Less than a month after the French Blue Economy Act relaxed the eligibility conditions to benefit from the French import Value Added Tax (VAT) reverse charge mechanism, the Sapin II Bill — currently under debate before the French Parliament — now provides that such benefit requires authorization by the French Customs Authorities, under certain conditions. In theory, while the Sapin II Bill is under debate, it is still possible to apply for the benefit from the French import VAT reverse-charge procedure as a precautionary measure. While strictly abiding by Article 1695-II of the French Tax Code (FTC) as worded pursuant to the Blue Economy Act, companies wishing to opt for the mechanism may do so by sending a letter on plain paper to the French Customs Authorities (by registered mail with return receipt requested). However, the French Customs Authorities released a memo on July 13 confirming that practical application of this measure will be deferred until October 1, even if companies opt in immediately.

A Tax Alert prepared by Ernst & Young France, and attached below, provides additional details.

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Full text of Tax Alert 2016-1326