VAT is a tax on goods and services supplied in the course of independently carrying on a business or other economic activity in France. Salaried employment is, therefore, outside the scope of the tax.
Rules governing the scope of the tax are the same within the whole EU territory: The basic principle is that the place from which any goods are supplied or where the provider of services is established determines whether an activity takes place in France. However, several exceptions exist.
VAT also is due on goods imported into France from a country outside the EU and on goods that have been acquired?(i.e., imported)from other EU Member States and under the EU Single Market Procedure.
VAT is charged at the following rates unless the goods or services are outside the scope of VAT or exempt from VAT:
Standard rate 20.6%
Lower rate (on most food products, books, water, etc.) 5.5%
Exemptions apply, inter alia, to certain banking, insurance, and financial services, property transactions, education and health services, and certain nonprofit-making activities. Supplies that are not exempt are referred to as taxable supplies.
To avoid double taxation, credit is given for VAT paid on goods and services used for the purpose of making any taxable supply and any supply that is outside the scope of VAT if it would have been taxable if carried out in France. Credit for VAT paid is also given in respect of certain exempt transactions, e.g., exports (also referred to as zero-rating). However, most exempt transactions do not entitle the supplier to credit for VAT incurred, and the underlying VAT therefore represents a cost.
The principal mechanism for collecting the tax requires the
supplier (called a taxable person) to charge VAT on the goods or services supplied, to take credit for VAT paid on business expenditures and pay the net tax over to the authorities. However, for some transactions, e.g., the intra-Community supply of goods, the recipient of the supply of goods is required to account for the VAT due, rather than the supplier.
There are special rules allowing the recovery of VAT incurred by foreign enterprises in France if the VAT is referable to the making of supplies outside of France.
22. Inheritance and Gift Taxes
Inheritance and gift tax applies to the worldwide estate of a resident and to a nonresident estate located in France. France has signed tax treaties relating to inheritance taxes with many countries.
Gift and estate tax rates are as follows:
q Between Direct Parents and Children (after an allowance of FF 300,000)
Over Not Over Rate
FF 0 FF 50,000 5%
50,000 75,000 10
75,000 100,000 15
100,000 3,400,000 20
3,400,000 5,600,000 30
5,600,000 11,200,000 35
11,200,000 40
Registered gifts made every ten years to children by parents are tax-free up to a limit of FF 300,000 per child.
q Between Spouses (after an allowance of FF 330,000)
Over Not Over Rate
FF 0 FF 50,000 5%
50,000 100,000 10
100,000 200,000 15
200,000 3,400,000 20
3,400,000 5,600,000 30
5,600,000 11,200,000 35
11,200,000 40
q Between Brothers and Sisters (after an allowance of FF 10,000 granted only for inheritance)
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