- Taxable entities must deduct the value-added tax VAT incurred on goods and services they have acquired by offsetting it against the tax due provided they hold the document justifying the VAT
- The term operate a deduction refers to the action of listing the deductible tax amount on the tax return even if this amount cannot be offset due to insufficient VAT owed by the company
- This term is valid even for a company that cannot perform the tax offset due to reasons such as not having deductible transactions, only making exports or intra-community deliveries, or having a tax credit for other reasons
- The deduction of VAT on goods and services acquired by a taxable entity is carried out by offsetting it against the tax due for the month in which the right to deduction arose
- The right to deduction arises when the tax becomes payable by the supplier of the goods, the service provider, or the acquirer of goods and services in cases of import, intra-community acquisition, or self-supply
- To exercise the right to deduct VAT on expenses related to goods deliveries or service provisions, the taxable entity must possess invoices or equivalent documents at the time of filing the sales tax return
- For other transactions where VAT is self-assessed, the deduction can be made if the taxable entity has included all necessary data on the tax return to verify the tax amount due and holds the document justifying these elements
- A taxable entity in possession of an invoice or equivalent document at the time of filing the sales tax return covering the tax period in which the tax became payable can exercise their right to deduction on this return as the formal condition justifying the tax deduction is met
Source: bofip.impots.gouv.fr
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
