Dictionary
Knowledge Base
Activity unit
Branch, firm.
Branch
A branch is not a firm with its own capital or director. A branch is a stable part of a company, regardless of the country where it is established. The branch has no independent management or decision-making powers.
Carrousel Fraud also called MTIC
VAT fraud with a more or less sophisticated scheme where an operator of the purchase/resale line buys some goods or services tax exclusive, then resells them with VAT and disappears without paying the Output VAT.
Deductible VAT
VAT paid (input VAT).
Delivery note
Document following the products, remitted to the customer when goods are delivered. It usually mentions the place of departure and arrival, the weight, quantity, precise name of the goods and the delivery date.
DELTA procedure
The DELTA program is the electronic clearing procedure implemented in 2007.
Directive
Juridical text issued at the European level and integrated in the laws and regulations of each member state. For instance, the European directive n°2006/112/EC related to VAT, was transposed into the French law via the French Tax Code.
Distant sales
Distant sales are subject to specific rules (issuance of invoices, taxation thresholds) towards the final individual consumer including VAT matters in case of sales to individuals residing in another EU country.
EORI
The EORI (Economic Operator Registration and Identification) is a unique EU identification number used since 1st July 2009 by the economic operators who must comply with Customs formalities (importations or exportations).
This identification number is delivered by the country where the EU operator is established and by the country where the first operation takes place for non-EU operators.
ESL (European Sales List)
Monthly or quarterly declaration where a liable service provider reports the values and VAT numbers of the customers established in another EU country. Some member states also request the codification according to the type of services rendered. The Directive 2008/8/EC says that only the service provider is subject to such a declaration.
Fiscal representative
- VAT registered company, authorised by its local tax authorities to represent, for VAT purposes, an individual or legal entity not established in the European Union. The tax representative is jointly responsible for operations relating to French VAT and undertaken by the entity not established in the European Union.
- VAT registered company, authorised by its tax authorities to file requests for VAT reimbursement within the framework of the 13 th European directive. By extension, this term is also used under the 8th directive.
Gross VAT
VAT collected (output VAT).
Import or export document (SAD, DAU, IM)
The Customs clearing process for import and export starts with the submission of a declaration.This declaration is established on a form named D.A.U in French (“Document Administratif Unique”) and S.A.D in English (Single Administrative Document).
Export or import evidence (EXxx, IMxx )
The import or export document comprises several different pages as pieces of evidence of the import or export. It also indicates which regime the products have benefited from (release for free circulation, putting into a bond, inward processing, intra community delivery…etc).
The very first box of the SAD indicates:
COM Exchanges of goods originating from the European Union (EU), or in free circulation, with parts of the customs territory excluded from the fiscal territory.
EX Export declaration towards non-EU countries other than the EFTA and the countries of the Visegrad group.
IM Import declaration of goods directly from non-EU countries other than the EFTA and the countries of the Visegrad group or from EU countries but not put into free circulation.
EU. Export and import declaration with the countries of the EFTA and the Visagrad group.
The second box underneath indicates the procedure code – code 0 to 9 including:
These documents serve as importation evidence (VAT paid to the Customs) or exportation (justify the VAT exemption).
Incoterm
Commercial terms originating from a regulation enacted and published by the International Chamber of Commerce in Paris.
These terms define the loading, transport, means of transport, insurances, place of delivery and passing of risk.
For example, DDU : Delivery Duty Unpaid, towards a final destination but without the clearing on import.
The current Incoterms 2000 in force will be replaced by Incoterms 3000 as of 01/01/2011.
Intra-Community Acquisition
Arrival in one of the countries of the European Union of goods, products or merchandises purchased from a supplier in another country of the EU or transferred from a stock located in another country of the EU.
Intra-Community Delivery
Departure of goods; products or merchandise sold to a customer in the EU or transferred to a stock located in another EU country.
Intrastat report
Monthly declaration illustrating the flows of all goods arriving in an EU member state from another one or leaving one of the EU member state for another EU member state. Since 1993 (opening of the borders), this declaration has been the responsibility of the VAT registered company.
Liable to VAT
Entities with a VAT number
Liaison office
Office established in a country other than that of the head office for marketing and non-commercial purposes.
Net VAT
The VAT balance (output minus input).
Not established for VAT purposes
A company is considered as "not established" when it has no office, branch or activity unit in the country where it undertakes purchasing and/or selling and/or resale operations.
A liaison office (with no economic activity) is not a permanent establishment.
Permanent establishment for VAT
Branch or subsidiary, liable for income statements and balance sheet accounts. It generates an economic activity in the country.
A construction site can be considered as a permanent establishment – according to bilateral agreements.
List of the fiscal agreements signed by France.
Portal (of VAT refund)
Web site at the disposal of the Tax Authorities of each member state also allowing companies to process their VAT claims in the other 26 countries.
Respondent (fiscal)
Tax liable entity established in France accredited by its Tax Center which has the mission to submit a VAT return in the name of the foreign operator and to pay the due tax in the name of the operator on behalf of its French customer.
Reverse charge mechanism or Self-assessment
This mechanism allows the buyer to declare the due tax as the liable of it and to simultaneously deduct it when he has a right to deduction.
Services (Directive 2006/112/EC)
BtoB : specific taxation in the country where the service is rendered
- Real Estate property-related services (Art. 47)
- Passenger transport services (Art. 48)
- Supplies of cultural, artistic, sporting, scientific and educational services, and similar entertainments and events , as well as any related service (Art 53) (until 31.12.2010)
- Restaurant services (even on board) (Art 55)
- Short-term rental of means of transport (Art 56)
- Travel agencies
BtoB : taxation where the customer is located (reverse charge mechanism)
For the rest : Article 44
Subsidiary
A subsidiary is a company with its own capital and director, regardless of the country where it is established . The majority shareholder of the subsidiary's capital is the parent company.
Tariff code of the products
Customs codification of products which allows to calculate customs duties and to file the declaration.
Tax agent
VAT registered company, authorized by the tax authorities to represent, for VAT purposes, an individual or legal entity established within the European Union. The tax agent is not responsible for the operations declared to the tax authorities.
Tax point
A right that the tax authorities can exercise after a given deadline vis-à-vis a taxpayer to obtain payment of the tax.
Temporary fiscal representation
Simplified procedure allowing an operator who carries out importations from a non-EU country followed by an intra-community delivery to use the services of a temporary fiscal representative. This temporary fiscal representative will be in charge of the required declaration on behalf of the operator who will not have to be VAT-identified in the country where the importation is done.
Triangulations – VAT triangular operations
These are operations involving three operators who are VAT registered in three different member states. If this condition is fulfilled, some simplified fiscal measures can be applied to the organization of the purchase/resale process.
UER – use & enjoyment rules
Exception to the common rule of services taxation since 01.01.2010 allowing the states to keep the taxation in their country when services are rendered or used there but also to exempt services used outside the EU.
VAT (popularisation)
- VAT is a tax on consumption: calculated according to value-added
- The principle of VAT is neutrality for economic operators (VAT is not a cost)
- The company collects the VAT
Since 01/04/2001, the so-called "normal" rate in France is 19.60%. Each country in the European Union has its own VAT rates.
VAT certificate
Document issued by the fiscal authorities governing the claimant. Proof of claimant's liability to VAT facilitating either VAT registration of claimant in another EU country (6 th European directive).
VAT Package - Directives 2008/8/EC and 2008/9/EC
Corpus of two directives deeply modifying the application of VAT on services rendered within the EU (2008/8/EC) as well as the VAT refund in the countries where companies are not established (2008/9/EC).
VAT Quitus
Certificate for the acquisition of a vehicle (car, boat, plane) issued by the tax office. This document indicates precisely the status of the acquisition regarding VAT and permits the registration of the vehicle at the appropriate register.
VAT recovery
Input VAT on purchases to taxable sales (6 th European directive). Right to reimbursement of VAT paid to suppliers in another country (8th and 13 th European directives).
VAT refund
Financial flow following the introduction of a request for VAT reimbursement (6th, 8th and 13th directives of the E.E.C.)
VAT return
Declaration form for the French tax authorities. In France it has to be filed even if no operations need to be declared.