VAT and France

The general rule when goods are moved between the UK and France, even if they are just internal transfers of own goods rather than arms-length sales or purchases, is that they are treated as exports and imports that may be subject to local VAT in each country.

This can be avoided when a UK business sends any of its goods to France to have a service carried out on them, before being returned to the UK. For example, some specialist machinery may need to be sent back to the manufacturer’s factory in France to be repaired, before being returned to the UK. Or, some work in progress may need to undergo a special process in France before it is returned to the UK as finished stock.

To qualify for this simplified treatment, the UK business must:

• Be registered for UK VAT;
• Hold proof of export of the goods from the UK;
• Record the movement of the goods in a temporary movements register;
• Account for VAT on the value of the service received, using the reverse charge mechanism.

It does not matter if the goods are processed by more than one business in France, or even if they are also processed in another EC country, as long as they are returned to the UK once all services have been completed.

A UK business that is not registered for VAT is likely to have TVA charged on the service by the French business, which it will be unable to reclaim.

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