- Article 257 bis of the French Tax Code (FTC) allows for VAT exemption during business transfers under certain conditions.
- The transfer must involve a set of coherent elements allowing the purchaser to continue the activity.
- The transfer must be between two taxable persons liable for VAT.
- The transferee must intend to continue the operation.
- If these criteria are not met, VAT will apply at the standard rate of 20%.
- A universality of assets refers to a set of tangible and intangible assets constituting an autonomous economic entity.
- Examples of universality transfers exempt from VAT include: contribution of a business to a company with continued activity, sale of a complete branch of activity, and universal transfer of assets in the event of dissolution without liquidation.
- Examples of transactions subject to VAT include: sale of a stock of goods without resuming operations, and sale of a building alone, even if it was used as part of an economic activity.
- If the transfer does not concern the entire fund but only certain elements, article 257 bis of FTC does not apply systematically.
- When intangible items are sold separately, VAT applies in the majority of cases.
- Examples of items subject to VAT include: sale of a customer base, sale of a brand or commercial name, and transfer of the right to use a patent or software.
Source: cyplom.com
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.
