Company Taxation Solutions in the Right Note

Company Taxation Solutions

Many companies established outside the European Union ask us to recover the VAT paid in France during professional expenses: travel, trade fair, import, etc.

To illustrate the subject, we suggest that you study the case of a Swiss company having incurred expenses in France and submitting a request for VAT refund to the French tax services following the participation of a trade fair.

What is VAT?

The Value Added Tax (VAT) was created in the 1950s, it corresponds to the value of the good that we buy or import and its rate can vary from one year to another. The VAT rate in France in 2017 is 20% but there may be devaluations depending on certain goods or services.

First of all, let’s remember the 3 conditions to be respected to be eligible:

You have to be a business

  • You must be able to prove your status as a “taxable person” in your country of origin.
  • It is necessary to verify that its country of origin has signed a reciprocity agreement regarding VAT refunds.

VAT recovery in France from a Swiss company

A Swiss industrial company, specialized in the manufacture of chocolates, and marketing its products throughout the world, participates in a renowned exhibition for chocolate makers in the city of Lyon in France. Its participation generates expenses related to the show and travel. Let us see below some examples of expenses that the company can have on the spot and also the indirect expenses which take into account the expenses which are not directly related to the presence at the show:

  • Travel expenses
  • Accommodation costs
  • Catering costs

The Swiss Chocolate Manufacturing Industry must ensure that its purchase invoices comply with the applicable French rules. In addition, some expenses do not give right to deduction, so it is important to include each type of expense to know if it is possible to recover the VAT paid. The use of the business calculator is essential there.

Here is the statement of the Swiss company for its expenses incurred:

Direct costs:

This expense is invoiced by the organizer of the show excluding taxes if the invoice includes a package (location, electricity, furniture, etc.). If the organizer only rents you the bare pitch, the invoice will include VAT (TTC). It is therefore important to distinguish between the two. In our example, the Swiss company opts for the second option: rental of the bare pitch

Bare pitch: 10 000 € TTC

Indirect costs:

After having identified the expenses, it is now necessary to define whether they are deductible. Here are the deductible expenses of our example below:

The organizer’s invoice for the rental of the stand:  100% deductible

  • VAT on hotels is not recoverable, unlike catering costs. It is therefore possible to recover VAT on breakfasts but not VAT on hotels.
  • The diesel note: If the car is a diesel company vehicle (diesel), VAT is deductible at 80%.
  • Catering costs are 100% deductible.
Derek Fonnie

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