Introduction
Are you self-employed and wondering how to properly invoice VAT? VAT, or value added tax, is a tax that applies to most goods and services. As a self-employed person, you have to charge VAT to your customers, and this can sometimes be complex. In this article, we'll walk you through the basics of self-employed VAT invoicing, giving you tips and tricks on how to do it right. Follow the leader !
What is VAT?
Before going any further, it is important to understand what exactly VAT is. VAT is a consumption tax that is applied at each stage of the chain of production and distribution of goods and services. It is levied by companies that sell goods or services, and it is then paid back to the State. As a self-employed person, you are also subject to VAT in certain cases, and you must therefore invoice it to your customers.
The different VAT rates
There are several VAT rates in France, which vary depending on the type of good or service sold. The main VAT rates are:
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- The normal rate: it amounts to 20% and concerns most goods and services.
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- The reduced rate: it can be 5,5% or 10% and applies to certain specific goods or services, such as food, cultural products, energy renovation work, etc.
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- The special rate: it can be 2,1% and concerns certain specific products, such as medicines reimbursable by Social Security.
It is important to know the VAT rates applicable to your business so that you can invoice them correctly to your customers.
When should you charge VAT?
As a self-employed person, you are not always subject to VAT. You benefit from a simplified regime, called the micro-enterprise regime, which exempts you from invoicing VAT in certain cases. However, there are turnover thresholds that must not be exceeded in order to benefit from this scheme.
The franchise regime based on VAT
If you are self-employed and you realize less than 82 euros of annual turnover for the activities of sale of goods, supply of housing or provision of accommodation, you benefit from the exemption regime based on VAT. This means that you are exempt from charging VAT to your customers.
However, if you exceed this turnover threshold during the year, you become liable for VAT from the first day of the month following that of the overrun. You must therefore start charging VAT to your customers as soon as you become aware of this overrun.
The micro-enterprise scheme
If you achieve less than 176 euros in annual turnover for other service activities, you benefit from the micro-enterprise regime. In this case, you are also exempt from charging VAT to your customers. However, if you exceed this threshold, you must invoice the VAT from the first day of the month following that of the overrun.
How to charge VAT as a self-employed person?
You now know when you have to charge VAT as a self-employed person. But how to do it concretely? Here are some steps to follow:
Include VAT on your invoices
The first thing to do is to indicate the amount of VAT on your invoices. To do this, you must enter the VAT rate applicable to your activity, as well as the amount excluding tax (excluding taxes) and the amount including tax (all taxes included). Be sure to separate these amounts and indicate them clearly on your invoices.
Keep a sales register
It is also important to keep a sales register, in which you record all your invoices. This register will allow you to justify the sums you have invoiced and the amount of VAT collected. It may be requested by the tax authorities in the event of an audit, so it is essential to keep it up to date.
Declare and remit VAT
Finally, you must declare and remit VAT collected from the tax administration. Depending on your tax regime, you will have to make a periodic declaration, monthly or quarterly, and pay the amount of VAT collected. Be sure to respect reporting and payment deadlines to avoid penalties.
Conclusion
Self-employed VAT invoicing can seem complex, but by understanding the basics and following the essential steps, you can do it easily. Make sure you know the applicable VAT rates, enter VAT correctly on your invoices, keep a record of sales and declare and remit VAT to the tax administration. By respecting these rules, you will be able to charge VAT in full compliance. Do not hesitate to consult official resources or contact an accounting expert if you have any doubts or additional questions.
FAQ
What is VAT?
VAT, or value added tax, is a tax on consumption that is applied at each stage of the chain of production and distribution of goods and services. It is levied by companies that sell goods or services, and it is then paid back to the State.
What are the VAT rates in France?
There are several VAT rates in France. The standard rate is 20%. There is also a reduced rate of 5,5% or 10% for certain specific goods or services, and a special rate of 2,1% for certain particular products.
When do you have to charge VAT as a self-employed person?
As a self-employed person, you must charge VAT to your customers when you exceed the turnover thresholds set by the micro-enterprise scheme or the franchise regime based on VAT. Make sure you are familiar with these thresholds and charge VAT as soon as you exceed them.
How to charge VAT as a self-employed person?
To charge VAT as a self-employed person, you must enter the amount of VAT on your invoices, keep a sales register and declare and remit the VAT collected to the tax authorities. Follow the steps in this article to do it correctly.
