Supply of goods : VAT payable on advance payments from 2023 onwards

VAT (value-added tax) is a consumption tax on products and services. Companies act as "tax collectors" on behalf of the government. It pays the difference between the VAT collected from its customers and the VAT it has paid to its suppliers, which it can reclaim on its purchases. To understand the changes that will be introduced in 2023, it is important to grasp the concepts of chargeable event and chargeability. From January 1, VAT will be payable on supplies of goods as soon as a deposit has been received, rather than on completion of the transaction.

Cause and payability

The taxable event is defined as "the event by which the legal conditions necessary for the tax to be payable are met".

Payability is defined as: "the right that the Treasury can assert, from a given moment, on the taxpayer, to obtain payment of the tax, even if payment can be deferred".

Of the two concepts mentioned above, it is that of exigibility which is by far the more important in practical terms. This is because it is the due date, and not the chargeable event, that determines the date on which the tax must be paid.

While in most sales transactions, the chargeable event and the due date are the same, there are cases, particularly in the provision of services, where they need to be distinguished.

Sales of goods

As a general rule, any supply of goods attracts VAT regardless of whether payment is made in advance, at the time of delivery or afterwards.

In principle, delivery of the good is defined as the transfer of the power to dispose of the good in the same way as an owner. It should not be confused with the physical delivery of the good. As a result, the tax will be payable at the moment of the "legal" transfer of ownership- the signing of the purchase order, for example - and not when the goods are physically handed over, which takes place some time later.


The taxable event occurs when the service is rendered. VAT, on the other hand, is not due until the advance payment, price or remuneration has been received.

Taxable receipts include all sums received in connection with the performance of the work: advances, deposits, settlement of the balance.

Some companies make both sales and services. For practical reasons, it may be in their interest to pay VAT on the debit side, i.e. when invoicing. In this way, VAT on sales and VAT on services are payable at the same time.

What will change in 2023

As of January 1, 2023, and in order to comply with European legislation, if a deposit is paid when the order is placed, before the goods are delivered, VAT will become chargeable as soon as the deposit is received, and will be calculated on the amount of the deposit(article 30, law no. 2021-1900 of December 30, 2021).

The advantage for the purchasing company is that it will be able to deduct VAT on purchases of goods at the time of payment on account, without waiting, as is currently the case, for the full amount of tax to be payable by the supplier. To do this, advance payment invoices will have to be issued.