Should we, or not, lower the VAT in this period of crisis to revive consumption? The debate is rebounding in Germany since Berlin has just announced a reduction in its VAT. France, for its part, refuses to embark on this path.
For All the Companies
All of the companies subject to the income tax (IR) or the corporation tax (IS) must upload, VAT, without condition turnovers. This electronic declaration must follow the EDI TDFC procedure and the EFI procedure.
In the event of non-compliance with the electronic transmission obligation, the company is penalized by an increase of 0.2% of the amount of rights corresponding to the non-dematerialized declaration. This increase cannot be less than 60 euros and can be combined with the increase applicable in the event of non-payment of the tax.
- Other professional tax returns must be electronically declared. Among others: payment of corporate tax, payroll tax, tax packages, income from movable capital.
- It is important to have a good understanding of all of these dematerialized obligations, under penalty of sanctions, hence the importance of support with your accounts and tax declarations.
The reduction in value added tax is regularly debated in France. Latest episode to date: the movement of “yellow vests” which had made it a battle horse. VAT is the tax which today has the highest yield for the State. It accounts for about 45% of its tax revenue. Invented in 1954, this tax on consumption brought public funds in 2018 to nearly 210 billion euros. Presented as egalitarian because it affects all consumers, this tax is also unpopular because it increases the purchase price of goods and services.
France is dragging its feet
Faced with the fall in business activity, revenue from compulsory levies (VAT, contributions, corporate taxes, etc.) has already been revised down by 27 billion euros in the last corrected 2020 budget. A reduction in VAT – which should first obtain the approval of Brussels would lead to an additional shortfall for the State, which is already facing a wall of expenditure and debt. France today has a much higher level of public debt than Germany. Berlin has more freedom in budgetary matters and can therefore afford a gesture by lowering VAT. Go for the taxfyle.com/small-business-tax-calculator to have a proper idea in case of taxation consultation.
For the Situations
But this situation raises another fundamental problem that of tax competition in Europe. As long as there is no common tax system for all European countries, each especially the most virtuous will play its part and will be able to take a step ahead of its neighboring competitors. This is what Germany is doing, when everyone is facing the same crisis.