The principle in one sentence
You charge VAT to your customers (output VAT), you pay it to your suppliers (input VAT), and you pay the difference over to the State. If input VAT exceeds output VAT, you get a credit.
The four rates
Rate
20%
- Applies to
- Standard rate — most goods and services
Rate
10%
- Applies to
- Eat-in catering, passenger transport, renovation
Rate
5.5%
- Applies to
- Food products, books
Rate
2.1%
- Applies to
- Reimbursable medicines, newspapers and magazines
| Rate | Applies to |
|---|---|
| 20% | Standard rate — most goods and services |
| 10% | Eat-in catering, passenger transport, renovation |
| 5.5% | Food products, books |
| 2.1% | Reimbursable medicines, newspapers and magazines |
The three schemes
VAT exemption threshold (franchise en base)
You do not charge VAT and do not reclaim it. The statement “TVA non applicable, article 293 B du CGI” must appear on your invoices.
Simplified scheme
One annual return, with two instalments in July and December. Suited to moderate volumes.
Standard real scheme
A monthly return, or quarterly if the VAT due stays under an annual threshold. It is the scheme that gives the best view of your cash flow.
The most common mistake
Treating the VAT you collect as available cash. It does not belong to you. A company that lives on its VAT discovers the problem when the time comes to pay it over.