Importation using the reverse charge mechanism

International Taxes

Importation using the reverse charge mechanism

Reverse charging of VAT at the time of importation has been the subject of much discussion in recent months. This measure has undergone many changes in a very short time. We have summarised the episodes in this article.

Episode 1

With effect from 1st January 2015 companies established in the European Union importing goods originating from third countries may opt for the reverse charge VAT mechanism to avoid having to pay it out at the time. Formerly, a company established in a member country which conducts import operations in France used to have to pay VAT to the Department of Customs when the goods were cleared and recover it several months later.

This advance payment of VAT placed a heavy burden on companies in terms of cash flow. The Act of 2015 removed this burden by making it possible to opt for the reverse charge mechanism. This practice consists of carrying out a book transaction on the VAT declaration to allocate the payment of VAT to self at the time of customs clearance. This advantage could be used solely by companies in possession of a Single Clearance Authorisation.

Episode 2

The “Blue economy” Act of 20th June 2016 amended the previous law. With effect from 1st October 2016, any company established in the European Union can opt for reverse charging of VAT unconditionally. This practice is no longer restricted to companies holding a Single Clearance Authorisation. The Constitutional Council halted the proposal of the Sapin II Law on the reverse charge mechanism of VAT at the time of importation.

Episode 3

The Sapin II Law, debated in parliament for several months, was intended to regulate the option on reverse charging by imposing conditions on its implementation. Authorisation would have to be requested from the Customs Department and would be granted if the applicant company fulfilled the following four conditions:

  1. To have conducted at least four importations in the European Union in the course of the previous 12 months;
  2. To have a register of importation operations;
  3. Not to have committed any offence against the Department of Customs and the tax services;
  4. To provide proof of financial solvency allowing the company to fulfil its commitments for the last 12 months.

Episode 4

This legal provision was censured by the Constitutional Council on 8th December 2016 on procedural grounds. However, the identical provision was reintroduced in the framework of the loi de finances rectificative pour 2016 (Amending Finance Bill no, 2016-1 918 of 29th December 2016 published in the Official Journal of the French Republic of 30th December 2016). In conclusion, any European business can opt to reverse charge VAT at the time of importation if it fulfils the four conditions above stipulated in article 1695 of the General Tax Code.

How to opt for reverse charging of VAT at the time of importation

ASD is an international firm specialising in tax and customs strategy. We offer our clients the possibility of putting this solution in place to protect its cash flow. For more information, contact us using the contact form; a sales representative will quickly respond to you.

How to opt for the VAT reverse charge mechanism

This is a very attractive option for companies as it allows them to protect their cash flow and no longer pay VAT at the time of importation. ASD, a tax firm specialising in intra-community VAT, prepares your application and files it with the relevant authorities. For further information contact us using our contact form.

 

 

 

Share on social networks

More information on our VAT reverse charge

ASD Group is an international company specialising in VAT recovery for over 20 years.
For further information, please contact us via our contact form.

Find out more about the author of the article

ASD Group

ASD Group

News

Find all our news on VAT and customs, decrypted by our experts

Get started on e-commerce ! E-commerce

Get started on e-commerce !

The distance selling: particularities The distance selling concerns selling a product that is directly delivered to the customer’s home (private customer or entity without a VAT(...)

Read more
E-Commerce with ASD Group ASD Group News

E-Commerce with ASD Group

The founder of this french e-commerce firm met ASD Group and his earnings soared to the tune of 500% in 5 years, thanks to ASD Group's tax experts. Select Sophia Antipolis magazine tells(...)

Read more
ASD Group: understanding international growth and working with pros ASD Group News

ASD Group: understanding international growth and working with pros

Discover how ASD Group can boost your international growth in the article “ASD Group: Understanding international growth and working with pros”, published by the Select Antipolis(...)

Read more
ASD Group shares its experience in a seminar devoted to the access to the European market ASD Group News

ASD Group shares its experience in a seminar devoted to the access to the European market

The ministry of Agriculture, Fisheries and Food of Quebec is organising a seminar “The European market opens to you, be ready” It aims to offer a better understanding of the(...)

Read more
Construction and Public Works & Transport: attention to the sanctions concerning posting of workers Posting of Workers

Construction and Public Works & Transport: attention to the sanctions concerning posting of workers

The law concerning posting of workers in France has been strengthened, and new sanctions have been introduced to fight against provision of illegal international services. Project owners,(...)

Read more
Free-trade with Canada: how to take advantage of the business opportunities abroad? International Taxes

Free-trade with Canada: how to take advantage of the business opportunities abroad?

At a time when many countries are questioning their degree of economic openness and are retreating into protectionism, Canada opens up to foreign markets. Gradually, Canada positions itself in(...)

Read more
VAT reverse charge : VAT refunds outstanding International Taxes

VAT reverse charge : VAT refunds outstanding

Normally, European companies that carry out taxable operations in other European Union member countries, are required to identify themselves for VAT in those countries. In order to fight(...)

Read more
Reinforcement of obligations concerning posted workers Posting of Workers

Reinforcement of obligations concerning posted workers

Starting from 1st of July 2017, new rules will come into force regarding mandatory declarations and displaying information for the posted workers. Public and private project owners and(...)

Read more
With ASD: international growth made easy ASD Group News

With ASD: international growth made easy

Read the story of the ASD Group, published by the Select Sophia magazine in its "Eco News and Innovation" category. The article tells the evolution of the ASD Group, explains its(...)

Read more
Our experts are at your disposal to answer your questions. Benefit from a free consultation!
Ask us for advice