VAT is a tax which concerns only the final consumer. The value added tax is the same for everyone, regardless of the production process or the marketing of items or services.
For the Companies
The company, as soon as it operates an activity dependent on VAT, must submit all of its sales to this tax. The company must also collect a tax from its customers. This tax is then transferred to the administration of the Public Treasury, monthly or quarterly. However, the company can recover the purchase tax paid to suppliers from the Public Treasury.
- It is possible to recover VAT using a declaration specific to this type of tax deduction. This is the CA 3 declaration. The company therefore submits a net VAT which corresponds to a tax on the real added value of the company over a defined period.
- VAT is a tax that is neutral for the business. In the exception where the company practices an activity that is not taxable by VAT, it will then have to pay VAT to suppliers, but the tax cannot in any case be deducted. There are several activities that are not included in the application of VAT such as medical activities or the rental of non- habitable space. Depending on the type of activity carried out, the date of deduction and payment of VAT differs.
For example, if your business is a delivery service business, the transaction, either the reversal or the deduction, must be completed at the end of the month in which the delivery was made, even if the payment is not settled by customers. Then, the company must advance the VAT collected on its sales and pay it to the Public Treasury. This has the effect of increasing the company’s working capital requirements.
When it comes to providing services, a different rule applies: VAT is required or deducted on the day of payment for the service. The company does not have, in this case, to advance the tax to the Public Treasury. Here is 1099 tax calculator
VAT and the auto-entrepreneur
Since 1st January 2015, there are several levels of mandatory and applicable VAT:
- For most item sales or service activities, the standard rate is 20.0%.
- Regarding the activities of catering, the sale of foodstuffs, transport as well as construction work in old housing, the so- called intermediate rate is 10.0%.
- The so- called reduced rate is 5.5% applicable to essential items, that is to say, non-alcoholic drinks, most foods, some agricultural items, passenger transport, most shows as well. That some residential construction work, etc.
- All of your sales as well as your services are subject to VAT from the first day of the month in excess.
- It is also important to give rectification invoices to customers with regard to operations or accounts relating to operations, carried out from the first month of overrun which is not subject to VAT.
- It is possible to deduct the VAT relating to the expenses since the month of overrun.
Creation of invoices without VAT
When the auto-entrepreneur creates an invoicing slip, it does not indicate VAT, whether it is a trade or service activity. In these cases, the self-employed person must mention “VAT not applicable, article 293 B of the CGI” on the slips.