Arsene Taxand - VAT & indirect taxes

The reform of the rights of deduction for the purposes of VAT is effective as from January 1, 2008

We have previously described the purposes of this reform and looked at its implementation for companies already recovering 100% of their VAT and other entities (banks and financial institutions, insurance companies and holding companies).

As this reform is being implemented without any change in positive law, it should not ultimately lead to any change in the amount of the rights of deduction; furthermore, it does not necessarily require the complete overhaul of companies’ information systems.

It can and must be implemented by companies after they have taken all the time they need.

For those who recover 100% of VAT, it means that an effort will have to be made at least in training the procurement, accounting and tax departments to help them to gain a better understanding of the new tax terminology and the new process for deducting VAT.

Depending on the nature of the fixed assets held by the company, it may also lead to tools being put in place for tax purposes outside the accounting system in order to monitor coefficients, and particularly reference coefficients, and entail an adaptation of due diligence processes, in the event of the existence of fixed assets (and real property in particular).

After gaining experience in implementation in companies with differing VAT situations, we have set up a special email address which is specifically intended to provide you with practical support in this area: tvadeduction2008@arsene-taxand.com

Alain Recoules