VAT identification obligation for foreign companies that hold
stock in France under suspensive tax regime (RFS)
The new VATI reverse charge regime put in place on January 1, 2022 has led to new reporting obligations for companies that are not established in France holding goods under the suspensive tax regime (RFS). This is particularly the case for companies using so-called “RFSE” or “RFSI” stocks.
How does a warehouse under a suspensive tax regime work?
When goods enter a warehouse under the Suspensive Tax Regime, the VAT due for the acquisition or importation of these goods placed in an RFS stock is "suspended". Up until december 31st, 2021 this "suspended" VAT was managed by the RFSE storage service provider through customs procedures. Foreign companies were not identified for VAT in France.
What changed on January 1st, 2022?
Since January 1st, 2022, it is now the French tax administration that is responsible for managing suspensive regimes and no longer Customs.
This transfer of duties is not without consequences as it implies an obligation for companies holding stocks under RFS to register for French VAT as well as the obligation to file monthly VAT returns. Companies established outside the European Union will most often be required to appoint a tax representative to meet these obligations.
Warehouse providers under RFS see their role profoundly changed with regard to the tax management of this stock since it is transferred to their foreign customers. It is now mandatory to inform the tax authorities when the goods placed under RFS leave via a CA3 declaration.
The payment of "late payment interest" when goods placed under RFS are dispatched on the national market is still valid but this payment can no longer be made via customs declarations.
To sum up, what must be declared?
It should be noted that the VAT pre-filling mechanism applicable since January 1st, 2022 does not work for withdrawals from the suspensive regime.It is the responsibility of the company that holds a stock under RFS to identify the transactions that need to be reported in its VAT declaration.A distinction must be made depending on whether the departure of the goods is to a country within the European Union, a third country or whether the goods are actually dispatched on the French market.
It is also up to the company that holds a stock under RFS to identify which operations carried out via its RFS stock will be subject of a Declaration of Exchange of Goods (DEB), even though these DEBs were probably previously managed by the company's storage service provider within the framework of the customs regime.
It is recommended that companies holding a stock under RFS contact a tax representative in order to take understand and tackle these new obligations.
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