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FRANCE VAT REFUND

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FRANCE VAT RATE

France falls under the EU VAT system, and is part of the European Union single market economy.

Maurice Lauré, Joint Director of the French Tax Authority, the Direction générale des impôts, first introduce VAT on April 10, 1954 in France. In France the VAT is known as Taxe sur la valeur ajoutee (TVA). In France, the VAT is considered to be the most vital source for state finance and brings 52% revenue of the state. All economic activity in France is subject to VAT.

There are different kinds of vat rates currently applicable in France but for general sales and supply of goods and services the standard rate (defined as the EC standard rate) is 19.6%.

There is also a reduced rate of 5.5% which is applicable to certain goods and services that includes the following:

♦  Food products
♦  Passenger transport
♦  Publishing
♦  Certain works carried out in the main residence

Most renovation and building works and materials are subject to VAT at only 5.5%, but the work should be executed by a registered tradesperson. If you perform the work yourself and purchase the materials then you have to incur 19.6% VAT on the materials.

As for instance, while purchasing doors for your house it may charge 3,000 euros excluding VAT. After charging VAT at 19.6% the cost will go upto 3600 euros. But if you contact with supplier and pay him for installing the door, you should incurr 3,220 euros (VAT at 5.5%) and 350 euros for the installation charge. Thus you will get the benefit to save 30 euros.

The reduced rate of VAT is not applicable to the following cases:-

♦  new buildings
♦  extensions to an existing property
♦  'luxury' additions, such as a swimming pool

Finally, there is a special rate of 2.1%, which applies to a limited scope of goods and services like food, press and some primary goods (defined as the EC lower rate). Specific rates apply to French overseas departments.

When France increased its VAT rate, it caused a 20% loss of sales. Lately, France has gone back to the reduced rate of 5.5% after getting the green light from the EU. Nicolas Sarkozy has announced that VAT in restaurants will be reduced from 19.6% to 5.5% which will commence from July 1, 2009. This reduction is estimated to cost the taxpayer €3.25 billion.


 
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