Value added tax (VAT) is an indirect tax on consumption that impacts the majority of commercial transactions in France. When it comes to banking services, the application of VAT has specific features that are important to understand for good accounting management. What are the VAT rules for bank charges ? Should the standard rate of 20% or another reduced rate be applied for this type of transaction? You will find all the answers in this guide.
Summary
Managing your VAT becomes easy with Indy
Companies liable for VAT must collect it , declare it and pay it to the tax authorities;
Most banking services are subject to VAT at the standard rate of 20%;
Fees similar to bank charges are exempt from VAT (0% rate);
The accounting of VAT on bank charges must comply with strict rules;
The VAT collected and deductible must be declared VAT on bank home owner data online every month , quarter or year (depending on your regime).
With Indy, categorizing your bank charges is done in one click! The right VAT rate (20%, exemption, etc.) will apply automatically! 🤩
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Functioning
VAT is an indirect tax levied on the consumption of goods and services. This tax is called indirect because tongliao phone number list the State does not directly collect this tax from consumers. It is the companies that will play an intermediary role between the latter and the tax administration. Here are the basics of how it works :
A VAT rate is set for each type of product and service. The standard rate in France is 20%, reduced rates are then provided for by the texts (10%, 5.5%, etc.);
When a business sells a product or service, it charges VAT to its customer. Through this 10 essential winter plumbing tips you need to know right now! transaction, the business collects the VAT;
How does VAT work in France?
The company will then have to declare and pay the VAT to the State. However, it will not have to pay the entire VAT collected but only the difference between the VAT collected (on its sales) and the deductible VAT (on its purchases);
Deductible VAT corresponds to the VAT that the company pays on its purchases and professional expenses (purchase of equipment, services, bank account fees, etc.) and which it can then recover . This mechanism therefore allows the company to pay back to the State only the difference between the VAT it collects and that which it has paid.