Deferred payment of VAT

Deferral of the payment of VAT is no longer contingent on the mandatory presentation of a guarantee.

The obligation for operators to present a soumission cautionnée (guaranteed undertaking) in order to be entitled to deferral of payment of the VAT owed on imports or when oil products are released for consumption has been revoked. Up to now, over 85% of businesses benefitting from a customs bond credit[CL1] , which have asked to take advantage of this measure, have been catered for.

What effects will this decision have on you?

There are four essential points:

• First, if you are aiming to reduce the amount of your guarantee, your expenses for clearance procedures will be slashed under this measure.For a container with a value of €152,000, exclusive of taxes, the average cash flow gain due to the revocation of the VAT payment deferral guarantee has been assessed at €20.9.
• Second, even if you are not looking to reduce the amount of your guarantee, you can still benefit from the measure which allows you, without an increase in guarantee-related expenses, to have a much greater clearance capacity than at present.
• Even if you currently use the AI2 procedure for VAT exemption, it is in your interest to apply to benefit from the measure to the regional customs collector who manages your customs bond credit to plan for a situation in which your AI2 quota may not be sufficient to cover your operations, at the year-end for example.
• Lastly, the financial gain from deferring the payment of VAT, without  providing a guarantee, will be even greater if you opt (see point three below) to make a single monthly VAT payment on the 25th of the month following the transactions.

What procedures need to be accomplished to benefit from the measure?

Customs operators paying VAT on imports or when mineral oils are released for consumption are advised that form DA 13-048 is now available online. The form concerns dispensation from providing a guarantee, which may be granted to these operators, subject to certain conditions, for the deferral of the payment of this tax.

Single monthly payment date

Since 2005, you have been able to opt to pay VAT owed in respect of all your declarations of imports or release for consumption (oil products) for the previous month in a single monthly payment on the 25th of each month.

The 25th of the month was deliberately chosen as the single monthly payment date because it always falls after the date for filing the CA3 return with the tax authorities and is therefore subsequent to the deduction of VAT for all businesses liable to the tax.

Only VAT is concerned by the single monthly payment date as it is the only input tax among the taxes and duties collected by French Customs. All other taxes (EU and domestic) that are assessed on the basis of declarations of imports or release for consumption (oil products) will continue to be paid at 30 days. This 30-day period starts either on the date of the daily form summarising the amounts to pay for each transaction or, in the event of aggregation, from the middle of the applicable period (ten-daily or monthly forms).

How will this measure affect you?

There are two important points.

• First, the introduction of a single monthly payment date will totally remove the financial costs (carrying costs) incurred by certain businesses in the past when they paid VAT to Customs before deducting it on the CA3 return filed with the tax authorities.

As a result, for a container with a value of €152,000, exclusive of taxes, the average cash flow gain resulting from the removal of the carrying cost (when this is booked), with a single monthly payment on the 25th of the following month, has been assessed at €30.5.

• Second, if you opt to pay VAT on the single monthly payment date, your payment deferral period will be much longer than it is at present; it could be up to 55 days. You would therefore fully benefit from this measure by combining it with the dispensation system, the aim of which is to remove the financial costs related to the guarantee for the deferred payment of VAT.

What effect will the measure have on payment deadlines?

Businesses continue to pay customs duties and taxes other than VAT on the usual deadlines (i.e. daily, every ten days or monthly).
However, VAT can be paid to customs once a month, after receipt of the form summarising the amounts to pay for each transaction, on the 25th of the month following the transactions.

Example: VAT payable on the basis of IM 4 returns filed between 1 and 30 April 2010 could be paid in a single instalment on 25 May 2010.

What procedures need to be accomplished to benefit from the measure?

The single monthly payment date option is not mandatory and you can make a choice to either pay on the single deadline or continue with previous payment arrangements, when filing your undertaking which is either guaranteed, partly guaranteed or non-guaranteed, or to make the request at any time to the regional collection office that manages your customs bond credit.
Practical arrangements. In order to benefit from both the deferred payment and single payment date, you should send an application for dispensation of guarantee for the VAT payment deferral to the  regional customs collector who manages your customs bond credit.
On the other hand, if you are not interested in the dispensation measure or if it was unable or cannot be granted to you in the immediate future, opting for the single monthly payment date on the 25th of the following month will involve increasing the amount of the guarantee.