The most common mistake when reclaiming VAT from France is that entrepreneurs assume that every receipt with French VAT will also be returned in full. That is not the case. Like any other refund country, France decides for itself which types of costs are eligible for deduction and to what extent. Anyone who submits a request without checking it will often see that part is rejected, that the treatment takes longer due to additional questions, or that the final amount is considerably lower than expected.
The underlying rule is contained in Directive 2008/9: a returning country never has to give back to a foreign entrepreneur more than it would allow to its own entrepreneurs. France has restrictions on a number of cost types that do not apply in the Netherlands or have been filled out differently. Examples include certain fuel costs for passenger cars and representation and accommodation costs. This is exactly where things often go wrong: the request is set up on the basis of what is common in the Netherlands, while France has its own list of what is allowed and what is not allowed.
Why this mistake occurs so frequently
Most entrepreneurs who claim a refund of French VAT themselves do so once or twice a year. There is then little reason to know the full set of French rules by heart, and you don't have to: the rules are set out in the requirements published by the tax authorities for each country of return. The problem only occurs when a receipt ends up in a request without further review, purely because it has VAT on it. A fuel receipt, a hotel invoice or a stock exchange invoice looks the same to the applicant everywhere, but does not automatically fall under the same cost category in France as in Germany or Belgium.
Which types of costs often go wrong
Fuel is a recurring example. In France, different principles apply to passenger cars than to vans or lorries, and in practice, that distinction is not always made when compiling a request. The accommodation costs of its own staff are also regularly discussed: France treats overnight stays by its own employees differently than overnight stays that are charged to third parties. And representation costs, such as a business dinner with a customer, often have a stricter test than a regular exhibition stand or trade fair.
What this means in practice
The result is not that the entire request is rejected. Usually, part of the requested VAT is deleted, while the rest is simply paid out. This is often confusing for the entrepreneur: the amount in the decision differs from what was expected, without it being clear exactly which receipt was rejected and why. In the case of a manually submitted request, this also means that the next request will be compiled again with the same uncertainty, because the previous rejection is not automatically translated into an adapted method.
How to prevent this
The crux is simple: before submission, test each type of cost against what France specifically allows, instead of what is common in the Netherlands. This requires up-to-date knowledge of the French requirements list, and a way of working where this test is done structurally, not occasionally. On selected the page where we claim VAT back per situation explains how that varies by cost type, and why the same receipt is fully deductible in one country and not fully deductible in the other.
If you want to see how much this could actually save, you can use get an indication of a few questions of what French VAT will remain unclaimed over the course of a year. This estimate already takes into account common restrictions, so the result is closer to the actual refund than a simple adding up of receipt amounts. How that assessment works exactly and where the underlying sources come from, you can read on the page that shows where our information is based.
If you have doubts about a specific situation, for example a borderline case between representation and an ordinary business expense, it is advisable to submit this to a VAT specialist. We classify and assess receipts, but do not provide tax advice on individual cases. Frequently asked questions about what does and does not count are collected on the page with answers to similar questions.
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