Sales tax (Value Added Tax) is a consumption tax payable by end consumers. Companies are in turn responsible for collecting it on behalf of the State.
How to calculate Sales tax?
What are the differences between collected Sales tax and deductible Sales tax? As a company, are you subject to Sales tax? What is the relationship between the price excluding Sales tax or the price including Sales tax?
So many questions that deserve clear answers. And you are in the right place! But no more chatter: hang in there, we’re gone. Making use of the sales tax calculator zip code is important there.
Sales tax: definition
Sales tax (Value Added Tax) is a tax on consumption. It is paid by end customers to sellers on the basis of a pre-defined rate depending on the nature of the product or service purchased.
You should know that companies are not subject to Sales tax, they are content to collect it and then pay it back to the State.
There are two distinct types of tariffs: the price excluding taxes (HT) which corresponds to the pricing invoiced by the company, without taking into account the Sales tax. And the price inclusive of all taxes (TTC) which is made up of the price excluding tax and the corresponding amount of Sales tax.
In mainland France, there are currently 4 distinct rates:
20%: this is the normal rate in force. It concerns most of the goods or services for sale.
10%: we are talking here about an intermediate rate. Are concerned for example:
- Catering or sale of prepared food products
- Rental of hotel rooms, camping pitches or furnished premises
Entrance fees for infrastructure and cultural events (trade fairs, museums, fun fair, parks, temporary or permanent exhibitions, etc.)
5.5%: this is the reduced rate. It includes consumer goods or basic necessities as well as certain cultural products. Here are some of them:
- Arrangement, services and equipment for the elderly or disabled
- Books, cinema tickets, tickets for sporting events.
2.1%: “super-reduced” rate. This is a very specific rate, which only concerns a few elements. We find for example in this category:
- Newspaper sales (print or online)
- Reimbursable drugs
- Live animals for slaughter
You can find all the elements for each rate here, as well as the differences for the overseas departments.
Sales tax deductible, Sales tax collected, Sales tax credit and Sales tax payable: make the distinction
We clarified in the previous part the Sales tax on the customer side, i.e. how high your customer is taxed when he buys from your company. Now, let’s take a look at the 4 terms that apply to you as a business manager. Source of much confusion and regularly misinterpreted, it is nevertheless thanks to them that you will know what you owe to the State or if it is indebted to you.