You run a company in France and you live in London, New York, Dubai or Singapore. Your French customers ask for invoices with VAT, your accountant mentions returns called CA3, and you wonder whether you even need to charge this tax in your first year. This guide answers the whole chain in one place: when your French company owes French value added tax, when the small-business exemption protects you, how to register and get your European VAT number from abroad, what a compliant French invoice must contain, which return to file and when, when you can claim a refund, and how to correct mistakes and defend yourself without boarding a plane. It is written for a business reader, every French acronym is explained, and every decisive legal statement is tied to the exact article of the French Tax Code (Code général des impôts, abbreviated CGI) or to an official page you can open yourself.
Two warnings before we start. First, VAT (taxe sur la valeur ajoutée, abbreviated TVA) is administered by the French tax authority, the DGFIP (Direction générale des finances publiques), through your local business tax office, the SIE (Service des impôts des entreprises). It has nothing to do with URSSAF, the agency that collects social contributions on salaries. Founders often mix the two, and mixing them means paying the wrong body or missing the right deadline. Second, VAT is a flow tax: you collect it from your customers on behalf of the State, you deduct the VAT you paid on your own purchases, and you send the difference to the Treasury. The money that passes through your hands is not your turnover, and treating collected VAT as cash is the single most common cause of cash-flow crises for young French companies. If you are still choosing the vehicle itself, read our step-by-step guide to setting up a company in France as a foreign founder first; this article takes over exactly where that guide stops and follows the VAT thread to the end.
I. Get your French company into the VAT system and invoice correctly from abroad
Everything starts with two questions that many founders ask in the wrong order. They ask how to get a VAT number, when they should first ask whether their activity is even within the scope of the tax and whether the small-business exemption covers their first years. This first part answers both, in that order, so that you never register for a regime you do not need and never miss a registration you do need.
A. When does your French company owe French VAT and when does the small-business exemption protect you?
The scope of French VAT is defined by Article 256 of the CGI, which states: “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: sales of goods and supplies of services made for consideration by a taxable person acting as such are subject to VAT. Three conditions therefore decide everything: you carry on an economic activity independently, you act as a taxable person rather than as a private individual, and you supply something for payment. Article 256 A of the CGI completes the picture: “Sont assujetties à la taxe sur la valeur ajoutée les personnes qui effectuent de manière indépendante une des activités économiques mentionnées au cinquième alinéa, quels que soient le statut juridique de ces personnes, leur situation au regard des autres impôts et la forme ou la nature de leur intervention.” Your legal form does not matter: a SAS (société par actions simplifiée, the flexible joint-stock company most foreign founders choose), a SARL (société à responsabilité limitée, the limited liability company with stricter statutory rules), a branch (succursale) or a subsidiary all fall within the same test. What matters is independent economic activity for consideration on French territory.
Place matters as much as activity. For services, Article 259 of the CGI provides that “Le lieu des prestations de services est situé en France” when, in business-to-business relations, the customer is a taxable person established in France, taking into account the seat of its economic activity, its fixed establishment (établissement stable) or, failing that, its domicile or habitual residence. The practical consequence for a foreign founder is the one most often misunderstood. When your French company bills a French business customer, French VAT applies. When your French company bills a business customer established in another European Union country that gives you its own national VAT number, the sale is generally treated as an intra-EU supply or a reverse-charged service and you do not charge French VAT; the customer accounts for the tax in its own country. When you bill a private individual in another EU country, the rules depend on what you sell, with distance sales of goods and electronic services following specific regimes, including the One-Stop Shop (OSS), the European portal that lets you declare VAT due in several countries through a single return. And when you bill outside the European Union, exports of goods and most services to non-EU customers are generally exempt with a right to deduct, which means you charge no VAT but keep your right to recover input VAT. Map every revenue line to one of these four boxes before your first invoice, because the wrong box means either VAT missing on your invoices or VAT wrongly charged to customers who will refuse to pay it.
Even when your activity is within scope, you may owe nothing in your first years thanks to the franchise en base de TVA, the small-business exemption that relieves qualifying companies from charging and paying VAT. Article 293 B of the CGI states: “Pour leurs livraisons de biens et leurs prestations de services, les assujettis établis en France bénéficient d’une franchise qui les dispense du paiement de la taxe sur la valeur ajoutée lorsqu’ils n’ont pas réalisé en France un chiffre d’affaires, évalué dans les conditions prévues à l’article 293 D, excédant les plafonds suivants”. The official service-public.fr page on the exemption, consulted for this article, gives the thresholds applicable in France: for sales of goods, catering and accommodation, turnover (chiffre d’affaires, abbreviated CA) of the previous calendar year of 85,000 euros or less keeps you exempt, with a tolerance threshold of 93,500 euros for the current year beyond which you become liable from the first day of the overrun; for other services, the thresholds are 37,500 euros for the previous year and 41,250 euros for the current year, with the same mechanics. Specific categories such as regulated activities, legal professions, authors and performers follow their own thresholds, published on the same official page, so check your exact category rather than assuming the general figures apply to you.
The exemption is a trade, not a gift, and the terms of the trade are stated on the same official page: under the exemption there is no VAT return to file, but in return you cannot deduct the VAT on the purchases your business makes for its activity. A founder who buys 40,000 euros of equipment loaded with 20 percent VAT and sells consulting below the threshold loses 8,000 euros of recoverable VAT by staying exempt. Conversely, a founder with almost no purchases and small margins gains simplicity at zero cost. Do the arithmetic before you choose, and remember that you can opt out of the exemption voluntarily by notifying your SIE if charging VAT and recovering input VAT serves you better, for example because your customers are businesses that deduct VAT themselves while your suppliers bill you heavy VAT. The exemption also has a strict invoicing consequence: as long as you are exempt, your invoices must carry the statement that VAT is not applicable under Article 293 B of the CGI, and you must never show a VAT amount or a VAT rate on them. Showing VAT while exempt exposes you to the tax being claimed from you while your customer cannot deduct it, the worst of both worlds.
Two boundary cases deserve a paragraph each because foreign founders meet them constantly. First, the holding company that only receives dividends: dividends are outside the scope of VAT, so a pure holding with no services billed to its subsidiaries is not a taxable person for VAT purposes on that income; the moment it bills management fees, rents premises or supplies services for consideration, that part of its activity enters the scope and the tests above apply to it. Second, the founder who sells from abroad through the French company while still resident elsewhere: the company’s establishment in France, registered with the RCS (Registre du commerce et des sociétés, the company register kept by the greffe, the registry office of the commercial court), makes it a French taxable person for what it does in France regardless of where its shareholder sleeps. Residence of the owner and tax establishment of the company are two different questions, and only the second decides VAT.
B. How do you register, get your EU VAT number and issue compliant invoices without living in France?
Registration in France is no longer a separate VAT pilgrimage: since the single counter (Guichet unique) run through the INPI (Institut national de la propriété industrielle, the national industrial property office that operates the business formalities portal) became the mandatory route, you register the creation of the company once, and the information flows to INSEE (Institut national de la statistique et des études économiques, the statistics institute that issues SIREN and SIRET numbers), to the RCS and to the tax authority. The SIREN is the nine-digit identity number of the company itself; the SIRET is the fourteen-digit number of each establishment (SIREN plus five digits for the premises). The Kbis extract (extrait Kbis), the official identity card of the company issued by the greffe, proves registration and is what banks, suppliers and many customers ask for before any serious relationship. The BODACC (Bulletin officiel des annonces civiles et commerciales), the official gazette of business announcements, publishes the creation so third parties can rely on it. Article 286 of the CGI still states the underlying tax obligation in these terms: “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 newly created company this declaration of existence is triggered through the single-counter filing, but the fifteen-day logic shows how fast the administration expects you to appear on its radar, and any later change, cessation or new establishment follows the same declaration discipline.
The intra-EU VAT number, the one your foreign suppliers and customers will ask for, is built mechanically from the SIREN: the letters FR, a two-digit computer key, then the nine digits of the SIREN. It is issued by the SIE once the company is active for VAT purposes, and it must be validated before you use it in intra-EU trade. Validate your own number and your customers’ numbers through the European Commission’s VIES system before zero-rating the first intra-EU invoice, keep a dated screenshot or printout of each check, and re-check periodically for regular customers. A wrong or unchecked customer number is the classic entry point of VAT reassessments on intra-EU supplies, because without a valid customer number recorded and declared, the administration treats the sale as domestic and claims the missing French VAT from you. If your company also needs to trade in other EU countries under the distance-sales or OSS rules, registration for the OSS is done through the French portal and the corresponding declarations are filed electronically; do not confuse this European simplification with your French domestic returns, which continue separately.
Article 283 of the CGI designates who actually pays: “La taxe sur la valeur ajoutée doit être acquittée par les personnes qui réalisent les opérations imposables, sous réserve des cas visés aux articles 275 à 277 A où le versement de la taxe peut être suspendu.” The same article then organises the main exception you will meet as a foreign-run company: when a service covered by Article 259 A of the CGI is supplied by a business not established in France to a French taxable customer with a VAT number, the tax is accounted for by the customer under reverse charge (autoliquidation), and the same logic applies symmetrically when your French company buys such services from foreign suppliers. Concretely, if your French SAS pays a British agency or an American software vendor for services used in France, you generally self-assess French VAT on the purchase in your own return and deduct it on the same return if your activity gives a right to deduct, which is neutral in cash terms but mandatory in reporting terms. Forgetting the reverse-charge lines is one of the most frequent findings in audits of internationally run small companies, precisely because no money moves and founders assume nothing must be declared.
Invoicing is where distance hurts most, because a French invoice is a formal document and an incomplete invoice costs your customer its deduction while exposing you to fines. Article 289 of the CGI opens with the principle: “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”. The official service-public.fr invoicing pages list the mandatory contents (mentions obligatoires): date of issue and sequential invoice number, identity and address of both parties with the customer’s intra-EU VAT number for intra-EU business sales, SIREN of the supplier, date of the sale or service where different from the issue date, precise description and quantity of each line, unit price excluding tax, applicable VAT rate per line, total VAT per rate, total excluding and including tax, payment deadline and penalties for late payment, and, where relevant, the exemption wording, the reverse-charge wording or the self-billing (autofacturation) wording. Rates to apply are those in force on the date of the chargeable event: the standard rate is 20 percent, with reduced rates for defined categories of goods and services described on the impots.gouv.fr VAT portal for professionals, so verify the rate line by line rather than applying 20 percent blindly to everything. Keep every invoice, sent and received, for the full retention period in a form the administration can audit, and organise from day one a monthly folder per supplier and per customer: the founder who reconstructs two years of invoices the week before an audit has already lost half the battle.
Electronic invoicing (facturation électronique) deserves a clear warning because it changes the plumbing while this article is being read. France is moving to mandatory structured e-invoicing between taxable businesses with transmission through registered platforms, on a timetable the administration has already adjusted once; the service-public.fr news pages track the current schedule. Whatever the exact date applicable to your company size, the direction is fixed: prepare now by choosing invoicing software that produces compliant structured invoices, keep PDFs as well as structured data, and never treat an email with a PDF as sufficient for the future without checking that your tool meets the transmission requirements. A final practical point for founders abroad: give your French accountant (expert-comptable) a mandate (mandat) for the professional tax portal (impots.gouv.fr business account) and for the single-counter portal, with its own credentials and traceable access, so that registration steps, option letters and returns can be filed while you sleep in another time zone. Our companion guide on the annual legal calendar of a French company run from abroad shows how VAT deadlines fit inside the full year of corporate, tax and payroll obligations.
II. Run VAT month after month and fix mistakes without flying to France
A company that is registered and invoices correctly still fails if it files the wrong return, pays late or ignores a reassessment letter because it was sent to the registered office (siège social) while the founder lives abroad. This second part covers the recurring machinery, refunds, audits and remedies, always with the same question in mind: what do you do from another country, through a screen and a representative, within the deadlines that keep running whether you read the letter or not?
A. Which return do you file, when do you pay and when can you claim a refund?
Article 287 of the CGI states the filing duty: “Tout redevable de la taxe sur la valeur ajoutée identifié conformément aux dispositions combinées des articles 286 ter et 286 ter A est tenu de remettre au service des impôts dont il dépend et dans le délai fixé par arrêté une déclaration conforme au modèle prescrit par l’administration.” The official service-public.fr page on declaring and paying VAT, consulted for this article, describes the three practical regimes. Under the standard real regime (régime réel normal), you file the CA3 return each month, declaring total transactions, VAT collected per rate, deductible VAT, reverse-charge lines and the resulting balance, and you pay the balance electronically through the impots.gouv.fr business account when the return is filed. Under the simplified real regime (régime réel simplifié), available below defined turnover thresholds, you pay two half-yearly instalments (acomptes semestriels) and file a single annual summary return (form 3517, the CA12) by the second working day after 1 May, regularising the year. Under the exemption (franchise en base), you file nothing as long as you stay within the thresholds described in the first part. The classification depends on turnover and on options you may have filed, and crossing a threshold moves you from one regime to another from 1 January of the following year or immediately in defined cases, so have your accountant confirm your regime every January rather than discovering the change through a late-filing notice.
Deduction is the engine of the whole system. Article 271 of the CGI states: “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.” You deduct VAT on purchases of goods and services used for your taxed transactions, including VAT on startup investments, rents, subcontractors, equipment and, under defined conditions, vehicles and fuel, each with its own exclusion or limitation rules. Three conditions are cumulative and each generates its own litigation: the expense must be used for transactions giving a right to deduct, which excludes activities that are exempt without such a right; you must hold a compliant invoice in the company’s name, which brings us back to the invoicing discipline of the first part; and the VAT must have become chargeable, with timing rules that differ between goods and services. When your activity is mixed, for example a company that both sells taxed consulting and carries on an exempt financial or medical activity, only the portion linked to taxed transactions opens the right to deduct, and the allocation method must be documented. When you are partly outside scope, for example dividends alongside services, the same allocation logic applies to overheads.
When deductible VAT exceeds collected VAT, the balance is a VAT credit (crédit de TVA) that you carry forward or claim as a refund (remboursement de crédit de TVA) on the return, using the dedicated refund form. Exporters, companies in their investment phase and companies with heavy reverse-charge purchases are structurally in credit and should claim regularly rather than letting credits sleep. The administration checks refund claims before paying, sometimes with a request for invoices and contracts, and first-time claims by young companies with a foreign-based director attract particular attention, which is normal and not an accusation: answer with complete files, bank statements showing payment, contracts and proof of the reality of the transactions, and the refund follows. Keep the company’s bank account (compte bancaire professionnel) strictly separated from personal accounts, because refunds are paid to the company’s account and mixed flows slow down every verification. If the SIE asks for explanations, the deadline in the letter runs from its sending, so organise mail forwarding from the registered office and electronic notification so that a letter sitting unread in Paris does not become a missed deadline in another continent.
Intra-EU and international reporting runs alongside the domestic return and founders abroad forget it most often. The European sales statement (état récapitulatif, formerly DEB for goods, now handled through specific declarations) and the European service declaration (DES, déclaration européenne de services) report your intra-EU supplies and services to business customers, and Article 1788 A of the CGI attaches a direct price to forgetting them: “Entraîne l’application d’une amende de 750 € : a. Le défaut de production dans les délais des états prévus à l’article 289 B.” The same article raises the fine to 1,500 euros if the statement is still missing thirty days after a formal notice, and adds 15 euros per omission or inaccuracy with defined caps. Calendar discipline from abroad therefore means five parallel tracks: domestic returns and payments, instalments if under the simplified regime, intra-EU statements, OSS returns if you use that channel, and the annual accounts and corporate tax filings covered in our legal-calendar guide. Put all five in one shared calendar between you and your accountant, with alerts set one week before each deadline in your own time zone, and confirm filing with the electronic receipt (accusé de réception) that the portal issues for every return.
B. What happens when VAT goes wrong: audits, penalties and how to correct and challenge from abroad?
VAT errors surface in three ways: you spot them yourself when reviewing the accounts, the SIE writes to ask for explanations (demande d’éclaircissements) or supporting documents, or a full audit (vérification de comptabilité or contrôle fiscal) opens and the auditor reconstructs VAT from your invoices, bank statements and contracts. Self-correction is always cheaper than waiting: file a corrective return for the period concerned, pay the missing VAT with the return, and regularise the related statements in the same movement. Spontaneous correction before any audit notice reduces the penalty layer even though late interest for the time the Treasury was deprived of the funds generally remains. The most frequent self-found errors in foreign-run companies are missing reverse-charge lines on foreign supplier invoices, VAT wrongly recovered on exempt activities, invoices without the company’s full name, intra-EU supplies declared without a validated customer number, and exemption-threshold overruns noticed months after the day they occurred. Each of these has a defined correction path through the next return or a specific claim, and your accountant knows which box of the CA3 receives each correction; what the accountant cannot do is invent the underlying documents, so the monthly folder discipline from the first part is what makes correction possible at all.
When the administration moves first, procedure protects you but only if you use it. A request for explanations sets a deadline, usually thirty days, and a reasoned answer with documents often closes the file without reassessment. An audit follows a formal notice with defined guarantees: the auditor examines the accounts, holds a closing discussion (débat oral et contradictoire) before leaving, and any reassessment (redressement) must be notified in a reasoned proposal (proposition de rectification) that states the legal basis, the facts and the amounts per tax and per period, with the means of challenge and the deadlines. From abroad, you act through your accountant and, where the amounts or the principle justify it, through counsel, with powers of attorney (pouvoirs) that allow them to receive documents, attend meetings and file appeals in your name. Never ignore a registered letter (lettre recommandée avec accusé de réception) sent to the registered office: tax deadlines run on notification, and the company domicile you declared is deemed to reach you. Appoint a person in France who forwards every administrative letter the day it arrives, and mirror that with electronic access so nothing depends on a single mailbox.
Penalties follow a ladder that the reassessment notice must spell out. Late filing and late payment trigger surcharges and late interest; inaccurate or incomplete returns trigger penalties scaled to good or bad faith; fictitious invoices or organised fraud trigger the heaviest penalties and criminal referral. The fixed fines of Article 1788 A of the CGI quoted above apply to the European statements regardless of the amounts at stake, which means a company with ten missing intra-EU lines can owe thousands of euros of fines on transactions where no VAT was even lost. Interest for late payment compensates the Treasury for time, while surcharges punish the breach, and the two stack. Reductions exist for prompt payment after reassessment and for defined spontaneous regularisation procedures, so read the penalty pages of every notice before deciding whether to pay first and argue later or to challenge the whole reassessment. Paying the principal to stop interest while formally contesting the penalties is a standard tactic that counsel uses routinely, and it requires no presence in France, only a transfer and a letter filed on time.
Challenge routes are the same whether you live in Paris or abroad, and they all start with the general claim (réclamation) to the SIE that issued the assessment, filed within the statutory deadline with the tax notice, the grounds in law and fact, and the amount contested, including a request to suspend enforced collection where available. If the claim is rejected expressly or by silence after six months, you appeal to the administrative court (tribunal administratif) of the place of taxation, which for a French company is the court of the registered office, with representation possible without your personal attendance. European law arguments carry real weight in VAT disputes: because French VAT implements the European VAT Directive, a national interpretation that contradicts the directive or the case law of the Court of Justice of the European Union can be set aside, and French courts apply that primacy regularly in VAT cases on place of supply, exemption and deduction. Keep every procedural receipt, because missing a claim deadline by one day ends the dispute whatever the merits, while a complete file with validated VAT numbers, compliant invoices, contracts, proof of payment and consistent returns wins cases that looked difficult at the notification stage. The companies that survive VAT audits from abroad are not the ones with the cleverest structures; they are the ones whose monthly folders let counsel prove, line by line, that the VAT declared matches the economy actually performed.
Conclusion
VAT for a French company run from abroad reduces to six habits. Confirm that each revenue line is within scope under Articles 256 and 256 A of the CGI and located in France under Article 259 before you charge or zero-rate anything. Measure your turnover against the exemption thresholds of Article 293 B every quarter, and the day you cross them, charge VAT from the first day of the overrun and file accordingly. Register once through the single counter, obtain the FR VAT number built on your SIREN, validate every EU customer number in VIES, and issue invoices that satisfy Article 289 with all mandatory contents. File the return your regime requires under Article 287, monthly CA3 or annual CA12 with instalments, deduct only with compliant invoices under Article 271, self-assess reverse charge under Article 283 on foreign services, and never forget the European statements fined by Article 1788 A. Correct spontaneously when you find an error, answer every SIE letter within its deadline through your accountant and counsel, and challenge reassessments through the claim and the administrative court when the law is on your side. Run this machinery with a shared calendar, monthly folders and a reachable registered office, and VAT becomes what it should be for a foreign founder: a neutral flow through your company, not a risk to it. Review your position against your annual filings with our annual legal calendar guide, and confirm each January that your regime, your thresholds and your mandates are still the right ones for the year ahead.