Since the 1st of January 2022, the VAT reverse charge for imports is mandatory and automatic.
Background to the new regulation
The VAT reverse charge for imports makes it possible to simultaneously collect and deduct import VAT on your VAT return (monthly or quarterly CA3), without any advance payment.
Effective 1st January 2022:
- The management and collection of VAT applicable to imports and exits from suspensive regimes have been transferred from the Directorate-General for Customs and Indirect Taxes (DGDDI) to the Directorate-General for Public Finances (DGFiP).
- The VAT reverse charge for imports is mandatory and automatic for all companies registered for VAT in France. The declaration and payment of import VAT is made directly in your VAT return, instead of a customs declaration. No prior authorisation is required for this purpose.
- your online VAT return is pre-filled with the amount of import VAT to be collected on the items you have previously declared to the DGDDI; The pre-filling will be effective on the 14th of each month; the online service «ATVAI Data» allows the VAT payer to obtain details of the pre-filled amounts;
- by the 24th of each month, importers must file their periodic turnover declaration (CA3) with the amount of reverse charge VAT (on their imported goods of the previous month).
The VAT reverse charge mechanism represents a real advantage in terms of cash flow for companies. However, this new reform imposes on traders an additional administrative task that must be integrated into their internal processes: comparing the amount of the reverse charge VAT for their imports published on the Customs website with the VAT amount recorded in their customs and tax management system.
To do this, you need to collect a monthly report from all your customs representatives
that cross-references the following data:
- your commercial invoice (name of the supplier, invoice number, VAT identification number of the taxable person and customer, etc.);
- your customs declaration with the declared VAT base and the customs import value (CVI) duty paid (or «DDP» including the invoiced transaction value of the goods + costs of transport to the agreed final destination + insurance costs + customs duties). Be careful not to confuse the customs duty base calculated for the CIP customs valuation and the import VAT base calculated for the DDP customs valuation.
This information will then make it possible to:
- compare them with the amount of reverse charge VAT pre-filled by the DGDDI on the CA3; (Please note that this information is indicative and potentially partial for outputs from ‘procedures with economic impact);
- correct any differences by indicating the correct amount of self-settled VAT on the CA3.
Conditions to benefit from the reverse charge of import VAT when clearing goods through customs
- A French intra-community VAT number is mandatory from 1 January 2022 on each customs declaration. The absence of any identification will invalidate your customs declaration.
- Companies, irrespective of where they are based, that do not have a French intra- community number and wish to import goods into France, must contact the relevant tax authorities to obtain this number, which they will then have to enter on all their customs declarations.
- Registration on the customs website is necessary to recover import VAT amounts.
- For a Delta G or X Import, enter the document code 1008 followed by the French VAT number.
- For a Delta H7, enter the additional tax reference FR7 followed by the French intra-community VAT number.
The challenges of this new mechanism for companies
- The customs report (first version) does not include the names of customs agents. The cross-check must therefore be made with the customs declaration number.
- Customs agents are not legally required to report, although the administration recognises their central role in data collection.
- There is a tight deadline (10 days) for verification of VAT amounts with the administration and customs agents.
- A company is responsible for the accuracy of the VAT amounts it declares.
- Some risk situations will require special attention:
- Triangular operations of purchase (FOB for example) - resales (DDP) by a foreign operator giving rise to an import into France;
- imports for trade fairs by foreign operators;
- transfers of stock in France by foreign companies for resale to French e-commerce platforms or to European individuals.
MyTower’s Customs Broker Enablement module makes it possible to address many of the challenges associated with the widespread use of reverse charge accounting: controlling data and data quality, controlling the relationship with customs agents, and assisting with miscalculations.
Collection of reports from customs agents
- In a standard format, aligned with the European standard - EUCDM.
- Easy data integration with multiple options: Excel/CSV file upload, FTP server, EDI or API.
Monitoring the performance of customs representatives
- Quality control of the uploaded data
- ECS Audit Control
- Follow-up of information declared
Working with brokers
Integrated communication tools to facilitate exchanges and traceability.