You live in London, New York, Dubai or Singapore, and your French company has just started billing its first clients. The money comes in, the accountant mentions TVA — taxe sur la valeur ajoutée, the French value added tax (VAT) — and a set of very practical questions follows: does your company need a French VAT number, when must it start charging 20% on its invoices, what happens if turnover stays small, how do you get back the VAT paid to French suppliers, and what do you do if the French tax administration (Direction générale des finances publiques, the public finances directorate, usually called the administration fiscale) sends a reassessment while you are 6,000 kilometres away? This article answers all of these questions in one place, for the foreign founder or foreign group that runs a French company from abroad.

French VAT looks intimidating because it combines registration duties, invoicing rules, periodic returns, payment calendars and audit procedures that all carry their own deadlines. Miss one deadline and the penalties apply automatically. But the system is also logical: each step follows from a small number of statutory provisions in the Code général des impôts (CGI, the French Tax Code), and the courts apply them strictly — including against taxpayers who discover too late that a deduction or a refund request was time-barred. Two recent rulings of the Cour de cassation (the French supreme court for civil, commercial and criminal matters), both given in the same long-running dispute about a VAT credit claimed years after the invoices were issued, show exactly how unforgiving the limitation periods are. They are analysed below, with the exact words of the Court.

Every French acronym is explained on first use. The Kbis is the official extract proving that a French company exists and is registered. The SIREN is the nine-digit identification number issued to every business by INSEE (the national statistics institute) through the Guichet unique (the single online business registration portal operated by the INPI, the national intellectual property institute, which also handles company registrations). The SIRET adds five digits identifying each establishment. The RCS (registre du commerce et des sociétés, the trade and companies register kept by the greffe, the registry of the commercial court) records the company. The SIE (service des impôts des entreprises, the corporate tax office) is your company’s local tax office. The BOFiP (Bulletin officiel des finances publiques) is the tax administration’s official published doctrine. The CA3 is the standard monthly or quarterly VAT return form, and the CA12 the annual return under the simplified scheme. With these keys in hand, the rest of this article reads without friction.

I. Does your French company need French VAT, and how do you register from abroad?

A. Which transactions are caught, where they are taxed, and who pays when the supplier is foreign

The starting point 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: supplies of goods and services made for consideration by a taxable person acting as such are subject to VAT. The full text is published on Légifrance, article 256 of the CGI. If your French company sells goods or provides services for a price, it is in principle inside the VAT system from day one — the question is not whether VAT exists, but whether the company must charge it, file returns for it, or can remain outside the charge under a relief.

The second question is where a service is taxed, because a foreign founder typically works across borders: a French company advising a German client, a holding company billing management fees to subsidiaries, a software company selling subscriptions worldwide. Article 259 of the CGI states the business-to-business rule in one sentence: “Le lieu des prestations de services est situé en France” when the customer is a taxable person established in France, and symmetrically outside France when the business customer is established abroad. The full provision is on Légifrance, article 259 of the CGI. Concretely, services supplied by your French company to a business customer established in another country are generally not subject to French VAT; they are taxed, if at all, in the customer’s country. Services supplied to French business customers carry French VAT. Services to private individuals (non assujettis, non-taxable persons) follow different location rules and are very often taxed in France when the supplier is established there.

The mirror situation matters just as much: your French company buys services from a supplier established outside France — a British consultancy, an American software vendor, a Moroccan service provider. Article 283 of the CGI organises the reverse charge (autoliquidation, the mechanism by which the customer, not the supplier, accounts for the VAT): where a supply covered by article 259 A is made by a business not established in France, the customer acting as a taxable person and holding a French VAT identification number accounts for the tax itself. The text is on Légifrance, article 283 of the CGI. For services covered by the general business-to-business rule, the same article adds that “la taxe doit être acquittée par le preneur” when the supplier is not established in France. In practice, your French company self-assesses French VAT on these foreign purchases on its own return — VAT it can usually deduct at the same time, so the cash effect is neutral, but the declaration is mandatory and its omission is one of the most frequent triggers of reassessment.

Choosing the right vehicle at the outset shapes this entire analysis, as explained in the companion guide on how to choose between an SAS, a SARL, a branch and a subsidiary: a French subsidiary (filiale) is a separate taxable person with its own VAT number, while a branch (succursale) of a foreign company is registered in France and also receives a French VAT identification, but its cross-border flows with the head office need careful mapping under the place-of-supply and reverse-charge rules above.

B. Registering the company, getting the VAT number, and the small-business relief that excuses charging VAT

Registration itself runs through two channels. Commercial existence comes from the Guichet unique: once the file is accepted, INSEE issues the SIREN, the greffe records the company in the RCS, and the Kbis extract proves it. Tax existence follows: article 286 of the CGI requires that “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.” The provision is published on Légifrance, article 286 of the CGI. In practice your accountant files this existence declaration (déclaration d’existence) with the SIE, and the company receives its intra-Community VAT number, built as FR followed by a two-digit key and the nine-digit SIREN. From abroad, everything passes through your French accountant or tax representative with a mandate (mandat), because filings happen online in the professional area (espace professionnel) of impots.gouv.fr. Keep the mandate letter and a proof of each filing: if a penalty notice arrives two years later, the only defence is documentary.

Small turnovers can escape the whole charging machinery through the franchise en base (the small-business VAT exemption, literally “exemption on the base”): below statutory turnover thresholds, the company bills without VAT, files no VAT returns, and states the legal reference of the relief on its invoices. The thresholds currently applicable, recalled by the Ministry of the Economy on economie.gouv.fr, eligibility for the VAT franchise, are 85,000 euros with a tolerance threshold of 93,500 euros for sales of goods, sales of food for immediate consumption and accommodation services, and 37,500 euros with a tolerance threshold of 41,250 euros for other services. The detailed conditions are explained in English on Service-Public Entreprendre, franchise en base de TVA. The government’s plan to create a single threshold in 2025 was suspended and the existing thresholds were maintained, so founders should work with the figures above and check them each year in the Finance Act (loi de finances). Note the trap hidden inside the relief: a company under the franchise cannot deduct the VAT it pays to its suppliers, and certain transactions are excluded from the relief altogether — article 293 C of the CGI lists operations to which “La franchise mentionnée aux articles 293 B et 293 B bis n’est pas applicable”, including transactions covered by article 257 of the CGI. The provision is on Légifrance, article 293 C of the CGI. A property-dealing company, for example, cannot shelter behind the franchise. Exceeding the threshold has immediate consequences: the company becomes liable from the first day of the month of the excess (and retroactively from 1 January in some configurations described by the BOFiP), must start charging VAT at once, and must regularise. Founders who hover near the threshold should therefore monitor turnover monthly, not discover the excess at year-end closing.

II. How do you charge, deduct, recover and defend French VAT from abroad?

A. Charging the right rate, issuing exact invoices, deducting input VAT, and filing the returns on time

The standard rate is the simplest figure in French VAT and the one foreign founders get right most often: article 278 of the CGI states that “Le taux normal de la taxe sur la valeur ajoutée est fixé à 20 %.” The text is on Légifrance, article 278 of the CGI. Reduced rates exist for defined categories of goods and services and the applicable rate must be checked line by line, because applying 20% where a reduced rate was due overcharges the customer, while applying a reduced rate where 20% was due leaves the company liable for the difference plus penalties. Electronic invoicing (facturation électronique) is becoming mandatory between French taxable businesses on a phased calendar, which is one more reason to run billing through compliant software rather than manual documents from abroad.

Every invoice your French company issues must satisfy article 289 of the CGI, which opens with a strict duty: “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 provision is published on Légifrance, article 289 of the CGI. The invoice must show the VAT number of both parties for intra-Community and reverse-charge transactions, the exact rate and amount of VAT per line, and, where the customer self-assesses the tax, the words autoliquidation. A portfolio company that forgets the VAT number or the reverse-charge wording does not lose the underlying economics, but it manufactures disputes with customers and gives an auditor an easy first finding. Under the franchise en base, the invoice must instead carry the statement that VAT is not applicable with the statutory reference — charging even one euro of VAT by mistake while claiming the relief creates a debt to the Treasury for that euro.

Deduction (déduction) is where French VAT repays compliant businesses: article 271 of the CGI states that “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.” The text is on Légifrance, article 271 of the CGI. Three cumulative conditions follow from the statute and the case law: the expense must relate to taxed transactions, it must be supported by a compliant invoice issued in accordance with article 289, and the deduction must be claimed on time. The timing condition is the one that destroys the most money, and the Cour de cassation applies it without mercy. In a ruling of 1 October 2025, pourvoi No. 24-14.456 (ECLI:FR:CCASS:2025:CO00495), the Commercial Chamber held, on the combined authority of articles 271 of the CGI and 208 and 242-0 A to 242-0 G of Annex II to the CGI, that the customer of a supplier who opted for VAT payment on debits “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.” The ruling is published on courdecassation.fr, Commercial Chamber, 1 October 2025, No. 24-14.456. A company that receives invoices and waits — because the founder lives abroad, because the file sits with a former accountant, because the business was in judicial liquidation — loses the deduction permanently once that 31 December passes. The Court quashed the Paris court’s decision precisely because the lower court had treated late deduction as still available; it was not.

Filing follows two tracks under article 287 of the CGI, published on Légifrance, article 287 of the CGI. Under the standard real scheme (régime réel normal), the company files the CA3 return monthly and pays the VAT due each month; the statute adds that “Lorsque la taxe exigible annuellement est inférieure à 4 000 €, ils sont admis à déposer leurs déclarations par trimestre civil.” Under the simplified scheme (régime simplifié d’imposition), the company files one annual CA12 return with “Des acomptes semestriels sont versés en juillet et en décembre”, equal respectively to 55% and 40% of the previous year’s tax before deduction of VAT on fixed assets. From abroad, the practical rule is simple: give your accountant a monthly document flow (sales, purchases, bank statements) even under the simplified scheme, because reconstructing eleven months of records in December is how errors — and then penalties — are born. Keep every purchase invoice, every return receipt (accusé de réception) and every payment proof for the full retention period, since the auditor will ask for them and the burden of proving deduction lies on the company.

B. Getting the VAT credit refunded, surviving penalties, and challenging a reassessment from abroad

When deductible VAT exceeds collected VAT — typical for a young company investing heavily, an exporter billing without French VAT, or a business with large foreign reverse-charge purchases — a VAT credit (crédit de TVA) arises. The credit is first carried forward onto the next returns, and the company may request a refund of the remaining balance under the conditions set by the regulations. The refund request is itself time-limited, and the same saga that produced the October 2025 ruling illustrates the danger one stage earlier: in the same dispute, the Commercial Chamber had already ruled on 23 November 2022, pourvoi No. 21-13.613 (ECLI:FR:CCASS:2022:CO00681), published on courdecassation.fr, Commercial Chamber, 23 November 2022, No. 21-13.613, quashing a Paris ruling that had mishandled the limitation analysis for a VAT-credit refund claimed in January 2016 for expenses spread over 2006 to 2012. Two quashings in the same file, three years apart, both turning on time limits: the lesson for a founder living abroad is that VAT credits must be monitored return by return, and refund claims must be filed as soon as the right is born, never warehoused for a calmer year.

Penalties apply mechanically. Article 1728 of the CGI punishes late filing with “10 % en l’absence de mise en demeure ou en cas de dépôt de la déclaration ou de l’acte dans les trente jours suivant la réception d’une mise en demeure d’avoir à le produire dans ce délai”, rising to 40% after that thirty-day period and 80% where a hidden activity (activité occulte) is found. The provision is on Légifrance, article 1728 of the CGI. Late payment draws further interest (intérêt de retard) on top. A founder who discovers the problem from abroad should therefore regularise spontaneously before any formal notice (mise en demeure) arrives: the difference between 10% and 40% is often decided by a single letter. Practical protections cost little: a calendar with the CA3, instalment and annual return dates, a monthly filing discipline with the accountant, a French address for service that is actually monitored (the company’s registered office, siège social, or the accountant’s office under mandate), and immediate forwarding of every brown envelope from the tax office.

If a reassessment (redressement) or an audit proposal arrives, the procedure is written and can be handled from abroad through a representative. The audit ends with a proposal of rectification (proposition de rectification) to which the company replies within thirty days, extendable on request; disagreement goes to the departmental review (recours hiérarchique) and, for questions of fact, to the departmental commission (commission départementale des impôts); the assessment notice (avis de mise en recouvrement) can then be challenged first in a compulsory administrative claim (réclamation contentieuse) and then before the administrative court (tribunal administratif). Paris and Île-de-France founders note: the competent forum follows the company’s SIE and registered office, so a Paris-registered company answers to Paris tax offices and the Montreuil administrative court for most of the inner suburbs’ overflow — keep that geography in the file from day one, because a claim sent to the wrong office still lets the clock run. Throughout, the winning file is the boring one: compliant invoices, complete returns, dated mandates, and proof that each deduction was declared within the month of receipt and each refund claimed before expiry. The October 2025 ruling is the authority to quote back to anyone tempted to wait: late paperwork does not create a second chance, it creates a final loss.

Conclusion

French VAT for a company run from abroad reduces to five disciplines: confirm where each flow is taxed and who accounts for the tax, register promptly and keep the VAT number on every document, stay under the franchise thresholds knowingly or leave the relief cleanly, deduct and claim refunds inside the statutory time limits, and answer the administration in writing within each deadline. The statutes give the framework — articles 256, 259, 271, 278, 283, 286, 287, 289 and 1728 of the CGI — and the Cour de cassation’s paired 2022 and 2025 rulings give the warning: French courts enforce VAT time limits exactly as written, even when the delay came from distance, reorganisation or liquidation. A foreign founder who builds a monthly routine with a French accountant, watches turnover against the 37,500 and 85,000 euro markers, files every CA3 on time and claims every credit without delay will find French VAT unremarkable. The founder who lets the file sleep abroad will meet it again, with interest.