Swiss Company and Storage of Goods in France: Procurement, Warehousing and Sales from France
The Swiss company specializes in the trading of raw materials for the food, cosmetics, and fragrance industries. It operates as an importer, trader, and supplier to industrial customers, including manufacturers of finished and semi-finished products.
From an operational perspective, the company sources its products from:
- suppliers established in France; and
- suppliers located outside the European Union.
As part of its logistics and commercial strategy, the company has established a stock of goods in France to shorten delivery times by positioning its products closer to its customers.
Its customer base consists primarily of businesses established in France, with occasional sales to customers in other European Union Member States as well as to third countries.
The transactions managed from France therefore include:
- domestic purchases;
- imports;
- domestic B2B sales;
- intra-Community supplies; and
- exports.
Attention - For confidentiality and anonymity purposes, certain elements presented in this business case have been intentionally modified. In particular, the country of establishment, the business sector, and the nature of the products have been adjusted, without affecting the consistency, relevance, or overall scope of the analysis. As each situation has its own specific characteristics, an individual assessment is required to determine the applicable VAT treatment, as well as the related reporting and invoicing obligations.
Procurement, Storage and Sales of Goods in France: What Are the VAT Implications?
The operating model implemented by the Swiss company has direct implications for French VAT purposes.
Transactions Requiring VAT Registration in France
Certain taxable transactions carried out by the Swiss company in France require it to register for VAT in France and file French VAT returns.
Imports Taxable in France :
Where the Swiss company acts as the importer of record in France, it is liable for the import VAT. This VAT is accounted for through the French import VAT postponed accounting mechanism (reverse charge on import VAT) on the French VAT return.
As a result, the Swiss company is required to register for VAT in France.
To learn more about imports, read our dedicated blog post.
Intra-Community Supplies :
The company sells goods from its French warehouse to customers established in other European Union Member States and identified for VAT purposes in those Member States.
In these circumstances, the transactions qualify as VAT-exempt intra-Community supplies, provided that all substantive and formal requirements are met.
This activity requires the Swiss company to register for VAT in France.
To learn more about intra-Community supplies, read our dedicated blog post.
Exports :
The company also sells goods from its French warehouse to customers located in non-EU countries.
These transactions qualify as VAT-exempt exports, provided that all legal and documentary requirements are satisfied.
This activity also requires the Swiss company to register for VAT in France.
To learn more about exports, read our dedicated blog post.
Transactions that do not, in Themselves, require VAT Registration in France
With respect to domestic purchases of goods delivered from France to its warehouse located in France, the Swiss company incurs French VAT.
To recover this VAT, two options are available:
- either by submitting a VAT refund claim under the so-called 13th Directive procedure (Directive 86/560/EEC), if the company is not required to register for VAT in France based on its activities;
- or by deducting the VAT directly on its French VAT return, if the company is required to register for VAT in France and file French VAT returns due to the nature of its activities.
Sales carried out from the French stock and delivered to customers located in France constitute domestic transactions subject to French VAT.
Where customers are taxable persons, these sales may fall under the VAT reverse-charge mechanism provided for under Article 194 of the VAT Directive, subject to strict conditions being met.
Considered in isolation, such domestic activities would not necessarily require VAT registration in France. However, their treatment requires a detailed analysis of the place-of-supply rules, invoicing requirements, and the VAT status of the customers.
In practice, considering the overall scope of transactions carried out by the Swiss company, it is required to register for VAT in France. As a result, it may recover French VAT incurred on domestic purchases directly through its French VAT return.
All of these transactions create a complex VAT environment, in which the accurate classification of flows and the proper management of VAT compliance obligations are essential.
Structuring and VAT Compliance: Solutions Implemented
In this context, it became necessary to structure and secure the company’s VAT position in France.
As a first step, we performed a detailed analysis of all transactions carried out by the company and provided, for each flow, the applicable VAT treatment, invoicing requirements, and the conditions required to benefit from VAT exemption regimes, reverse-charge mechanisms, or VAT recovery on purchases.
Based on this analysis, we concluded that the company was required to register for VAT in France and appoint an accredited VAT fiscal representative to fulfill its French VAT compliance obligations.
VAT Fiscal Representation and VAT Returns
Having subscribed to our VAT fiscal representation services in France, the Swiss company entrusted us with the following activities:
- VAT registration of the company in France;
- obtaining a French EORI number;
- managing its periodic French VAT returns;
- filing VAT recapitulative statements for its intra-Community supplies.
Benefits of appoiting a VAT Fiscal Representative
This type of situation is common: a foreign company developing its business in France through a local stock of goods, generally operated by a logistics service provider.
This structure enables:
- rapid commercial expansion;
- closer proximity to customers; and
- the avoidance, at least initially, of setting up a local subsidiary.
However, holding stock in France has significant VAT implications. A prior analysis of the transaction flows is essential to secure VAT compliance obligations and mitigate tax risks.
VAT Penalties and Risks Avoided
Failure to comply with French VAT obligations may result in significant financial consequences for companies, including those established outside France.
This notably includes non-compliance with filing obligations (VAT returns, VAT recapitulative statements, EMEBI), failure to comply with the substantive or formal requirements applicable to VAT regimes, as well as the absence or insufficiency of accounting documentation.
Such deficiencies may result in the loss of VAT exemptions, the application of reverse-charge mechanisms being challenged, or the denial of VAT deduction rights.
With respect to the French VAT return, the main penalty provisions include:
- late payment interest calculated at a rate of 0.20% per month;
- a 10% penalty surcharge in the event of late filing, increased to 40% where the filing occurs after a formal notice to comply;
- a 5% surcharge in the event of late payment.
Regarding ERTVA, failure to submit the required declaration within the statutory deadlines is subject to a penalty of €750, which may be increased to €1,500 if the declaration is not filed within 30 days following a formal notice.
Furthermore, each omission or inaccuracy is subject to a €15 penalty, capped at €1,500 per declaration, including errors relating to mandatory registers.
Failure to report a transaction in the ERTVA declaration may result in the loss of the VAT exemption applicable to intra-Community supplies.
Regarding EMEBI, failure to submit the declaration is subject to a penalty ranging from €75 to €150, which may reach €2,250 in the event of repeated non-compliance. Errors or omissions may be treated as a failure to file and may result in the same penalties.
In relation to VAT reverse charge mechanisms, failure to apply the required reverse charge is subject to a penalty equal to 5% of the VAT amount that should have been declared.
Finally, with respect to invoices, each error or omission may result in a penalty of €15 per error or omission and per invoice, subject to a cap equal to one-quarter of the amount that is or should have been stated on the invoice.
VAT Solutions, your accredited tax representative
Companies established outside the EU carrying out activities in France are often required to appoint a VAT fiscal representative for VAT registration, filing VAT returns, and, where applicable, paying VAT to the tax authorities.
VAT Solutions, an accredited VAT fiscal representative, manages your VAT obligations (VAT, OSS, ERTVA, EMEBI) and ensures your VAT compliance in France.
