January 2023: France is introducing the VAT regime, which enables companies within a same corporate group to be considered as individual taxable persons (compensating VAT credits with losses).
France joins the majority of EU countries in offering connected entities the chance to constitute a single VAT entity, with a single VAT registration, and remove the cash flow of VAT payments on intra-group invoices.
Before 2023, French companies could apply only for an administrative simplification for groups. Groups were not considered as unique taxable persons and intra-group transactions were not exempted for VAT purposes. Until the new full VAT group implementation, each distinct entity had its separate VAT obligations and had to submit its own VAT return and issue invoices from its own VAT number. The facilitation meant that all VAT due was combined into a single payment, permitting a cash-flow benefit for groups of companies.
This change allows related businesses to form a unique VAT taxable person. This implies that no VAT is charged on invoices between VAT group members. Businesses initially must request a minimum 3-year group period, in which no VAT returns are required from individual members: a core member will take responsibility for filing a consolidated return. To be eligible to become part of a group, companies must be linked under various factors (e.g., shareholding, financial, or control).
Only companies established in France can join a VAT group. The group itself will have a single number, but all parties will remain jointly and severally liable. The members of a VAT group must file a single consolidated VAT return. It is not possible to file individual VAT returns for each entity. Lastly, the invoices generated by group members should refer to this fact by including a reference to this fact, as the name, address, and individual and group VAT numbers. The wording may state: “ Membre d’un assujetti unique “.