Reclaiming French VAT by a UK business
French VAT is called ‘Taxe sur la Valeur Ajoutée’, or ‘TVA’, and it can sometimes be charged to a UK business buying French goods or services. Is there any way to claim this tax back?
A UK business buying goods from France, which are exported to the UK, cannot reclaim French VAT by including it on its regular UK VAT return. Instead, it should give the French supplier its UK VAT registration number so that TVA does not get charged in the first place. If the UK business is not registered for VAT, there is no way to reclaim any TVA that is charged.
In some cases, a UK business which is VAT-registered may be able to claim back TVA charged on goods and services under a special refund scheme set up by the EC 8th VAT Directive.
Qualifying for an 8th VAT Directive refund from France
The main conditions are:
- The expense must have been incurred for business purposes;
- TVA cannot be reclaimed on goods which are for export from France;
- The UK business must not be registered for TVA, nor is it liable to be registered;
- The UK business must have no physical presence in France (an exception is made for an establishment in France that solely carries out services for its foreign head office);
- The UK business must not be making any supplies which are within the scope of TVA. Services which are covered by the reverse charge mechanism can be ignored. This includes Schedule 5 services which are deemed to be supplied in France because the customer is based there. These are ‘intangible’ or ‘intellectual’ services such as royalties, advertising, consultants, professional services, banking, insurance, internet services etc.
Therefore, the scheme is intended to cover expenses received and consumed entirely within France itself. Common expenses on which TVA is reclaimed include hotels (but not for employees), subsistence, entertainment, advertising, professional fees, training courses, exhibitions and conferences.
The scheme can also be used to reclaim TVA on goods imported into France from outside the EC, but only if there is no other way available of reclaiming it. If importing the goods into France results in the business having a fixed establishment in France, or in having to register for TVA, then this scheme cannot be used as the main conditions above would be breached.
Refunds of TVA are not available on:
- Goods and services for the direct benefit of travellers (such as hotel accommodation), which have been bought for resale;
- Most motor and transport expenses, and any incidental activities;
- Goods and services supplied free or at much less than the normal price (except for goods that usually have a very low value);
- Services relating to non-deductible goods, such as repairs to private cars;
- The purchase of a building located in France.
The reclaim procedure
The time limit for making a claim is 30 June following the calendar year in which the TVA was incurred. Claims are normally made for periods of 3 months or a year. A claim for a 12-month period must not be less than €25, and a claim for a 3-month period must not be less than €200. Expenses not claimed in one quarter may usually be included in a later claim in the same year.
The claim must enclose original invoices or import documents that prove that TVA has been paid. Photocopies are not normally accepted. The papers are stamped and returned once the claim has been processed.
The first claim in every 3-year period must also be accompanied by a UK VAT66 certificate to prove that the business is registered for VAT in the UK. The original certificate must be sent, rather than a photocopy. If the business is using a trading name that is different from the name of the business that is registered for VAT, and any of the invoices are made out to the trading name, the certificate will also need to show this trading name. Certificates may be obtained by applying to:
National Registration Service
VAT 66 Section
62 - 70 Tettenhall Road
Wolverhampton WV1 4TZ
Fax: 01902 392202
The completed 3559-SD reclaim form, VAT 66 certificate and invoices should be sent to the French TVA office at this address:
Direction Générale des Impôts
Service de remboursement de TVA
10 rue du Centre
The French government has 6 months to refund the VAT or to say why the repayment cannot be made. A quick response should not be expected.