Taxation

Creation of a VAT Group: application since 1 January 2023

Publié le null - Directorate for Legal and Administrative Information (Prime Minister)

Since 1er January 2023, the VAT group scheme is implemented. To subscribe to this scheme, members of the group must apply to the tax office to which they belong before 31 October of the year preceding its application.

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What is a VAT group?

A VAT group is the possibility offered to different closely linked entities financial, economic and organizational aspects to become a single taxable person for VAT purposes. It concerns VAT taxable persons who have in France their place of business or a permanent establishment or, in their absence, their permanent address or usually resides.

This grouping of legal persons allows for a consolidation of the payment of VAT and thus a considerable reduction in the number of transactions to be reported. Indeed, internal operations carried out between the members of the group will be not subject to VAT.

Please note

This new regime now applies to all companies. Until now, only large companies could set up a VAT group.

Option to be reported before 31 October of the year preceding its application

To form a VAT group, the option must be formulated by declaration before 31 October of the year preceding its application. This declaration shall be made by the representative appointed by the group to the tax office concerned and shall be accompanied by the agreement of all the members. The VAT group is then created on 1er January.

The group, which has a unique VAT identification number, shall be operational for a period of 3 years when it is formed. However, the scope of the group may change if a member who did not meet the link criteria when forming the group now meets them (subject to formulation by the representative and agreement of the member concerned).

The criterion of links between taxable persons in the VAT group

Members of a VAT group must have financial, economic and organizational links in order for the group to be formed. Such links must continue to exist during the period of existence of the group.

These links have been defined as follows:

  • financial links: holding, directly or indirectly, more than 50 % of the capital or voting rights of another taxable person;
  • economic links: the pursuit of a principal activity of the same nature, of interdependent, complementary activities or activities pursuing a common economic objective, of an activity carried out in whole or in part for the benefit of the other members;
  • organizational links: links between taxable persons in law or in fact, directly or indirectly, by a joint directorate or organization of their activities wholly or partly in consultation.

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