VAT rate: 20%
Reduced rates: 10%, 5.5% and 2.1%

As a founding member of the European Union, France has defined its VAT rules as per regulations set out by the EU. All the countries in the EU are required to impose a VAT, with a minimum threshold of 15%. While each EU country has its own VAT rate, it doesn't matter where you are located; it only matters where your customers are. Thus, if you have customers in France, you must charge the French VAT rate.

According to the Tax Foundation, France imposes a VAT, or Taxe Sur la Valeur ajoutée in French, of 20%. This is slightly below the EU's average of 21%.

As freelancers and solopreneurs in France, you might be required to register for VAT, and while dealing with taxes can be overwhelming, we're here to help you through the process.

What are the different VAT rates in France?

Few regions, like French Guiana and Mayotte, don't impose VAT. Others charge the following rates:

0%: This applies to intra-community and international transport, excluding road and inland waterways.
2.10%: This applies to pharmaceuticals, newspapers and certain magazines, admission to cultural events, etc.
5.5%: This applies to some food, beverages without alcohol, books, services to senior citizens and disabled persons, social housing, sanitary protection for women, supply of works of art by their authors, etc.
10%: This applies to home services (cleaning, childcare, home courses), social housing, sales for immediate consumption, admission to amusement parks, works and repairs on residential buildings built for more than two years, sights, passenger transport, pharmaceuticals, bio-fertilizers, etc.
20%: This applies to all other taxable goods and services.

Registering for VAT in France

Who is required to account for VAT in France?

Working as a freelancer has its benefits; however, those don't include a tax exemption. Luckily, if you set up a micro-enterprise for your freelance work in France, you can enjoy the simplified taxation benefits. A micro-entrepreneur (or self-entrepreneur) is someone who has created an individual company and has opted for the micro-enterprise tax system. It can save you a lot of extra paperwork, and this status allows you to work in France as a freelancer for as long as you want. You can even use your personal banking account instead of a professional one.

The best benefit of setting up a micro-enterprise is being exempted from paying VAT as long as your turnover is below a certain threshold.

If you're buying and re-selling goods or materials, setting up a restaurant or bar or furnished accommodation, the threshold is €82,200.
If you're offering services or liberal professionals, the threshold is €32,900 a year.

Disadvantages of the micro-enterprise scheme include:

The annual revenue cap. You can remain with the scheme until you exceed the threshold over two years. If you do, you have to switch to follow the standard business structure.
Not paying VAT = not receiving returns on VAT.
This scheme is not advised if you have a lot of expenses to pay (for example, a lot of equipment to buy).

There are other ways of working as a freelancer in France that do not have revenue caps, but those schemes are not VAT exempt and require more management time and fees. Regardless of whether you operate under the micro-enterprise system, Xolo can help you register as a freelancer in France and handle all the necessary paperwork on your behalf. With Xolo Go, you use our company as a legal framework to invoice your clients whether they're across town or across an ocean.

When to register for VAT in France

EU VAT returns are due quarterly. At the end of each quarter, you have 20 days to file and pay whatever you owe

20 April, for the first quarter ending 31 March
20 July, for the second quarter ending 30 June
20 October, for the third quarter ending 30 September
20 January, for the fourth quarter ending 31 December

How to register for VAT in France

If your business is eligible to be registered for VAT in France, you need to make a note of the following things:

If your micro-enterprise is based in a non-EU country, you will need a fiscal representative. Within the EU, you won't need one, but it could be helpful, given that the documents are in French and might be challenging to understand. Here's a list of countries that do not need a fiscal representative.
You must be registered with an EU VAT number. When you are eligible to pay VAT, the EU will automatically register you in the EU tax system. As a result, the EU will keep track of the taxes you pay, the tax credits you receive, and the tax amounts you charge your customers.
To get the VAT number, you must have a VAT certificate, Articles of Association (translated in French), and a copy of the extract from the national trade register in your country.

If you have crossed off all items in the checklist above, you can register for VAT. You can do this through the Mini One-Stop Shop (MOSS) registration. The Mini One-Stop Shop is an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This scheme is optional but especially useful if you have customers in multiple countries, including France, within the EU. MOSS allows you to avoid registering in each member State of consumption. To learn more, click here.

An alternate method is to register for VAT with the help of an agent: you can hire an accountant (or agency) to handle your VAT returns and dealings with the tax office. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

It can take around four weeks for your VAT to be registered.

Financial Obligations of VAT Registered Freelancers In France

'With registrations comes responsibilities.' Okay, this might not be an actual quote, but it is true nonetheless. After you have successfully registered for the VAT, it's time to follow through with the rest of your obligations. Here are some of the things that you should be aware of:

You should issue invoices with the disclosure details outlined in the French VAT Act. Depending on the volume of your transactions, these invoices should be issued monthly, quarterly, annually, or seasonally.
You should issue electronic invoices with proper signature, authenticity, and agreement by your client.
You should maintain all your accounts and records for at least ten years. [If the process already has you clenching your fists and reaching for aspirin, Xolo Go can help by automatically generating, sending, and storing all your invoices digitally]
You should ensure correct invoicing of customers for goods or services as per the French time of supply VAT rules.
You are required to process the credit notes.
After registering for the VAT, you are only allowed to use the approved foreign currency rates.

How Can Xolo Help?

Tax registration process can be tricky at times, but we hope this guide has helped clear your doubts! If you’re still confused about the different schemes and numbers and paperwork, Xolo offers a range of solutions that handles all the hassle while you focus on your core competencies.

With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC.

Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.
Xolo Leap requires Estonian e-Residency, but you can start your own EU company with us once you have it!
We offer different tiers of service depending on the solopreneur’s, or as we call them, Xolopreneur's, individual needs.
Once you get your business set up, you can literally run it from anywhere in the world! So whether you’re looking to gain access to the EU market or a digital nomad - this is the place for you!