VAT registration in France vs. permanent establishment: clearly distinguishing between obligations

VAT registration: an identification and declaration obligation

What it is.

To “register” for VAT means to obtain a VAT no. FR and identify yourself with the administration for declare and pay the VAT collected (and, if applicable, exercise the deduction). A foreign company must register in particular when it supplies goods or services that entitle it to deduct VAT (e.g. import, sales of goods located in France, intra-community deliveries from France, intra-community deliveries from France, certain B2C services, etc.). For companies Outside the EU, the law may require designation From a fiscal representative accredited.

Concrete examples.

• Purchases of goods in France followed by a domestic sale for the benefit of private customers.
• Purchases of goods in France followed by intra-community delivery or export.

To remember.

Registration does not prejudge the existence of a permanent establishment: one can be required to register without having a permanent establishment in France.

Conversely, the existence of a permanent establishment may lead to having to identify yourself for VAT, but these are two separate analyses.

VAT permanent establishment: a sufficient “human and technical” presence

European definition.

In VAT, a permanent establishment is a establishment other than the head office, characterized by a sufficient degree of permanence And a appropriate structure in human and technical resources Allowing him to receive and use services or to provide services.

This definition applies to the determination of the location. Of taxation And of accountable.

Practical effects.

• ‍B2B services : the presence of a table establishment may move the Place of taxation to France if the service is rendered unto or through this establishment.‍
• Legally, a permanent establishment in terms of VAT is different from a permanent establishment in terms of corporate tax: the qualification VAT follows its own criteria. Although the two concepts are similar in practice, it is nevertheless necessary to carry out a separate analysis in order to assess the presence of a permanent establishment in terms of IS or VAT.

Key case law (CJEU).

• ‍Titanium (C-931/19) : the possession of a rented building without clean human resources Not enough steps to characterize a permanent establishment.‍
• Berlin Chemie (C-333/20) : the simple use of a Subsidiary service provider in the State of the lessee does not create Not ipso facto a permanent establishment with the lessee; you need a Control of resources human and technical.

Case study: how to reason

• ‍B2B advice provided by a company based in Dubai for the benefit of a French client subject to VAT
  No permanent establishment in France as long as the service provider does not have human and technical resources in France. VAT is self-liquidated by the French B2B customer. PNo registration required. ‍
• Stock in France with domestic sales for the benefit of B2C customers
  Shipments from a French warehouse, invoicing with VAT FR: matriculation necessary (without prejudging a‍a permanent establishment).

• Dedicated recurring local team (staff + IT) providing services
  Human/technical resources Sufficient and Permanents in France → permanent establishment risk and location in France of the services provided through this permanent establishment.‍
• Renting a building in France without own staff
  No establishment just because of the building. VAT obligations will depend on the type of transactions carried out.

Points of vigilance for international groups

• ‍Do not confuse permanent establishment VAT and permanent establishment at the IS: the criteria differ.‍
• Local subsidiaries/partners : the mere presence of a service provider is not enough; the decisive factor is the permanent presence of human and technical resources to carry out or support transactions from France.‍
• Countries outside the EU : if taxable transactions, verify the need for registration and, if applicable, the need to appoint a tax representative (with exemption regimes for certain reciprocal countries).‍
• Documentation : map flows, intragroup contracts, SLAs, execution locations, and Who is in control human/technical resources.

Quick checklist

• Is the operation taxable in France ? (well located in FR, service located in FR, B2C sales in FR, etc.): Enrollment probable.
• Do we have in France own, permanent, human & technical resources ? : Permanent establishment risk and effects on the territoriality of the transactions carried out.
• Company outside the EU? : Check if it is necessary to appoint a fiscal representative (and possible exemptions).

Conclusion

THEVAT registration And thepermanent establishment pursue different logics: one is declarative, the other substantial. A company may be required to identify itself for VAT in France without have a permanent establishment, and vice versa. In addition, the recognition of a permanent establishment may relocate the location of a service and therefore the obligations arising from it. A case-by-case analysis, in light of the applicable regulations of the law, ofthe recent case law and From BoFIP is required.

Support from Cyplom Avocats

Cyplom Avocats, a firm exclusively dedicated to VAT, assists foreign companies and international groups in: (i) qualify flows correctly (registration vs. permanent establishment, (ii) secure the location of the operations and the person responsible, (iii) procure a TVAFR number and, where applicable, nominate a fiscal representative, (iv) Documenting the situation (contracts, resources, etc.) in support of the CJEU case law. We intervene upstream (audit), at the warehouse (registration/configuration) and afterwards (declarations, control).