VAT Liability and Delivery of Goods

VAT Liability and Delivery of Goods

Since January 1, 2023, VAT on deposits received by a seller of goods is due, meaning it must be remitted to the tax authorities upon receipt.

Before this date, VAT on the delivery of goods was generally due at the time the delivery took place (i.e., on the date of the VAT-triggering event – CGI Art. 269, 1-a and 2-a). Some exceptions to this rule existed and remain in place.

Since January 1, 2023, a new exception has been added:

VAT on advance payments made prior to the delivery of goods (the triggering event) is now due at the time of receipt, up to the amount actually received (Law 2021-1900 of December 30, 2021, Art. 30).

Consequently, this VAT becomes deductible for the purchaser at the time of payment of the advance (CGI Art. 271, I-2).

This new rule has been incorporated into an update of the administrative guidelines: BOI-TVA-BASE-20-10 No. 65 of December 21, 2022.

According to the administration’s commentary, for VAT to become due at the time of an advance payment, all relevant elements of the future delivery must already be known at the time of the deposit, particularly that the goods or services are precisely identified.

It is also specified that advance invoices, prepared in accordance with Article 289, I-1-c of the CGI, must include all mandatory information required under Article 242 nonies A of Annex II of the CGI.

Do you have questions regarding VAT declarations related to your goods deliveries or service provisions? Contact our firm for assistance!