Box A3 of the French VAT return: the mysteries of reverse charge

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General presentation of box A3

In box A3, you must report the amount excluding VAT Of purchases of services provided by a service provider not established in France, but taxable in France on the basis of articles 259-1° and 283-2 of the General Tax Code (CGI). These are services for which French VAT is due, even if the provider is foreign.

Details of the transactions concerned

As a company established in France, the place of services that you purchase is deemed to be located in France. This means that the French VAT should in principle apply to these benefits, in accordance with the rules of territoriality.

The reverse charge mechanism

• Principle : Your foreign service provider invoices you for services without VAT.
• Obligation for the buyer : You must self-assess the VAT on these services, i.e. declare and pay VAT in France instead of the service provider.

Concrete example

• Typical case : A service of Google Ads rendered by an Irish or American Google entity for the benefit of a French company.
• Application : You receive an invoice without VAT and must self-assess the VAT in France.

The expert's point of view

How do I report these transactions?

1. Report in box A3 : Indicate the amount excluding VAT of the services invoiced in box A3 of your VAT return.
2. Report in box B : Depending on the applicable VAT rate, report this amount into box B to collect VAT on this service.
3. Deduction in box 20 : Indicate the amount of deductible VAT in box 20 of the VAT return to deduct the VAT on this service.

Financial impact

• Case of a company recovering 100% of VAT : This mechanism is financially neutral. For example, for a service invoiced €100 excluding VAT:
  • You collect €20 in VAT.
  • You deduct €20 in VAT.
  • The balance is zero.

Beware of sanctions

• Risks in case of non-compliance : Failure to reverse charge may result in 5% penalty on the amount of VAT that has not been automatically paid.
• Recommendation : It is essential to self-assess VAT on these transactions to avoid any risk of recovery during a tax audit.

Case of companies that partially recover VAT

• Situation : If your company does not recover all the VAT on its purchases (for example, in the case of exempt activities), the reverse charge will result in partial or total non-deductible VAT.
• Consequence : Part of the VAT collected cannot be deducted, which will have a financial impact.

Important points to keep in mind

• Identify service providers not established in France : Check if your service providers are based abroad.
• Understanding the reverse charge mechanism : Make sure you are familiar with this process to avoid reporting errors.
• Use additional resources : Our detailed video on box A3 gives you additional light.
• Be accompanied : A chartered accountant or tax lawyer can help you secure your VAT returns.

Conclusion

Box A3 of the CA3 VAT return is of particular importance for companies using service providers not established in France. By understanding the reverse charge mechanism and reporting these transactions correctly, you ensure tax compliance for your business and avoid potential penalties. Do not hesitate to consult our dedicated video to deepen these points and to ask a professional to assist you in this process.