Covid-19 : Simplification measures for filling in the French VAT returns

08/04/20

Tax e-Alert

The tax authorities are introducing a new, exceptional measure pertaining to the Covid-19 crisis regarding the filling of VAT returns. While it reiterates that the requests for payment deferral may only concern direct taxes and social contributions, it is, however, looking at simplifying the filling of VAT returns which are to be submitted during the confinement period, under certain conditions.

Measure 1: Simplification initially provided by the French Public Guidelines during the period of paid leave in cases of difficulty with the filling of returns

This measure is available to all companies subject to the usual non-presumptive tax regime which are facing difficulties gathering the documents to file their VAT return.

The company benefiting from this measure will be entitled to estimate the VAT amount payable to the Treasury in respect of the month of March and to pay only an advance payment corresponding to this estimate.

Please note that the authorities allow a 20% margin of error.

In practice, the flat-rate VAT amount must be carried over to line 5B “Sommes à ajouter, y compris acompte congés” [Sums to be added, including advance holiday pay].

Furthermore, the box reserved for special notes must include the mention “Acompte Covid-19” [Covid-19 advance payment] and, for example, “Application du Bofip en période de congés” [Application of BOFIP during a period of leave].

Measure 2: Exceptional payment of a flat-rate advance payment in cases of a reduction in turnover

This measure is reserved for companies which have experienced a decline in their turnover relating to the Covid-19 crisis. It is intended to last for the confinement period determined by the public authorities.

  • March return to be submitted in April

The company may declare a flat rate equal to 80% of the VAT amount declared in February, or in January if it had already used a flat rate for February.

This flat rate may be reduced to 50% if the company has ceased activity since mid-March or if its activity has decreased by at least 50% because of the Covid-19 crisis.

In practice, the flat-rate VAT amount must be carried over to line 5B “Sommes à ajouter, y compris acompte congés” [Sums to be added, including advance holiday pay].

Furthermore, the box reserved for special notes must include the mention “Acompte Covid-19” [Covid-19 advance payment] and the name of the flat rate (e.g. “Forfait 80% du mois de Janvier” [80% flat rate for January]).

  • April return to be submitted in May

The rules will be identical to those provided for the March period, “if the confinement period is extended making it impossible to submit an adjustment return on this date”.

  • Adjustment return

The company shall regularise its situation in the next return (for example, that of April, or of May, if the confinement period is extended).

It must then combine the operations relating to the period being declared with the operations of the previous periods for which advance payments were made.

In addition, the amount of the VAT advance payments paid the previous months must be carried over to line 2C “Sommes à ajouter, y compris acompte congés” [Sums to be added, including advance holiday pay], and will thus be deducted from the VAT amount to be paid.

There is no clarification regarding companies which submit their VAT returns on a quarterly basis.

Furthermore, the tax authorities indicate that the application of these measures shall be subject to a retrospective check.

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José Manuel Moreno

José Manuel Moreno

Avocat, Associé TVA & Douanes, PwC Société d'Avocats

Tel: +33 1 56 57 43 81

Venise Vincent

Venise Vincent

Senior Associate, Corporate tax, PwC Société d'Avocats

Tel: +33 1 56 57 43 75

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