All French VAT groups will be streamlined beginning in 2023.
In January of 2023, France will implement the entire VAT group simplification. This necessitates expanding the present French VAT group program beyond its current administrative scope into a complete VAT group regime, enabling them to be classified as single taxable persons.
If you want your application to take effect in the new year, you must have it by October 31. The deadline for applications to join VAT groups in 2023 was October 31, 2022.
France's Old VAT Group Simplification
French businesses could only choose administrative simplification for VAT groups before the 2023 update. VAT groups were not classified as a single taxable entity, nor were intra-group supplies ignored for VAT purposes.
Before adopting the new comprehensive VAT group simplification, each company was required to submit its own VAT return and generate invoices using its own VAT number. The simplification combines all VAT obligations into a single payment, providing cash flow benefits to business groupings.
In addition to each member's VAT return, the group leader will submit a monthly VAT return aggregating the VAT positions of all members and determining the group's overall VAT position.
Even if the group's leader made the payment, each entity remained jointly responsible for the VAT payment.
New French VAT Group Simplification
The following details will apply to French VAT groups beginning in January 2023:
Only businesses with a physical presence in France may become members of a VAT group.
In France, VAT grouping is optional. Companies may apply for a VAT group if they meet the conditions or opt to remain individual VAT entities.
The deadline for applying for the VAT group regime is October 31, with the option taking effect in January of the following year.
Once the application has been accepted, a group VAT number is issued.
For VAT reasons, intra-group transactions are ignored.
Nonetheless, they must maintain a record of these transactions.
Each group member is jointly and severally responsible for the group's VAT obligations and penalties.
Three years is the minimum duration for a VAT group. After the first three years, companies may join or leave the French VAT group with the representative's approval.
Three years is the minimum duration for a VAT group. After the first three years, entities may join or leave the French VAT group with the representative's approval.
Each member would be deemed a distinct business entity for VAT refund purposes.
Members of a VAT group file a combined return for VAT. Each entity cannot submit separate VAT returns.
Lastly, invoices issued by members of the group must include a particular reference to this fact and the members' names, addresses, and individual and group VAT numbers. The phrasing might state: « Membre d'un assujetti unique.