VAT and France

The general VAT rule for goods is that the physical movement of the goods between countries is more important than the legal ownership of them. So, for example:

• the transfer of stock by a business from the UK to a warehouse that it owns in France will normally be classed as an export; and
• a delivery of goods by a UK business to the UK warehouse of a French customer will not automatically be classed as an export, even if the invoice is sent to an address in France.

It follows that where a UK business transfers any of its stock or assets from the UK to France, it is treated in the same way as other exports from the UK to France. The UK business also becomes the receiving customer in France.

The VAT implications are:

• The UK business may need to register for French TVA to account for TVA on the import into France and on the onward sale in France.
• If the UK business is registered for TVA, the transfer of the goods can be zero-rated for UK VAT purposes as long as the business obtains and keeps the usual documentary proof of export.
• If the UK business is registered for UK VAT but not for TVA, UK VAT must usually be paid at the rate applicable to a normal sale in the UK. This is based on the value of the goods. However, no VAT is chargeable on goods which would normally be zero-rated or exempt when supplied in the UK (for example, books, children’s clothing and some food items).
• A UK business not registered for TVA should regularly check whether its value of supplies to itself and to other TVA-unregistered customers in France requires it to register for TVA under the distance selling rules.

This also applies to:

• Goods sent on sale or return, or on approval, where the customer has the right to return the goods at any time. Until the goods are accepted by the customer, they are treated as being a transfer of own goods.
• Consignment stocks, which are goods sent to France to make possible future supplies, but where a customer has not yet been found.

Exemptions

Certain temporary movements of goods are exempt from the above requirements. They are:

• Where the goods are temporarily moved to France to supply a service there, for example to carry out a repair or to lease goods to a French business. This exemption is available if:
  • The UK business does not have a place of business in France; and
  • The UK business has a specific contract to fulfil which needs access to those goods; and
  • The intention is to return the goods to the UK once the contract has been completed.

• Goods sent temporarily to France to receive a service there.
• Where the goods would be entitled to temporary importation relief if they were imported from outside the EC, and they are to remain in France for no longer than 2 years.

For all exemptions, the business must keep:

• commercial evidence that the goods have both left and returned to the UK, and
• a temporary movement of goods register.

Supplying installed or assembled goods in France, which might appear to be transfers of own goods if they do not belong to the customer until the work is complete, are also exempt from being treated as a transfer of own goods.

Call-off stocks are treated as standard exports.

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