Outside:

Goods & services sold outside the EU;

Goods & services supplied by unregistered supplier;

Statutory fees & services (MOT testing, congestion charge etc);

Tolls for bridges, tunnels and roads (operated by public authorities);

Voluntary donations to charity;

In France, the value added tax is imposed on all types of general consumption. VAT is popular for two reasons. The first reason is that it is imposed at each stage of value addition. Unlike sales tax, there is no scope of cascading in the value added tax. The VAT system is also helpful in avoiding the incidence of double taxation. Another major advantage of value added tax is that under this system all traders are dealt equally. It also involves minimum distortionary effects on economic activities.

Companies act as huge tax collectors for the French Government, not least in the collection of TVA, which generates more revenue than any other tax.

TVA is payable on almost all commercial goods and services, with few exceptions.

The most notable of the exceptions is residential property lettings, although the provision of services on a letting comes within the ambit of VAT.

The main rate of TVA in France is 19.6%, but there is a reduced rate of 5.5% for food, travel, some domestic personal services and most entertainment events.

The reduced rate of 5.5% also applicable to repair and improvement works to residential dwellings, but only on the costs of professional labour and materials. It is not available for DIY or for materials only.

So, where you employed a registered company but bought the materials yourselves, the materials would need to be purchased at 19.6%, whilst the rate on the labour would be 5.5%.

There is also a rate of 2.1% for medical prescriptions, TV licences, sale of live animals, press publications and certain entertainment events.

A micro-entreprise (including an auto-entrepreneur) can neither claim nor charge TVA, but this option is available to regime réel companies, and is obligatory if their turnover exceeds the TVA threshold.

The TVA turnover threshold for 2012 is €34,600 for a service based business and €89,600 for commercial activities, bars and restaurants and those who let furnished accommodation.

There are more generous concessions for artistic professions. The same concessions also apply to writers.

Accordingly, if you reach these levels of turnover you are obliged to charge TVA, although where these limits are only marginally exceeded by up to a few thousand euros, TVA need not be imposed for two years, including the year in which the limit was exceeded.

If you do not charge TVA because you are a micro-entreprise then all invoices to your customers must state that TVA is not applicable, as follows - 'TVA non applicable.

TVA returns need to be made monthly or quarterly depending on the level of turnover.

If the TVA paid is greater in any period than the TVA received then you may elect to either seek reimbursement or arrange a credit against the next declaration.

The return should be submitted by 30th April of each year or within three months of close of accounts if your accounting year is not the calendar year. The TVA declaration can be made and paid on-line.

VAT on services and goods with an overseas aspect is a complex area, and the situation can depend on:

• The type of service and goods being supplied;

• The country in which the supplier belongs;

• The country in which the customer belongs;

• The country in which the service and goods is performed;

• The country in which any relevant land is situated; and

• Whether the service and good is being received for a business purpose.