Understanding French VAT

In France, the taxpayer is liable for collected VAT and deductible VAT. Collected VAT is included on sales. Deductible VAT is included in the purchase of goods, equipment, and services. Collected VAT can be offset against any deductible VAT. Businesses can also postpone the declaration of VAT in certain circumstances.

Certain services are subject to a special fiscal regime that allows you to declare the VAT when payment is made, as opposed to when the voucher is recorded. Postponing the declaration of VAT payable as long as possible can be advantageous for a business. This regime is also valid for accounts receivable transactions when VAT is recognized at the time of receipt, instead of at the time of invoicing.

Under the VAT Deductible on Payment regime, when you buy something, you pay VAT to the supplier. You then deduct that amount from the VAT which you have collected from client sales and pay the difference to the fiscal authority.

Under the VAT Collectable on Receipt regime, when you sell something, you collect VAT, which you then owe to the fiscal authority.