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

ASD Group opens the doors to the world ASD Group News

ASD Group opens the doors to the world

This month, Select Antipolis magazine dedicated 8 pages to ASD Group.  Didier Delangue shares the history of the development of ASD Group. From the creation of ASD Group to its(...)

Read more
VAT registration changes in Switzerland International Taxes

VAT registration changes in Switzerland

Until now, a foreign company had the obligation to register for VAT in Switzerland, as soon as its taxable transactions in Switzerland reached 100 000 CHF (approximately 85 000€). From(...)

Read more
The dangers of the VAT fraud International Taxes

The dangers of the VAT fraud

Taxation remains a complex subject within the European Union. According to a study by the European Commission, The European Union member countries lost 151,5 billion euros in 2015, from which(...)

Read more
Update on the flat rate contribution of SIPSI Posting of Workers

Update on the flat rate contribution of SIPSI

Legislation concerning secondment declarations will change in the coming days. Zoom on future changes. WHAT IS THE DETACHMENT DECLARATION (SIPSI)? A foreign company wishing to second(...)

Read more
Strasbourg and its Eurometropolis adopt the Crit'Air sticker from 1st of November 2017 Posting of Workers

Strasbourg and its Eurometropolis adopt the Crit'Air sticker from 1st of November 2017

The affixing of the vignette Crit'Air on the windshield becomes more and more common in France. After Paris, Grenoble, Lyon and Lille, it is Strasbourg and its 33 surrounding municipalities(...)

Read more
This is the list of non-EU countries that do not have to appoint a tax representative International Taxes

This is the list of non-EU countries that do not have to appoint a tax representative

According to the article 289 A of the French General Tax Code, a foreign company that carries out transactions subjected to VAT in France must, in several cases, appoint a tax(...)

Read more
The posted worker turn-around in Europe Posting of Workers

The posted worker turn-around in Europe

After 12 hours of discussions, European Union’s Labour Ministers finally agreed upon the posted workers' reform. REDUCTION of the maximal posting duration European countries(...)

Read more
How to know if I have to file a DEB? Customs Obligations

How to know if I have to file a DEB?

Although companies can make commercial operations within the European Union freely and without a control on the borders, depending on your activity and the amount of trade you might have an(...)

Read more
European taxation of GAFA International Taxes

European taxation of GAFA

a huge subject since some months, the debate on a European taxation of digital multinationals, the « GAFA » (Google, Amazon, Facebook, Apple) aka « equality(...)

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