Latest VAT Group guidelines following consultation of new regime launched in January 2023
France has published the final VAT group regime guidelines. This follows a public consultation based on the January 2023 launch of the option for related groups to report under a single VAT number.
The latest guidelines include new clarifications on:
- Clarification on requirements for controls links
- Pre-VAT group establishment transactions
- Rights to deductions
January 2023 France implemented VAT group option to simplify reporting for related taxpayers
France joins most of the rest of the EU member states by providing the option for related companies to form a single VAT person, with just 1 VAT registration, and eliminate the cash flow drain of VAT payments on intra-group invoices.
Lastes guidelines foyer:
- requirements to formation of a VAT Group
- administration on admission and exit of members
- VAT treatment of intra-group transactions
- treatment for deduction of VAT
- reporting obligations
Pre-2023 Limited VAT group in France today
The old French VAT Group arrangements, introduced in 2012, only permitted netting off of debit or credit amounts owed between nominated related companies. Each company still filed its own VAT return, but did not have to pay VAT on intra-group invoices. Only where the lead company, responsible for the consolidated reporting, held at least 50% of the other members’ share capital would it be granted. Learn more about French VAT in our country guide.
January 2023 full VAT group
The 2021 French Budget introduced full VAT groups from 1 January 2022, for full operation from 1 January 2023.
This permits linked businesses to form a single taxable person for VAT. This means no VAT is due on invoices between members of the VAT group. Companies must apply initially for a 3-year minimum licence for a group, during which time no VAT returns are due from the individual members – a leading member will take responsibility for submitting a consolidated return. To qualify to join a group, businesses must be incorporated, but linked by shareholding, economics of financially or by control.
Only French resident businesses may join a VAT group. The group would share a single number, but all remain jointly and severally liable. For input VAT recovery, each member would be considered a separate business unit and the attribution method would apply (article 271 of the French tax code). Related provisions in the French tax code, notably regarding the VAT pro-rata calculation, would have to be amended by a decree of the French Supreme Court.