France VAT rates and VAT compliance

Once businesses are registered for VAT in France, they must follow local rules. This includes:

• Issuing invoices with the disclosure details outlined in the French VAT Act
• Electronic invoices, when used, must include the proper signature, authenticity, and agreement by the recipient
• Maintenance of accounts and records, which must be held for at least 10 years
• Correct invoicing of customers for goods or services in accordance with the French time of supply VAT rules
• Processing of credit notes and other corrections
• Use of approved foreign currency rates

The tax point (time of supply) rules in France determine when the VAT is due. For imports, it is the time of importation. For goods, it is considered as the point of transfer of title. Any VAT due should then be declared in the subsequent VAT return. The tax point for French services is when performed, or on an accruals basis as ‘enjoyed’.

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In France, the VAT rate on food products depends on the type of goods sold and how they’re packaged, and the context in which the goods are bought or served — specifically, the expected consumption period.  

Deferred consumption 
Includes foods that are stored in airtight containers, with expiry dates, such as those sold in supermarkets (instead of a catering business). These are food products that can or are expected to be consumed at a later date, and do not need to be consumed immediately. The VAT rate for these goods is 5.5%. 

Some products served in restaurants also have a VAT rate of 5.5% if they can be consumed later. These include bottled water, non-alcoholic canned drinks, and food that typically comes in packages such as crisps. 

Immediate consumption
Includes foods that are intended to be consumed immediately, such as foods served in restaurants, cafés, bakeries, bars, and fast food outlets. Also included are food products that are served at catered events. The VAT rate for these goods is 10%. 

The sale of alcohol in France is subject to a VAT rate of 20% (for drinks with an alcohol strength of 1.2% or higher), regardless of being served alone or with other food products with a lower rate. Alcohol can never benefit from lower rates that are applied to on-site dining (immediate consumption). 

In France, items considered as ‘luxury’ for tax purposes are expensive non-essentials such as jewellery and precious stones, high-end cars, high-end watches, boats, caviar, works of art, and tobacco and cocoa-based products. All luxury goods (those that are outside basic necessities) are charged at the normal VAT rate of 20%.

The goal of taxing luxury items in France, as in other EU countries, is to regulate consumption of high-end items, in addition to generating revenue for the French state. 

Most services in France are subject to the standard VAT rate of 20%. These services include childcare, haircuts and hair treatments, housework, and medical treatments. A small number of services, such as passenger transport and waste treatment, benefit from a reduced VAT rate of 5.5%.