| To charge or not to charge, to register or not to register - VAT for liberal professions in France || Jan 17, 2002 |
This may be useful, but you need to have your brain in gear to chomp through it.
Otherwise, here’s a quick summary of the basic rules which apply to me. I am URSSAF registered, liberal profession and charge VAT.
I went to see an accountant and he summed it up as follows.
1 - When billing a client in France for the provision of services :
(a) If your client charges VAT, you charge him VAT
(b) If your client does not charge VAT, you do not charge VAT
Example of (a) : a big corporate client charges VAT, so you charge him VAT
Example of (b) : a small “association Loi 1907” which does not charge VAT, you do not invoice VAT
2 – When billing client in another member country (not France) but still in the EU :
(a) If your client charges VAT, you don’t charge VAT
(b) If your client does not charge VAT, you do charge him VAT
Basically, the other way round. So if you work with clients in the UK for example, then the VAT principles operate the other way round from when billing those in France.
3 – When billing a client outside the EU, you do not charge VAT.
No VAT charged to Switzerland, USA, etc…
You have to register for VAT once your receipts exceed 175 000 FRF (23 378.58 €) in any one year. Contact your local tax office.
This is problematic, as you don’t know when this is going to happen.
If this happens half way through a year, contact your office and they will advise you. You may find yourself having to back track your clients and collect VAT on bills already sent out and which your clients have already paid. If you don’t, you’ll have to cough up the VAT you should have charged anyway. Depending on how you work and who your clients are, this may be difficult.
If it happens towards the end of the year and you just overshoot the limit, they may let it go. This is what they did with me. However, I realised only a few months into the following year and had to collect VAT afterwards. I eventually managed to get it all in – a miracle!
If you’re not sure, then wait. Once you have registered, it’s difficult to “unregister”, if your receipts are just around the 175 KF limit. It increases your paperwork and you have to keep a close check on your cashflow. That 19.% o is not yours, it’s marked “just passing though”.
Is there any advantage in opting to be subject to VAT, even if you are not near the limit? The main advantage is of course that you can recover any VAT paid out on deductible purchases. If you have to buy new office equipment, computer, software etc, then it’s quite nice to be able to recover the 19.6% someone has charged you!
There are lots of silly details you need to keep an eye out for.
If you don’t charge it when you ought to have done, the amount you were paid by your client will be taken as having included the 19.6% VAT which you will be liable for. Make sure you charge it if you ought to!
The onus is on you to make sure that your clients are or are not subject to VAT. Ask for their VAT Registration N°/EU VAT Registration N° as appropriate.
Two things may become evident :
1 - Go and have a chat with someone in your local tax office. They\'re more helpful than you think.
2 - Go and see an accountant BEFORE making your final decision.
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