VAT on advance payments in France - when does the tax liability arise?
The moment the money is received isn't always sufficient to properly settle French VAT. First, you need to determine the type of transaction, its taxable place, and the entity responsible for settling the tax.
The most important change concerns goods: from 2023, an advance payment for a future, sufficiently specified delivery may result in VAT becoming due as soon as the funds are received.
One advance payment, four different VAT paths
Don't start with the rate. Start with the type and location of the transaction.
Commodity
From 1 January 2023, VAT may be payable upon receipt of an advance payment – within the amount received and upon a specific delivery.
Service
VAT is generally payable upon receipt of an advance payment or payment, i.e. on receipts (TVA sur les encaissements).
WDT
Exempt intra-Community supplies of goods have special rules. French VAT is not automatically added.
Reverse charge
First, determine who settles the tax. The receipt of the advance payment does not change the taxpayer designated by the transaction mechanism.
Does the advance payment trigger VAT in France?
Select the flow type. The result indicates the direction of the analysis and does not replace the evaluation of the transaction documents and terms.
First, qualify the transaction
The same prepayment may mean VAT due, no French VAT or settlement of tax by the buyer.
The tool does not analyze delivery location, exemptions, or party status.Beware of old articles
From January 1, 2023, advance payments for the supply of goods may trigger French VAT upon receipt. Materials that unconditionally describe the "VAT only upon delivery" rule are currently incomplete. The French administration confirms the change in the current clarification regarding the supply of goods.
Advance payment for goods: VAT only for a specific delivery
Tax becomes due upon receipt of an advance payment up to the amount received, provided that all essential elements of the future delivery are already known. The goods must be precisely identified and the delivery sufficiently certain.
Impact of funds
What counts is the actual receipt of the advance payment, not the date of the order or the issuance of the proforma invoice.
Known delivery
The future goods and delivery terms must be recognizable at the time of payment.
Proportion
VAT is only payable on the part of the price covered by the advance payment received.
Order worth 10,000 EUR net
A French seller receives a €3,600 gross advance payment for precisely identified goods taxed at 20%. Upon receipt, he recognizes €3,000 of base and €600 of VAT. Delivery and the final invoice cover the remaining balance.
A general deposit is not always a taxable advance payment
If a customer deposits funds for unspecified future purchases, VAT should not be automatically recognized as with a sufficiently specific delivery. An analysis of the contract and payment function is necessary.
In the case of services, the receipt of the advance payment is usually determined by VAT
For services taxed by the contractor in France, VAT is generally due upon receipt of the advance payment, price, or remuneration. This is how the TVA sur les encaissements (receipts-based payment).
Receiving payment
Any part of the remuneration received before the service is provided may give rise to VAT on that part.
Settlement by charge
The option of settling by debit (d'après les débits) can accelerate VAT, but cannot postpone it to a point later than the actual payment.
Place of supply
Before calculating VAT, check whether the service is actually taxable in France and who settles the tax.
Example
The service costs €5,000 net plus €1,000 VAT. A 50% deposit means €2,500 net plus €500 VAT, payable upon receipt. Payment rules for services are also described in the BOFiP regulations regarding VAT liability on services.
Calculate VAT on advance payment
Enter the net value of the entire transaction, the advance payment percentage and the appropriate VAT rate.
Don't confuse tax event, due date and invoice
Tax event
The moment when the material conditions for taxation are met – usually the performance of a supply or service.
VAT chargeability
The point at which the administration can claim tax and it must be included in the appropriate declaration.
Document
The invoice describes the event and the amounts, but the name of the document itself does not determine the qualification of the payment.
When can a customer deduct VAT from an advance payment?
From 1 January 2023, the buyer may, in principle, deduct VAT from the advance payment for goods at the time of payment – only up to the amount paid and after meeting the general conditions for deduction.
The transaction is specified
The goods and future delivery should be sufficiently specific.
VAT is payable
The seller recognizes the tax on the portion of the price received.
The documentation is complete
The buyer has a valid advance payment invoice and meets the other deduction requirements described by the French administration.
An advance payment invoice is not a pro forma invoice
An advance payment invoice (facture d'acompte) documents the advance payment received. A proforma invoice, offer, order, or transfer confirmation do not replace a valid document.
Advance payment invoice
- has a consecutive number and date
- identifies the parties and the transaction
- shows the base, rate and VAT where tax is due
- is a reference point for the final invoice
Pro forma
- may indicate an expected payment
- is not a proper VAT invoice
- does not replace required tax data
- does not independently give the right to deduction
What should it contain?
An advance payment invoice generally contains mandatory invoice data, taking into account information that is known at the time of issuance. The French rules for issuing advance payment documents are described in the BOFiP invoicingdocument. A complete list of fields is discussed in the VAT invoice guide in France.
How to combine an advance payment invoice with a final invoice?
The final invoice shows the full value of the transaction, any advance payment received, and the remaining amount – without taxing the same portion again.
FACTURE D'ACOMPTE
FACTURE FINALE
The advance payment does not mean French VAT with exempt IDT
The IDT has its own rules for payment. An advance payment invoice issued before the goods are shipped does not accelerate the tax payment process like a domestic sale in France.
Don't charge 20% TVA just because the money was received earlier
The conditions for the exemption from IDT and the transport documentation must be confirmed. An advance payment invoice does not automatically trigger French VAT, as confirmed by the rules described in the BOFiP for intra-Community transactions. The delivery conditions, a complete set of evidence, and reporting obligations are described in the French IDT. This allows for the assessment of the advance payment to be separated from the assessment of the subsequent delivery.
Reverse charge: advance payment does not change the taxpayer
If the tax is settled by the French buyer under the reverse charge mechanism (autoliquidation), the foreign seller does not add French VAT solely because he has previously received an advance payment.
First the mechanism, then the invoice
A full analysis of the obligated entity and document markings can be found in the article on the reverse charge in France.
B2C and Amazon FBA: Establish Your Merchandise Flow First
The same customer and the same down payment may lead to a different result depending on the shipping origin, buyer status and OSS usage.
| Flow | First analysis | What about the advance payment? |
|---|---|---|
| FR Magazine → FR Consumer | Local B2C sales in France | VAT FR possible on specific delivery |
| FR warehouse → VAT FR company | Local sales and possible reverse charge | First, determine who settles the tax |
| FR Magazine → DE Consumer | Mail order and OSS possible | Separate path according to place of taxation |
| Transfer of own goods to the Russian Federation | Intra-Community movement | It is not an advance payment from the customer |
Amazon doesn't decide the tax rate
Not every prepayment collected through the Amazon channel automatically triggers a 20% VAT. First, analyze the model described in the Amazon FBA in France and VAT and the possible movement of your own goods.
The rate for the advance payment is based on the future transaction
Do not automatically select 20%. The advance payment assumes the rate appropriate for the goods or services it applies to.
One rate
Use the appropriate rate for a clearly defined benefit.
Several rates
Assign the advance payment to the item and distribute the base and VAT at the appropriate rates.
No attribution
A general deposit for future purchases may not meet the requirement of a sufficiently specific transaction.
What to do after returning the advance payment?
Do not delete the original invoice. The correction should leave a clear trace between the payment, the refund, and the VAT return.
First, check what the payment was for
An advance payment (acompte) and a deposit/compensation (arrhes) have different civil law consequences. The French consumer protection authority clarifies the difference between acompte, arrhes, and avoir. However, for VAT purposes, the actual function of the payment and its relationship to the transaction are also important.
Advance payment in CA3, e-reporting and foreign currency
Three areas require consistency: the date of receipt, the document and the entry in the settlement.
CA3 Declaration
If VAT is due on an advance payment received on October 8, 2026, the taxpayer will include it in their monthly tax return for October. Details of the declaration are discussed in the VAT declarations in France.
E-reporting of payments
In the 2026-2027 reform, payment data will be relevant for transactions where VAT is payable upon payment. The scope and deadlines must be aligned with the principles described in the article on e-invoicing in France.
Foreign currency
The amount of the advance payment and VAT must be correctly converted into euros according to the rules applicable at the time of payment and proof of exchange rate must be retained.
Payment reporting does not apply to every invoice
The French administration links the obligation to provide payment data to transactions for which VAT becomes chargeable upon receipt of funds. The current clarification was published on September 30, 2026, in the BOFiP document on transaction and payment data.
How does the result change in practice?
Local goods
Specific goods, delivery in France, 30% prepayment.
VAT on the received partLocal service
Service taxed by the contractor and 50% advance payment.
VAT on receiptWDT FR → DE
The VAT DE customer pays before the goods are shipped.
WDT rules, no automatic TVAReverse charge
The tax for the transaction is settled by the French buyer.
The advance payment does not change the taxpayerUnspecified purchase
Payment for future goods without specifying the assortment.
No automatic qualification10 mistakes when it comes to VAT on advance payments
The old rule for goods
Skipping the change effective from January 1, 2023.
Each payment = advance payment
Failure to check whether the transaction is sufficiently specified.
Automatic 20%
The rate is not set by the name "advance payment".
Proforma instead of invoice
The commercial document does not replace the advance payment invoice.
Double VAT
The final invoice again includes the already taxed part.
WDT as local sales
The advance payment is wrongly charged to the French TVA.
Reverse charge omitted
The seller charges VAT despite settlement by the buyer.
Bad period CA3
The impact and declaration go to different periods.
No rate distribution
The advance payment covers goods taxed at different rates.
Deleted invoice after refund
There is no correction and no full accounting trail.
Advance payment checklist in France
Go through the entire list before issuing the document and recording VAT.
- Determine whether the transaction involves goods or services.
- Confirm place of taxation.
- Check who is obligated to settle TVA.
- Determine whether it is a domestic sale, intra-Community supply, export or reverse charge.
- Verify that the future benefit is precisely defined.
- Confirm the date the funds were actually received.
- Set the appropriate rate or split it into multiple rates.
- Calculate the base and VAT only for the portion received.
- Issue a correct advance payment invoice.
- Do not treat the proforma as a VAT document.
- Check the buyer's deduction conditions.
- Schedule your advance payment to be settled on your final invoice.
- Assign tax to the correct CA3 period.
- Include payment data in e-reporting reform.
- Convert foreign currency to euro and keep the rate.
- When canceling, issue a correction and document the return.
- Keep your contract, order, invoices, transfers and correspondence.
Are you receiving advance payments and don't know when to settle your TVA?
We'll verify the transaction model, tax base, documentation, and due date. We'll then link the advance payment invoices to the CA3 declaration, reverse charge, IDT, or electronic reporting.
FAQ - VAT on advance payments in France
Does an advance payment for goods result in VAT in France?
Yes, from 1 January 2023 it may result in VAT being payable on the amount received if the future supply is sufficiently specified.
Does the rule apply to contracts concluded before 2023?
Yes. The administration indicates that the new rule covers advance payments received from January 1, 2023, including those under contracts already in effect at that time.
When is VAT due on an advance payment for a service?
As a rule, upon receipt of an advance payment, price or remuneration if the service provider settles French VAT.
Does the option d'après les débits postpone VAT after the payment date?
No. The charge-based billing option cannot delay due dates beyond the time of actual receipt of payment.
Is a proforma sufficient to settle the advance payment?
No. A proforma is a commercial document and does not replace a proper advance payment invoice.
Does an advance payment invoice have to include all the details?
It should contain the mandatory invoice data, except for information about a future transaction, which cannot yet be objectively determined. However, it must sufficiently identify the service.
Does the advance payment on intra-Community supply of goods result in French VAT?
Not automatically. Exempt IDT has special rules, and an advance payment invoice does not accelerate due date as with domestic deliveries.
In the case of reverse charge, does the seller add VAT to the advance payment?
No, if the purchaser actually settles VAT for a given transaction. An advance payment does not change the entity liable.
What rate should be applied to the advance payment?
The appropriate rate for the future product or service. If multiple rates are used, the advance payment should be allocated and divided accordingly.
Can the buyer deduct VAT from the advance payment invoice?
It can, if VAT has become chargeable, the transaction is properly identified, has a valid document and meets the other conditions for deduction.
In which period should the advance payment be reported in CA3?
During the period in which VAT became chargeable. For a typical advance payment, this means the period in which the funds were actually received.
What to do if your order is canceled?
Document the return, issue a credit note or credit memo and correct the VAT within the appropriate period, while retaining the original document.
Do acompte and arrhes mean the same thing?
No. They have different civil law consequences. For VAT purposes, the actual function of the payment and its relationship to the specific transaction must also be examined.
The material is for informational purposes and presents general principles as reviewed on October 6, 2026. The result depends on, among other things, the place of taxation, the status of the parties, the content of the contract, the definition of the future performance and the documentation.
