You formed a company in France from London, New York, Dubai or Singapore. The Kbis — the official registration certificate issued by the greffe, the clerk’s office of the commercial court — arrived in your inbox, the SIREN — the nine-digit company identification number issued by INSEE — is printed on your letterhead, and the first invoices are about to go out. Then your French accountant asks the question you did not expect: what is your VAT position? In France, the answer is never automatic. Some young companies must charge value added tax from their very first invoice, others are protected for a while by an exemption scheme called the franchise en base, and a company that gets the answer wrong pays the missing tax, a surcharge and interest — from abroad, with no local office to receive the warning letters. This guide explains, for a foreign founder or a foreign group running a French vehicle, when French VAT applies, how the 2026 turnover thresholds work, how to obtain a French VAT number, what a compliant invoice must contain, how returns are filed from outside France, and how to repair a late start before the cost becomes serious.
I. Does your French company really owe VAT, and from what date?
A. Taxable transactions, place of supply and the reverse charge when the supplier sits outside France
French VAT — taxe sur la valeur ajoutée, universally shortened to TVA — is governed by the Code général des impôts (CGI), the French general tax code. The starting rule is deliberately broad: Article 256 of the CGI provides that “Sont soumises à la taxe sur la valeur ajoutée les livraisons de biens et les prestations de services effectuées à titre onéreux par un assujetti agissant en tant que tel.” In plain English, any supply of goods or services made for consideration by a taxable person acting as such falls within VAT. A société par actions simplifiée (SAS, the flexible joint-stock company most foreign founders choose), a société à responsabilité limitée (SARL, the limited liability company with stricter statutory rules) and even a registered branch (succursale) of a foreign company are all assujettis — taxable persons — as soon as they carry on an economic activity in France. There is no minimum share capital or minimum headcount that keeps a company outside the system: only the nature and the place of the transactions matter.
The second question is where the transaction is taxed. For services supplied to a business customer, the European rule applied in France is that the service is taxed where the customer is established. Article 259 of the CGI states that “Le lieu des prestations de services est situé en France” when the business customer receiving the services is established in France Concretely, when your French SAS bills a German or American business client for consulting, design or software work performed for that client, the place of supply is generally outside France and no French VAT is charged — the foreign business customer accounts for the tax under its own rules where applicable. Conversely, when a non-French supplier bills your French company, the mirror mechanism applies: Article 283 of the CGI provides that where the supplier is established outside France, “la taxe est acquittée par l’acquéreur, le destinataire ou le preneur qui agit en tant qu’assujetti et qui dispose d’un numéro d’identification à la taxe sur la valeur ajoutée en France” This is the autoliquidation — the reverse charge: your French company self-assesses the French VAT on the foreign supplier’s invoice, declares it and deducts it on the same return, so the operation is usually cash-neutral but remains fully declarable. A foreign founder who ignores these lines and simply pays foreign invoices without declaring the reverse charge accumulates undeclared liabilities that surface at the first audit.
The third timing rule is the fait générateur — the chargeable event that fixes when the tax becomes due. Article 269 of the CGI provides that “Le fait générateur de la taxe se produit : a) Au moment où la livraison, l’acquisition intracommunautaire du bien ou la prestation de services est effectué”. For goods, VAT is therefore due when the goods are delivered; for most services, when the service is performed, with special rules for staged payments and successive statements of account. The Cour de cassation recalled the practical weight of this timing in a recent commercial chamber ruling about assigned receivables: in its decision of 22 October 2025 (pourvoi no. 24-19.201), the Court restated that “le fait générateur de la TVA se produit au moment où la livraison, l’acquisition intracommunautaire du bien ou la prestation de services est effectuée”. For a foreign-run company, the lesson is operational: the date printed on the invoice should reflect the real date of delivery or performance, because that date decides the period on which the VAT must be declared. Backdating or postponing invoices to shift VAT from one quarter to another is one of the first anomalies the French tax administration’s software flags.
Two frequent borderline cases deserve a clear answer. First, holding and invoicing structures: a French company that only holds shares and receives dividends is not, on those dividends alone, carrying out taxable transactions, but the moment it bills management fees, shared-service recharges or directors’ fees to its subsidiaries, those invoices are taxable services and can pull the whole company into monthly VAT returns. Second, distance and digital sales: specific regimes (intra-Community distance sales, the One-Stop Shop — guichet unique — for consumer sales across the European Union) allocate the tax to the customer’s country above certain thresholds, but they never exempt the French company from registering and documenting the flows. When in doubt, the question is never whether VAT exists somewhere; it is which country collects it and which number must appear on the invoice.
B. The franchise en base: the 2026 turnover thresholds that keep a small company outside VAT
The franchise en base — literally the “base exemption” — is the scheme that allows a small business to invoice without VAT: no VAT charged to customers, but symmetrically no VAT recovered on purchases. It is the default shelter of consultants, small traders and service companies in their first months, and the official English-language guidance of the French administration describes it in detail on the entreprendre.service-public.fr portal (see the administration’s pages on the franchise en base de TVA and on declaring and paying VAT). For 2026, the figures a foreign founder must memorise are the following: for sales of goods, the basic threshold is 85,000 euros of annual turnover with a tolerance threshold of 93,500 euros; for supplies of services, the basic threshold is 37,500 euros with a tolerance threshold of 41,250 euros. The mechanism works in two stages. As long as turnover for the current year stays below the basic threshold, the exemption continues. If turnover exceeds the basic threshold but remains below the tolerance threshold, the company keeps the exemption for that year and becomes liable for VAT on 1 January of the following year. If turnover exceeds the tolerance threshold, the exemption ends immediately — on the very day the threshold is crossed — and every subsequent invoice must carry VAT.
Three traps catch foreign-run companies in particular. The first is the reference turnover: thresholds are assessed on turnover excluding VAT (chiffre d’affaires hors taxes) for the calendar year, and the administration looks at the French turnover of the French company, not the worldwide turnover of the group — but intra-group recharges billed by the French vehicle count in full. A French SAS that merely re-invoices 60,000 euros of group costs plus a margin can cross the services tolerance threshold of 41,250 euros without ever selling to an outside customer. The second trap is the two-year look-back: the published examples of the administration show that exceeding a threshold in year N while having exceeded it in year N-1 can accelerate the exit from the scheme, so a company hovering around 38,000 to 40,000 euros of services turnover for two consecutive years should plan its VAT entry rather than discover it. The third trap is the invoice wording: while under the exemption, each invoice must carry the mandatory statement that VAT is not applicable under the franchise scheme, and the day the tolerance threshold is crossed, that statement must disappear and be replaced by a VAT line with the applicable rate — 20 percent standard rate in most cases, 10 or 5.5 percent for eligible goods and services. Invoices issued without VAT after the exit date expose the company to a reassessment (redressement) equal to the VAT that should have been collected, which the company must then pay out of its own margin because it can no longer legally reclaim it from customers months later.
Opting out voluntarily is sometimes the smarter commercial move, and the law allows it: a company may elect to become liable for VAT even below the thresholds, typically when its customers are businesses that recover VAT themselves and its own suppliers charge significant VAT on equipment, rent or subcontracting. The election locks the company into the VAT system for a minimum period and takes effect on a fixed date, so it should be timed with the accounting year and the invoicing cycle. Conversely, a company whose customers are private individuals — coaching, training for individuals, small e-commerce — usually defends the exemption as long as possible, because 20 percent added to consumer prices directly costs sales. The decision cannot be improvised from abroad: it requires a turnover forecast for the current and following year, a client-by-client analysis of who recovers VAT, and a written instruction to whoever issues the invoices, in France or from the foreign head office, so that the correct wording appears from the correct date.
New companies benefit from one practical simplification: in its first calendar year, a company created during the year applies the thresholds pro rata temporis — adjusted in proportion to the operating period — which means a SAS created in October crosses the services tolerance threshold with roughly 10,000 euros of invoices in its first quarter. Founders who launch in the last quarter and bill an initial intra-group setup fee regularly blow through the pro-rated threshold with a single invoice. The safe routine is therefore a monthly turnover check against the applicable threshold from the very first invoice, documented in writing, so that the file proves — in case of audit — that the exit date was monitored and applied. The French tax administration accepts that a young company makes an honest timing error of a few weeks and corrects it spontaneously; it does not accept a full year of invoices without VAT above the thresholds presented as an oversight.
II. How do you register, invoice and file VAT from abroad without triggering penalties?
A. Getting the VAT number, issuing compliant invoices and deducting input VAT before the deadline
Registration starts at company formation. Since 1 January 2023, all business creation formalities pass through the Guichet unique — the single online portal operated by the INPI, the French intellectual property and business formalities institute — which transmits the file to the greffe, INSEE and the tax administration. When the file states that the company will be liable for VAT, or when liability starts later after leaving the franchise scheme, the tax office (service des impôts des entreprises, SIE) assigns an intra-Community VAT number built on the SIREN: the letters FR, a two-digit key, then the nine digits of the SIREN. Article 286 of the CGI requires that “Toute personne assujettie à la taxe sur la valeur ajoutée doit : 1° Dans les quinze jours du commencement de ses opérations, souscrire au bureau désigné par un arrêté une déclaration conforme au modèle fourni par l’administration.” In practice, for a company formed through the Guichet unique, this declaration is embedded in the creation file; for a company that becomes liable mid-life — threshold crossed, voluntary election, new taxable activity — a specific declaration to the SIE within fifteen days is mandatory, and it can be filed by the foreign director or by a French representative (mandataire) with a proper power of attorney. Companies established outside the European Union that are liable for French VAT without a French establishment must additionally appoint a tax representative (représentant fiscal) established in France, who answers for the company’s VAT obligations toward the administration.
Once registered, every invoice must satisfy the strict French mandatory content. Article 289 of the CGI provides that “Tout assujetti est tenu de s’assurer qu’une facture est émise, par lui-même, ou en son nom et pour son compte, par son client ou par un tiers”, and adds that “La facture est, en principe, émise dès la réalisation de la livraison ou de la prestation de services.” The invoice must show the seller’s and customer’s names and addresses, the SIREN and intra-Community VAT numbers of both parties for intra-Community supplies, the date of issue and of the transaction, a precise description and quantity of the goods or services, the unit price excluding tax, the applicable VAT rate, the VAT amount and the total. For intra-Community supplies of goods exempt in France and for reverse-charge services, the invoice carries no French VAT but must state the legal ground — typically the self-billing or reverse-charge wording and the customer’s valid VAT number, verified beforehand on the European VIES database. Since 1 September 2026, France has also been rolling out mandatory electronic invoicing (facturation électronique) between taxable businesses, with structured formats and transmission through accredited platforms; a foreign-run company whose invoicing tool is configured abroad must verify that its software produces compliant structured invoices and archives them for the full retention period, because a PDF sent by email alone no longer suffices in the general case.
The financial heart of the system is the deduction of input VAT: the VAT your company pays to its suppliers reduces the VAT it owes on its sales. Article 271 of the CGI states the principle: “La taxe sur la valeur ajoutée qui a grevé les éléments du prix d’une opération imposable est déductible de la taxe sur la valeur ajoutée applicable à cette opération.” But the right to deduct is fenced with deadlines that foreign directors discover too late. In its ruling of 1 October 2025, the commercial chamber of the Cour de cassation held, by combining Article 271 CGI with the regulatory deduction deadlines, that “le client d’un assujetti, lorsque cet assujetti a opté pour le paiement de la TVA d’après les débits, doit déclarer la TVA déductible figurant sur les factures dans le mois de leur réception et au plus tard le 31 décembre de la deuxième année suivante”, adding that “A défaut de déclaration dans ces délais, le crédit de TVA ne peut donner lieu ni à imputation ni à remboursement.” Translation for the business reader: input VAT shown on a supplier invoice must be claimed promptly, and any VAT not declared by 31 December of the second following year is definitively lost — no carry-forward, no refund. A company run from abroad, where purchase invoices pile up in an inbox nobody reconciles monthly, bleeds deductible VAT every year. The remedy is a monthly discipline: every supplier invoice checked (valid VAT number, correct rate, real service), recorded and transmitted to the accountant before the return is prepared.
Deduction also has substantive conditions that audits test one by one: the expense must relate to a taxable activity, must not be excluded by law (a large share of vehicle, fuel, hospitality and entertainment expenses is wholly or partly excluded), and must be supported by a compliant invoice — a quote, a pro-forma invoice or a bank statement never opens the right to deduct. Where the company carries on both taxable and exempt activities, only the proportion assigned to taxable transactions is deductible (prorata). For capital goods — equipment, vehicles, fit-out works — the administration claws back deducted VAT if the asset is sold or reassigned to an exempt use within a multi-year adjustment period. Before signing a lease with heavy fit-out works or buying equipment from abroad, the foreign founder should therefore ask the accountant to model the deduction over the life of the asset rather than celebrate the first-year refund.
B. Monthly or quarterly returns, late filings, corrections and recovering VAT on invoices your customers never pay
French VAT is declared and paid on the standard CA3 return filed electronically on the impots.gouv.fr portal. Article 287 of the CGI provides that “Les redevables soumis au régime réel normal d’imposition déposent mensuellement la déclaration visée au 1 indiquant, d’une part, le montant total des opérations réalisées, d’autre part, le détail des opérations taxables. La taxe exigible est acquittée tous les mois”, while adding that “Lorsque la taxe exigible annuellement est inférieure à 4 000 €, ils sont admis à déposer leurs déclarations par trimestre civil.” Most foreign-owned operating companies therefore file every month; only genuinely small VAT payers file quarterly. A simplified annual regime with half-yearly instalments exists for the smallest businesses, but a company that chose or triggered VAT liability on significant turnover rarely qualifies, and the accountant confirms the applicable regime each year. From abroad, the critical point is access: the return is filed online by the company or its accountant through a delegated access (délégation), the payment is made by SEPA direct debit or bank transfer to the French Treasury, and the foreign director must ensure that the delegation is active and the bank account funded before each deadline. A return filed but unpaid, or paid from a foreign account with the wrong reference, still generates penalties.
Late or missing returns trigger an automatic penalty scale. Article 1728 of the CGI provides that “Le défaut de production dans les délais prescrits d’une déclaration ou d’un acte comportant l’indication d’éléments à retenir pour l’assiette ou la liquidation de l’impôt entraîne l’application, sur le montant des droits mis à la charge du contribuable ou résultant de la déclaration ou de l’acte déposé tardivement, d’une majoration”, set at 10 percent where no formal notice was sent — with higher rates after a formal notice and in cases of undeclared activity — plus late-payment interest currently set at 0.2 percent per month. For a company with 100,000 euros of annual VAT due, a year of complete silence costs 10,000 euros of surcharge plus interest before any discussion of the principal. Beside the return itself, ancillary obligations carry their own fines: intra-Community trade declarations (état récapitulatif TVA for services, statistical statements for goods), the annual list of customers for certain exempt operations, and e-invoicing transmission reports. Each has its own per-omission fine, and they cumulate.
When the company discovers the problem itself — no VAT number requested, a year of invoices without VAT above the thresholds, reverse charges never declared — the strategy is spontaneous regularisation, and it must be executed in the right order. First, stop the outflow: request the VAT number, fix the invoicing template, set the correct rates and start declaring the current period. Second, quantify the past: reconstruct period by period the VAT that should have been collected and the input VAT that can still be deducted, because the reassessment bears on the net amount and every deductible invoice recovered reduces the bill. Third, file the late returns or corrective returns with payment, before any audit notice arrives: spontaneous payment does not erase the 10 percent surcharge, but it stops interest from running and it preserves the argument of good faith against higher penalties and against the criminal qualification of tax fraud, which requires intent. Fourth, document everything — the monthly threshold monitoring table, the instruction given to the billing team, the accountant’s emails — because the difference between an honest timing error and concealed activity is proven with paper. Companies that regularise before receiving the audit notice (avis de vérification) routinely settle for the principal plus the basic surcharge; companies caught with no file and no explanation pay the higher rates and lose the administration’s willingness to grant payment schedules (délais de paiement).
One relief is frequently overlooked by foreign suppliers: VAT paid to the Treasury on invoices that customers never pay can be recovered. Article 272 of the CGI provides that “La taxe sur la valeur ajoutée qui a été perçue à l’occasion de ventes ou de services est imputée ou remboursée dans les conditions prévues à l’article 271 lorsque ces ventes ou services sont par la suite résiliés ou annulés ou lorsque les créances correspondantes sont devenues définitivement irrecouvrables.” The refund requires proof: a prior correction of the invoice (credit note — avoir — sent to the customer), and evidence that the debt is definitively irrecoverable — typically a court-ordered liquidation judgment (jugement de liquidation judiciaire) or a certificate of irrecoverability from the liquidator — or, earlier, the opening of the customer’s judicial liquidation, which already allows the recovery. The recent case law confirms how seriously the courts police this mechanism: in the same 22 October 2025 decision, the Cour de cassation ruled that “lorsque les créances correspondantes sont devenues définitivement irrécouvrables, il n’est pas fondé, sauf stipulation contraire du contrat d’affacturage, à réclamer au créancier la taxe dont celui-ci a obtenu le remboursement par application de l’article 272-1 du code général des impôts”. For a foreign company selling to French customers, the operational lesson is to send the credit note and file the refund claim as soon as the customer’s liquidation is pronounced, rather than waiting years: the claim follows the same strict deduction deadlines recalled above, and a refund claimed out of time is lost even when the underlying commercial loss is genuine. Our companion guide on recovering unpaid French invoices from abroad details the enforcement route — formal demand, European order for payment and the French injonction de payer — that produces the judgments on which the VAT recovery then relies: how a foreign company recovers an unpaid French invoice.
Conclusion
VAT is the tax where a foreign-run French company has the least room for improvisation and the most to gain from method. Determine the VAT position before the first invoice — taxable from day one or sheltered by the franchise en base — and calendar the exact date the 2026 thresholds would flip the answer. Obtain the FR VAT number within fifteen days of becoming liable, invoice with the full mandatory content from the correct date, and claim input VAT month by month so nothing expires under the deduction deadlines the Cour de cassation enforces strictly. File the CA3 return every month or every authorised quarter from abroad through a funded delegation, and if the past is already irregular, regularise spontaneously in the right order: stop the current leak, quantify the net arrears, file and pay before the audit notice, and document good faith. The broader setting — bank account, Kbis, hiring and the annual legal calendar — is covered in our hub guide for foreign founders (setting up a company in France as a foreign founder) and in our annual compliance calendar (the French company’s legal calendar from abroad). A company that treats VAT as a monthly routine pays only the tax it truly owes; a company that discovers VAT through a reassessment notice pays that tax plus surcharges, interest and the far higher cost of rebuilding its invoicing history under pressure.
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