New TVA rates applicable on 1st January 2014

By Valérie Aston on 18 November 2013 · Viewed 4835 times · Questions

French households will pay almost 6.4 billion euros more in 2014, without realising it, due to the new TVA rates applicable next year. On 1st January 2014, TVA rates will increase significantly, to fund the competitive tax credit scheme (CICE) for businesses.
 
The normal TVA rate for the majority of goods and services will increase from 19.6% to 20%, which should bring 2.6 billion euros. The current intermediate rate of 7% applicable to different sectors such as social housing, renovations, hotels and catering, passenger transport, will increase to 10%. The lower rate of 5.5% applied to commodities such as food will remain unchanged.
 
The different TVA rate can be confusing, especially for the food industry, since reduced TVA rates apply depending on the mode of consumption:

  • 7% if the food is intended for immediate consumption (if the goods cannot be kept, e.g. ice cream, croissant).
  • 5.5% if the food is sold in a package for conservation (salads and takeaways).

Summary of new TVA rates for 2014

  • Normal rate increases from 19.6% to 20%
  • Intermediary rate increases from 7% to 10% (taux intermédiaire)
  • Lower rate maintained at 5.5% (taux réduit)

Here are two useful links with:

  1. Current TVA rates applicable in 2013
  2. TVA rates applicable for the food industry

Valerie Lemiere: Start Business in France

About the author: Valérie Aston

I've been helping people who want to start or already have a small business set up in France since 2009. After graduating from a Master of Business Administration (MBA) degree, I worked as a senior marketing consultant in the UK and France for various International companies. I worked as a conseillère en création d'entreprises (senior business advisor) for BGE here in France and run this independent business on a daily basis.