VAT Guide for Freelancers in France

Standard VAT rate for freelancers in France: 20%

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. Let's get started with VAT rates that apply to freelancers in France:

VAT rates for Freelancers 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.

Who is Required to Register and Pay 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 will help you establish and manage your online business with full compliance and ease. With Xolo Go, you use our company as a legal framework to invoice your clients whether they're across town or across an ocean. 

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When to Register for VAT in France as a Freelancer

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 as a Freelancer

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.

Financial and Legal Obligations for 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:

  1. 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. 
  2. You should issue electronic invoices with proper signature, authenticity, and agreement by your client.
  3. 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]
  4. You should ensure correct invoicing of customers for goods or services as per the French time of supply VAT rules. 
  5. You are required to process the credit notes.
  6. After registering for the VAT, you are only allowed to use the approved foreign currency rates.

Avoid VAT headaches and get your business running as a Freelancer with Xolo

VAT is always one of the most overwhelming and time-confusing aspects of running a freelance business. Applying the rates, navigating the registration, or trying to keep all the accounts are mundane and boring but take you a big chunk of your time daily. That's why lots of freelancers and solopreneurs are turning to invoicing and online business management solution like Xolo to save time and make sure you're on the right track of legal compliance.

Xolo Go will give you all the features of a business without registering one yourself. You'll be able to invoice your international clients in a VAT-compliant way and keep full track of your financials with our dashboard and business bank account.

If setting up a business is your thing, Xolo Leap, solopreneur's favorite e-Residency service provider, will handle all the boring parts of establishing your fully-remote EU business-of-one and you'll be able to automate your daily admin tasks like calculating & collecting VAT, deducting business expenses, or paying yourself salaries. Launching a EU remote company can't be easier and effortless than that!

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