Deloitte Société d'Avocats

Reverse-charge mechanism for import VAT in France

Following the publication on the Economie Bleue law, it is possible to elect to account for VAT under the reverse-charge mechanism by way of simple option, from 22, June 2016, for companies established in the EU (including France). The businesses concerned do not need to meet any particular criteria. Such options should be sent to the French customs authorities without delay.

Interested businesses should therefore review their import transactions in order to opt very quickly for this new measure.

It should however be borne in mind that this regime will probably be modified by the entry into force of the law referred to as “Sapin II”, which is expected to reintroduce a system of prior approval by the French customs authorities. According to the bill, businesses established in the EU would have to fulfil four criteria which will be verified by the French customs authorities.

Companies established outside the EU would, for their part, have to designate a customs representative with Authorized Economic Operator (AEO) status. The “Sapin II” bill thus provides for a more favourable regime for companies established outside the EU because, in practice, all customs representatives have AEO status.

It is provided that companies which will have opted for the regime provided by the Economie Bleue law, will have their options automatically approved for three years but will not be able to benefit from an automatic renewal. They will therefore have to request authorisation after three years, which should provide enough time for these businesses to prepare.

The measure provided for by the Economie Bleue law is favourable for businesses established within the EU which benefit – at present – from a French platform as competitive as those of certain other Member States.

We are convinced that the French tax and customs authorities will be able to co-ordinate their efforts when implementing these new measures in order to avoid any VAT fraud. These transactions are different to intra-Community acquisitions of goods which gave rise to “carrousel” fraud, because businesses have to respect the customs formalities upon importation.