Country specific updates: France

The French Draft Finance Act for 2022 has recently been released and is being discussed in the French Parliament.

Please find below various highlights on VAT matters:

As regards banking and finance transactions (e.g. management of a fund) for which a VAT election is possible: currently the election is made as a whole for all relevant services, but the reform would allow the service supplier to elect transaction by transaction. Under French guidance, this election should be effective even if the service is VAT exempt in the country of the service recipient (e.g. exemption in Luxembourg). We anticipate in particular that certain French management companies or investment advisers may elect for the management of Luxembourg funds, but keep the exemption for French funds. This reform aims at improving competitiveness of said French companies (according to legislative history of the Draft Finance Act for 2022).

In case of instalment payment related to a supply of good, VAT would become applicable at the time of the payment.

Additional requirements to be a fiscal representative:

The legal entity that acts as fiscal representative and its officers must not have committed certain serious offences (tax “morality”)It must have an administrative organisation, plus human and equipment resources sufficient for its tasks of representationIt must have sufficient financial solvency for the purposes of its representation obligations, or a financial guarantee for at least 25% of the amounts related to such obligation.