VAT-registered companies with a VAT credit can claim it back. This enables them to optimize their cash flow. What are the steps involved? Here are the answers.
The principle of VAT credit
Companies subject to VAT invoice their customers for this tax on behalf of the State. Once they have collected the VAT, they pay it directly to the tax authorities at the time of declaration, known as VAT collected. In return, they can deduct the VAT paid on their purchases of goods and services, known as deductible VAT.
When the VAT collected exceeds the VAT deductible, companies owe the Treasury a VAT debt and must pay the difference. Otherwise, they benefit from a VAT credit, which they can claim back.
How do I claim a VAT credit?
Applications for VAT credit refunds should be submitted to the Service des Impôts des Entreprises (SIE) via the impots.gouv.fr website, by logging on to your professional space.
Companies subject to the standard actual tax regime wishing to obtain a refund during the year must complete the special form n°3519-SD with their intra-Community VAT number and attach it to their monthly or quarterly VAT return. Those who have opted for the annual VAT return can submit this form in January at the end of their fiscal year.
Companies covered by the simplified actual tax regime can request reimbursement of their VAT credit when filing their annual VAT return, using form 3517-SD. The request must be made no later than the 2nd working day following May 1st for the calendar year, or within 3 months of the end of the financial year for a non-calendar year.
A real boost for businesses
VAT credit refunds are a real boost to companies' cash flow. In practical terms, businesses whose deductible VAT is higher than the VAT collected have two options: to claim a refund, or to offset the amount against future tax returns. Some businesses, particularly bars and restaurants in tourist areas, prefer the second option, to keep the credit in reserve and use it in subsequent months against the balance of VAT due.
However, professionals need to keep a close eye on the amounts they claim, as an unjustified claim can result in a tax reassessment. In 2021, the tax authorities recovered over 2 billion euros in VAT credit refunds as a result of fraud and non-compliance with procedures. To avoid unpleasant surprises, it is therefore advisable to enlist the help of a specialist.