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Sales Tax and Its Essential Options for You

It is essential to have a good understanding of taxable transactions in order to understand how Sales tax works. There are three main categories of taxable transactions.

Transactions subject to Sales tax by nature

In general, this notion covers:

  • The sales of goods and services.
  • Carried out against payment.

Which are part of an economic operation (producers, traders, service providers, farmers, etc.) carried out independently (which excludes, for example, the employee), regardless of legal status .

Drawing:

An individual transfers, exceptionally, a house he owns. In this situation, although there is a sale of property for payment, the operation is part of the management of private assets and therefore does not bear Sales tax.

On the contrary, if an individual sells, in the usual way, objects which he produces himself, this activity could be reclassified as a professional activity and be subject to Sales tax. The frequency of operations therefore plays an important role.

Transactions liable to Sales tax by special provision

These transactions do not meet the criteria set out above. However, the law subjects them to Sales tax. It is mainly:

  • Of imports and intra-Community acquisitions.
  • The deliveries himself of goods or services (when a person gets a good or service through his property.)

A company uses its own tools to manufacture goods that it will use for its own account. This operation will bear Sales tax. The taxfyle.com/sales-tax-calculator  is perfect for them for the proper sales tax calculation.

Optional Sales tax taxable transactions

These activities are in principle not subject to Sales tax. However, it is possible, as an option, to submit them to Sales tax. It is mainly:

  • Rental of bare buildings for professional use
  • Deliveries of land not for construction or buildings completed for more than 5 years
  • Agricultural activities not compulsorily subject to Sales tax
  • Leases for rural property
  • Sales tax-exempt transactions

Certain transactions are exempt from Sales tax. It is mainly:

  • Intra-community exports and deliveries
  • Medical and paramedical activities
  • Education and vocational training activities
  • Insurance operations
  • Operations of non-profit organizations
  • Rental of premises for residential use

LBdD advice:

The company has the possibility of benefiting from the exemption regime based on Sales tax when its turnover for the previous year does not exceed 82,800 euros for sales of goods and 33,300 euros for services of services.

The basic franchise allows the company to be exempt from Sales tax. The latter therefore offers sales and tax-free services to its customers.

How Vat Works: What Are The Applicable Vat Rates?

Sales tax is calculated from the price received in consideration for the sale or service provided. Sales tax is payable on the delivery date for deliveries of goods on the date of collection of the price for the provision of services. The proper functioning of Sales tax presupposes rates adapted to the products concerned.

The Sales tax rates differ according to the type of operation performed. The normal rate is 20%. It applies when no reduced or intermediate rate is provided. There is the reduced rate at 5.5% (for certain food products, books, equipment for disabled people, for the provision of meals in school canteens, etc.) and the intermediate rate at 10% (for firewood, works in living quarters).

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