This article follows on from the first part, which explains in detail what VAT is and the operations it affects. Already lost? Go here 👈 to get back to basics!
In (very) brief ✅: Value Added Tax is an indirect tax paid by consumers, recovered by businesses, then paid back to the State.
The different rates 📊
When you buy a product or service, the price you pay already includes the VAT, which is referred to as the price inclusive of all taxes.
Without VAT, the price is exclusive of tax.
The VAT rate varies according to the product or service you are buying or selling:
| Standard rate | Intermediate rate | Reduced rate | Special rates |
|---|---|---|---|
| 20% | 10% | 5,5% | 2.1% (mainland France) |
| It applies to the majority of products and services where no other rate is available. | In particular, it applies to unprocessed agricultural products, firewood, home improvements not eligible for the 5.5% rate, certain housing services, fairs and exhibitions, games and amusement rides, cultural venues (museums, monuments), zoos, public transport, waste treatment and catering. | It covers most food products, feminine hygiene products, equipment and services for the disabled, books, gas and electricity, renewable energies, school canteen meals, tickets for shows and cinema, work to improve the energy quality of housing, social or emergency housing, and home ownership. | It is reserved for medicines reimbursable by social security, sales of live butchery and charcuterie animals to non-VAT taxpayers, TV licence fees, certain shows and certain press publications. |
For details of VAT rates in France, Corsica and the French overseas departments, click here.
The company, intermediary between customer and state 🤝
The company that collects the VAT on its products and services and passes it on to the consumer is in fact only an intermediary, since the final amount of this VAT is ultimately paid back to the State by the company.
Companies must be rigorous in their accounting management, because the slightest error concerning VAT can have a major financial impact, particularly on sales.
VAT calculation 🧮
Calculating the VAT on your products or services couldn't be easier!
Divide the price before tax by 100 and multiply by the VAT percentage applicable to your products or services.
For example
If you're a restaurant owner who wants to sell delicious pizzas 🍕 , you need to calculate the VAT-inclusive price you should charge your customers for a 4-season pizza 🍂 .
In this case, let's imagine that you want to sell it for 8 euros excluding VAT, you perform the following calculation to define the VAT amount:
8 euros / 100 x 10% VAT in this case = 0.80 centimes
To obtain the price including VAT, which you will charge your customers, you simply add the amount obtained to the price excluding VAT, i.e. in the case of our 4-season pizza: 8.80 euros.
Anytime to your help 💯
Next week, we'll be devoting an entire article to recoverable VAT- the VAT you've paid but, as a professional, shouldn't have. Interesting, isn't it 😉
And don't forget! Anytime also offers turnkey solutions to help you manage your accounting, directly linked to your bank account!
Would you like to find out more? Click here 👈
