Of course, they must show the amount of VAT in a perfectly legible and distinct manner. The object of the transaction concerned must be necessary for the operation of the business. Another decisive condition is that the expense must be payable by the supplier. In other words, the products purchased from the suppliers must be delivered. If it is a service, the supplier’s invoice must be paid.
It is also important to mention that the expenditure must not be subject to a measure prohibiting recovery of VAT, namely:
- Certain expenses for the benefit of company managers: accommodation costs, travel, etc.
- Fuel expenses: gasoline or passenger vehicle.
- Expenses to purchase private vehicles.
What are the steps to recover the VAT?
When you declare your VAT, and the deductible amount is greater than the amount collected, you are in a VAT credit situation. It is in principle the State which must reimburse you the amount. You can choose between a charge, that is to say a carry forward of this credit to the following period, or a refund. The exercise of the right to deduct the company can only be done when presenting the VAT return. The frequency of this process therefore depends on the VAT regime applied to the company to effectively recover VAT. For filing business taxes this is important now.
- In the event of an annual declaration: the amount concerned must be greater than € 150. Form 3519 (normal plan) must be completed.
- In the event of a monthly declaration: the amount concerned must be greater than € 760. you must complete form 3519 (normal plan) or directly on your CA3 form (simplified plan).
- The recovery of VAT is a complex operation which requires very specific procedures. It requires advanced skills in accounting, but also a precise knowledge of the legislation in force.
An accountant is essential to provide the support and advice essential to the exercise of the right to deduct.
VAT, what are the mandatory information on your invoices?
Understanding VAT questions
For all your sales made on French territory, a certain number of mentions are required on your invoices.
- the number of your invoice and its date of issue,
- your names and addresses, as well as those of your client,
- the amount excluding tax to be paid by your customer, and any possible reduction,
- the quantity and description of the goods or services, their unit price, their delivery date,
- your VAT number, the applicable VAT rate and the amount of VAT to be collected,
- the date of payment, and the rate of penalty incurred in the event of late payment.
Think about it, in the case of intra-community trade:
The mention of the identification numbers of your company and your business partner are required, in the case of a sale of property, you must indicate “VAT exemption, article 262 ter I of the General Tax Code”.
Effects on economic activity
An increase in VAT increases consumer prices, those of French products like those of imported products, but not export prices. Initially, it contributes to reducing consumption (and investment in housing) but has no effect on the competitiveness of French companies compared to their foreign competitors. The rise in consumer prices is then passed on to indexed wages, de jure (minimum wage) or de facto, which leads to an increase in companies’ production costs and a further rise in prices, which this time affects product prices.