Key takeaways
- France extended the 5.5% reduced VAT rate to include COVID-19 protection products, animal feed, and agricultural goods until the end of 2023.
- Online marketplaces are now jointly liable for VAT on third-party sales to combat fraud and support fair ecommerce competition.
- Green tax incentives reduce VAT on electric vehicles and energy-efficient home improvements to promote sustainability.
There have been several changes to VAT in France in 2023. Here are some key highlights of the updates to the French VAT system:
Expansion of the reduced VAT rate
The reduced VAT rate of 5.5% for COVID-19 protection materials and products will now be extended until December 31, 2023. This includes masks, some hygiene products, and protective clothing. Foodstuffs intended for consumption by food-producing animals as well as products of agricultural origin, fish, fisheries, and poultry farming will also have the reduced VAT rate of 5.5% applied.
Ecommerce VAT reform
In line with European Union (EU) directives, France has introduced significant reforms in VAT regulations for ecommerce transactions. Starting from 2023, online marketplaces will be held jointly liable for the payment of VAT in France on sales made by third-party sellers using their platforms. This measure aims to tackle VAT fraud and ensure fair competition between ecommerce businesses.
Green tax incentives
France continues to prioritize environmental sustainability by introducing green tax incentives. The VAT in France on electric vehicles (EVs) has been reduced to encourage their adoption, making them more affordable for consumers. Additionally, the installation of energy-saving materials, such as thermal insulation and energy-efficient windows, is subject to a reduced VAT rate of 5.5%.
Frequently asked questions
What are the latest VAT changes in France for 2023?
In 2023, France extended the reduced 5.5% VAT rate for COVID-19 protective products and added new items such as animal feed and agricultural goods. The country also introduced VAT reforms for ecommerce, making online marketplaces jointly liable for VAT on third-party sales.
Are there any VAT incentives for green initiatives in France?
Yes. To support environmental sustainability, France applies a reduced 5.5% VAT rate on electric vehicles and energy-efficient home upgrades like insulation and double-glazed windows. These measures aim to promote eco-friendly choices among consumers and businesses.
