2024 Olympics and Paralympics – VAT Recovery in France

With the successful completion of the 2024 Olympics and the Paralympics currently underway, some non-French resident businesses will have been involved in operating in France during this period. This could be producing events for the IOC or linked to the Olympics, sponsorship services, or even attending the event with clients. Those businesses will need to consider their direct and indirect tax obligations (if any) and also whether the French VAT costs they have incurred can be recovered.

Specific guidance has been published by the French Tax Authority for such businesses and is summarised below:

Companies with a registered office abroad may be liable for direct taxes (such as corporate tax and other local taxes) and indirect taxes (VAT) when they conduct their operations through a permanent establishment in France, i.e. including in the absence of a legal entity incorporated under French law. Non-resident individuals may also be liable for Personal income tax (PIT) where, for example, they operate their main business activity, whether employed or self-employed, in France. In terms of indirect taxes (VAT), the VAT refund/taxation requirements for an organisation with registered office abroad and no permanent establishment in France differ according to (i) the kind of operations it conducts in France and (ii) its State or Territory of residence. In view of the above, Stakeholders are strongly advised to perform a specific analysis of their situation in order to determine whether or not they have a permanent establishment in France, for both direct and indirect tax purposes.

Essentia is able to assist businesses with these issues, in particular, reviewing the business conducted in France to see whether a local VAT registration is required, and whether VAT bearing costs can be recovered.

Reviewing the business activities is crucial not only to abide by the French VAT regulations, but also to ensure timely recovery of French VAT. There are only two ways of recovering VAT: through a local French VAT registration, or via an overseas refund claim. Typically, if a local French VAT registration is triggered, VAT would be recoverable through the filing of VAT returns. If a local VAT registration is not warranted, the method of recovery can only be via an overseas refund claim.

However, in some cases, a business which is obliged to register for French VAT still might not be able to recover VAT through its VAT return filings, and instead, also needs to carry out an overseas refund claim. This usually happens where the business is required to register for VAT reporting and accounting purposes (e.g. it has imported or acquired goods in France), but due to the local VAT provisions, is not required to collect VAT on its supplies made in France (e.g. the domestic reverse charge applies).

Since overseas refund claims are time bound, it is imperative to ensure the business is aware of its obligations and follows the correct procedures in order to not suffer an irrecoverable VAT loss.

Overseas VAT refunds also follow two specific methods: those for EU established companies (the EU Refund Scheme) and those for non-EU established companies (the 13th Directive refund claim).

Each method has different requirements but in essence, is it more onerous for non-EU established businesses to complete such a refund.

The decision tree graphic provided by the French Tax authority at the top of this page is an excellent way of working out French VAT obligations.

Essentia is on hand to assist with French VAT advisory, compliance and refund services.