Do you want to trade within the European Union? Does your French business receive goods from another EU country? Are you curious how value-added tax (VAT) applies to intracommunity trade? In this article, we clarify the rules of intracommunity VAT to help you create compliant invoices.

What’s in this article?

• What is an intracommunity invoice?
  
• What are the rules for intracommunity VAT?
  
• What information is required on an intracommunity VAT invoice?
  
• How to issue an intracommunity invoice excluding VAT
  

What is an intracommunity invoice?

An intracommunity invoice is a document used for tax, accounting, and commercial purposes to record a transaction between a vendor and a customer in two EU countries. It serves as proof of the transaction and includes all relevant details, such as the identity of the parties, the amount due, and the terms of the sale.

What are the rules for intracommunity VAT?

Intracommunity invoices must follow specific tax rules to ensure compliance. Invoicing for VAT on these transactions depends on the following factors:

• The status of the purchaser (whether a business or a private individual)
  
• The type of transaction (sale of goods or services)
  
• The business’s tax regime
  

Exchanges of goods between businesses liable for VAT

Intracommunity supply of goods

Sales of goods from France are exempt from VAT if the buyer is also liable for this tax in their country within the EU. The French seller issues an intracommunity invoice without VAT to document the transaction, while the buyer pays and deducts VAT in their place of residence.

The intracommunity invoice must contain the following statement: “VAT exempt, Article 262 ter I of the General Tax Code (CGI).”

Intracommunity acquisition of goods

When a French business buys goods from a foreign entity based in the EU that is subject to VAT in its own country, the purchase is subject to customs duties at the applicable French VAT rate. The foreign seller issues a tax-free invoice without VAT, while the French business pays VAT on the acquisition in France. This VAT is usually deductible.

Distance sales to private individuals by a French business liable for VAT

A French business liable for VAT that sells goods to a private individual or a person not liable for VAT in an EU country is engaged in distance selling. The application of VAT on these activities is determined by the total value (excluding VAT) of all the business’s distance sales within a calendar year. If the annual amount before tax is less than €10,000, the VAT rate of the country of origin (i.e., the French business’s location) applies. If it’s more than €10,000, the VAT rate of the buyer’s country applies.

The VAT One Stop Shop handles the taxes on distance sales within the EU to simplify taxpayers’ payment and filing obligations.

Intracommunity acquisitions made by a French business exempt from VAT

When a French business using the VAT exemption regime makes purchases in the EU, the foreign seller must charge VAT at its own country’s rate if the annual total of the buyer’s intracommunity acquisitions is less than €10,000 excluding VAT over a calendar year.

However, if the annual total of these cross-border acquisitions excluding VAT exceeds €10,000 for the previous or current year, the French business must:

• Declare and pay the tax in France on its purchases at the applicable rate (the foreign seller issues the invoice without VAT).
  
• Ask the corporate tax office (SIE) to issue an intracommunity VAT number.
  

Under the basic VAT exemption scheme, it cannot deduct or recover VAT on its purchases.

Sales of services within the EU

Generally, services provided between taxable persons are taxed at the consumption location. A French business providing a service in another EU country must issue an invoice excluding VAT and include the statement “reverse charge.” If it is not liable for the levy in France, it must request an intracommunity VAT number from the local SIE.

On the other hand, services provided to private individuals or those not subject to VATare billed at the provider’s place of establishment. In this case, the French rate applies.

Buying services in the EU

Like cross-border acquisitions of goods, services purchased by a French entity are taxed at the French rate. If the French business is not using the VAT exemption regime, VAT can be deducted and refunded. Buyers not liable for the levy must obtain an intracommunity VAT number to complete the transaction, but they won’t be eligible for refunds.

What information is required on an intracommunity VAT invoice?

An intracommunity invoice with VAT must contain all the information typically found on a standard invoice, which includes:

• The word “Invoice”
  
• Invoice number and issue date
  
• Supplier’s identity: full name or business name, SIREN or SIRET number, the business’s legal form, share capital amount, Trade and Companies Register (RCS) number for merchants, or Trades Directory (RM) number for artisans, and registered office address
  
• Customer’s identity: their name or business name and their billing and delivery address (if they are different)
  
• Intracommunity VAT numbers of the relevant parties
  
• Purchase order number, if applicable
  
• Date of the sale of goods or completion of the service
  
• Description and itemized breakdown of each good sold or service provided: unit, quantity, type, brand, and reference
  
• Unit price, excluding tax on each good or service
  
• Any surcharges, such as delivery or travel costs (if applicable)
  
• Any discounts
  
• Total amount excluding VAT
  
• VAT rate applicable to each item
  
• VAT amount
  
• Total amount, including all taxes
  
• Deadline and terms of payment
  
• Rate of late payment penalties in the event of nonpayment by the due date
  
• Flat-rate fee for recovery costs
  

You can simplify your entire billing process with Stripe Invoicing, a tool that integrates with your existing systems to create intracommunity invoices, automate revenue recognition, and accelerate payment—all without writing a single line of code.

Otherwise, the French government website provides two invoice templates to guide you when creating your own.

How to issue an intracommunity invoice excluding VAT

To issue an intracommunity invoice excluding VAT, you must exclude the rate and amount, as well as the total sum that includes it. Replace this information with the following mandatory wording:

• “VAT exemption, Article 262 ter I of the CGI” for intracommunity deliveries
  
• “Reverse charge” for services where tax is payable by the customer