France: Latest key French VAT updates

New calendar for the e-invoicing and e-reporting reform

A couple of months ago, the e-invoicing and e-reporting reform was still foreseen to progressively enter into force as from 1 July 2024, with a timetable extending until 1 January 2026.

Taking note of the difficulties faced by the businesses to comply with the deadlines, the French Parliament included in the Finance Bill for 2024 a new calendar as follow:

1.  As from 1 September 2026:

• All companies must be able to receive electronic invoices in the formats specified by the reform.
• Large and intermediate-sized companies must be able to issue their invoice to French B2B counterparts using these formats and to transmit transactions and payments data to the French tax administration (e-reporting).

2. As from 1 September 2027, medium and small-sized companies must be able to issue their invoice to French B2B counterparts using the reform’s formats and to transmit transactions and payments data to the French tax administration.
 

Official comments published by tax authorities on bundled supplies

Since 31 December 2020, article 257 ter of the French tax code provides rules governing the VAT treatment of bundled transactions.

On 23 August 2023, the French tax authorities (“FTA”) published their official guidelines on these rules (BOI-TVA-CHAMP-60 dated 23/08/2023). In respect to the financial sector, these comments notably cover the specific topic of banking and financial services provided along with the sale of goods and (other) services (BOI-TVA-CHAMP-60-40 dated 23/08/2023).

 In these comments, the FTA specify that, based on the CJEU case law, they will consider as ancillary to the main supply of goods/services (and thus subject to the latter’s VAT treatment):

• Fees invoiced by the seller for the use of a means of payment.
• Fees invoiced by the seller to grant a payment extension.
• Free credit granted as defined by the French Consumer Code.

In addition, the FTA will consider that a consumer credit bearing interest cannot be considered as ancillary to another transaction and must, in any case, be considered as a unique (VAT exempt) supply.

Furthermore, the FTA rely on the CJEU case law to assume that  lease purchase agreements must be considered as unique (VAT taxable) supplies, unless the terms and financial conditions dissociate the leasing and credit operations.

The FTA also recall that in principle, when it comes to bundled (financial) transactions, the VAT treatment of such transactions must be analyzed on a case-by-case basis.
 

VAT update for the art market

To date, the French VAT regime of transactions on works of art provides two combinable advantages:

• In one hand, it allows to apply the reduced French VAT rate (5,5%) on intracommunity acquisitions and importations of works of art as well as on the sale of works of art directly by their author/right holders.
• On the other hand, it allows taxable dealers to only apply VAT on their profit margin upon sale of works of art (provided that certain conditions are met) and to consider, in certain circumstances, that this profit margin is equal to 30% of the sale price.
   

However, the Directive no. 2022/542 dated 5 April 2022 on VAT rates provides that it is not possible anymore (as from 1^st January 2025) to combine the above-mentioned provisions. EU Members States must choose between those.

After discussions with representatives of the sector, the French legislator decided, in the Finance Bill for 2024, to:

• Maintain and extend the reduced VAT rate on all transactions on works of art (i.e. now including domestic transactions and sales by others than authors/right holders).
• Exclude all transactions on works of art subject to the reduced VAT rate from the above-mentioned margin scheme, meaning that taxable dealers will have to apply VAT on the whole sale price.

 
This specific reform will enter in force as from 1 January 2025 and will be of interest for all businesses involved in works of art (investors, dealers, etc.).

If you wish to discuss these topics, please contact: FIDAL