#92-677Implementation of the European Union Directive on VAT System
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This law updates France's VAT system to comply with EU standards, affecting how VAT is applied to cross-border transactions. It impacts companies involved in import/export within the EU by changing the place of taxation and defining new rules for VAT deductions. Businesses must adjust their accounting and tax reporting processes according to these new rules.
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Key Changes
- VAT application is harmonized for cross-border transactions.
- New rules for VAT deduction for intermediaries.
- Changes in the place of taxation for goods and services.
Obligations
What this law requires
Intermediaries must deduct VAT on goods/services subject to intermediary operations by offsetting against VAT due in the month when the right to deduction arose, provided all four conditions are met: (1) intermediary operation is remunerated exclusively by commission with rate fixed in advance, (2) principal is informed of the price agreed with other contracting party, (3) intermediary acts under prior mandate and never becomes owner of goods, and (4) operation is not within excluded categories (industrial waste, non-taxable person deliveries, or operations by French-established persons acting as intermediaries for non-EEC based service providers).
Persons receiving products shipped in suspension of rights from another EEC member state must obtain prior approval from the administration as 'registered operators' and must provide a joint and several guarantee ensuring payment of duties. Tax becomes due upon receipt of products and is owed by the operator or the sender's fiscal representative.
Companies must adjust their accounting and tax reporting processes to reflect changes in VAT place of taxation for cross-border transactions and apply new VAT deduction rules according to the modified provisions of Articles 259 C and 273 octies of the tax code.
Registered operators (Articles 57, 61, and 62 of Law No. 92-677 dated July 17, 1992) are subject to administration controls under the conditions specified in Article L. 35 of the fiscal procedures book.
Persons importing goods must determine if goods qualify as importation based on whether they originate from outside the EEC, are not in free circulation, or come from EEC territories outside the VAT directive's scope, or are placed under specific customs regimes (temporary storage, warehousing, active improvement, temporary admission, or transit).