French taxation

PRACTICAL CASE
Mr. ALBERT, producer of household appliances, sells €50 HT a refrigerator to Ms. BERNARD, wholesaler. Mrs. BERNARD resells the ware €300 HT to Mr. CHARLES, trader, which in turn resells the ware to Mr. DIDIER, a private individual, for the price of 500 euros excluding taxes.
In a tax system where the VAT rate is 20%, complete the following statements:
Output (collected) VAT by Mr. ALBERT =
Input (deductible) VAT by Mr. ALBERT * =
VAT paid to the state by Mr. ALBERT =
Mr. ALBERT is a legal / real liable (debtor):
(* by hypothesis, no cost of production)
Output (collected) VAT by Mrs. BERNARD =
Input (deductible) VAT by Mrs. BERNARD =
VAT paid to the state by Mrs. BERNARD =
Mrs. BERNARD is a legal / real liable (debtor):
Output (collected) VAT by Mr. CHARLES =
Input (deductible) VAT by Mr. CHARLES =
VAT paid to the state by Mr. CHARLES =
Mr. CHARLES is a legal / real liable (debtor):
Output (collected) VAT by Mr. DIDIER =
Input (deductible) VAT by Mr. DIDIER =
VAT paid to the state by Mr. DIDIER =
Mr DIDIER is a legal / real liable (debtor):
Total value added for the refrigerator from production to consumption (assuming original value is €0):
Value added tax for the refrigerator:
Total tax cashed by the State:
The VAT cost on the refrigerator is actually borne by:
purchase cost (excluding tax) for Mr. CHARLES =
selling price (excluding tax) for Mr. CHARLES =
Net profit (excluding tax result) for Mr. CHARLES =
The cost of VAT on the refrigerator is actually borne by:
Payment (including tax) for Mr. CHARLES on the purchase of the refrigerator =
Cashing (including tax) for Mr. CHARLES at the sale of the refrigerator =
Disbursement of net VAT (collected – deductible) due to the State by Mr. CHARLES =
NET Gain for Mr. CHARLES =
Conclusion: VAT is………………….. for the company.
Taxation ESC MGE2 2019-2020
15
PRACTICAL CASES
Analyze the following transactions about the applicable VAT rules and complete the tables:
1- Mr. CHARLES, household appliance producer :
– Sale on January 15, 2019 of a refrigerator to Mr. DIDIER at unit price of 500 euros excl. tax.
– After negotiation, Mr. DIDIER gets a 10% discount on the excl. tax price.
– The refrigerator will be delivered to him on January 18, 2019 by Mr. CHARLES, for a “flat rate transportation” of 30 euros.
– The overall invoice is set on January 15, 2019.
Taxable operation? (yes/no)
justification:
Taxed operation? (yes/no)
justification:
If the transaction is taxable and taxed
Taxable base? (amount)
calculation:
Rate applicable
VAT to collect
calculation:
Date(s) of VAT liability
justification:
Statements to fill
Month(s) of on-line statement(s)
Taxation ESC MGE2 2019-2020
16
2- The ABC Limited Liability Company (SARL: Société à Responsabilité Limitée), which specializes in industrial cleaning:
– In January 2019, makes a maintenance service for his client the Stock Corporation (SA : Société Anonyme) EFG.
– It sends him her invoice on February 5, 2019: 10 hours of cleaning at € 20.00 excluding tax
– In addition, a bonus for completion on a Sunday is requested: flat rate amount of € 150.00 excluding tax
– The customer paid a down payment when ordering the service on January 5, 2019: € 120.00 incl. VAT
– He pays the balance by check on March 28, 2019, delivered in his own hands to the manager of the ABC Limited Company.
– The manager of the ABC LLC deposits the check in the bank on April 03, 2019.
Taxable operation? (yes/no)
justification:
Taxed operation? (yes/no)
justification:
If the transaction is taxable and taxed
Taxable base? (amount)
calculation:
Rate applicable
VAT to collect
calculation:
Date(s) of VAT liability
justification:
Statements to fill
Month(s) of on-line statement(s)
Taxation ESC MGE2 2019-2020
17
PRACTICAL CASE
After analysis, complete the turnover statement (VAT part collected) of October 2019 for the Stock Corporation INFOMAT, specializing in the sale and repair of computer hardware. This company has not opted to pay VAT on debit.
Month of operations’ October 2019:
– 5 October 2019: Sale of 2 HP printers to a local community: Price € Unit 200.00 excl. tax. Invoice and delivery on the same day. Payment by bank transfer on October 08.
– 10 October 2019: Sale of 10 Toshiba hard disks to a commercial company: Price unit €50.00 excl. tax – discount 10% consented. Invoice and delivery on the same day. Payment by bank transfer on October 12.
– 12 October 2019: Sale of an IBM computer to a company established in Switzerland: Price € 5000.00 excl. tax. Invoice and delivery on the same day. Payment by bank transfer on October 18.
– 15 October 2019: Repair of a scanner for an individual: Price € 50.00 excl. tax. Cash payment on the same day.
– 25 October 2019: Sale of a computer (exposure model) ACER to an individual: Price unit € 600.00 excl. tax, discount 50% consented. Invoice the same day. Delivery made on 2 November 2019. Payment by bank check delivered on November 02 upon receipt of the merchandise.
– 28 October 2019: Acquisition of a stock of 100 external hard disks from a supplier established in Germany. Unit acquisition cost € 30.00 excl. tax. Discount granted for big purchase: 5%. Same day invoice. Delivery made on 29 October. Payment by bank transfer made on the 25th October when ordering.
Taxation ESC MGE2 2019-2020
30
PRACTICAL CASE Calculation of 2019 Income Tax on 2018 income DUPLESSIS Tax Household
Mr. and Mrs. DUPLESSIS, born in 1973, living in Clermont-Ferrand, France, have 3 minor dependent children (2 students born in 2006 and 1 high school student born in 2003) and a 23-year-old adult child pursuing his studies in Strasbourg.
The income and expenses of this tax household are as follows:
– Mr. DUPLESSIS: Employee, wages collected in 2018 = € 36 000
He can justify € 3 000 of professional expenses.
-Mrs. DUPLESSIS: Employee, wages collected in 2018 = € 48 000
She can justify € 12 000 of professional expenses.
-Mr. and Mrs. DUPLESSIS are owners of an apartment they rent bare for residential use. Rents cashed in 2018 = € 16 000, land tax 2019 paid = € 2 200, owner’s insurance paid in 2018 = € 700, facade of the building carried out in 2018 (and paid in 2019) = € 2 000.
For the maintenance of their adult child pursuing these studies in Strasbourg, and having no income, the parents pay him a € 400 alimony per month which they can justify (The legal annual limit for deduction is € 5 888).
There was no global deficit for this tax household in 2017.
A € 300 donation to the “Restos du Coeur” (Charity Society) was carried out in 2018 (Supporting evidence).
Work to Do: Knowing that Mr. and Mrs. DUPLESSIS decided to reattach their major child, calculate the net income tax of the tax household DUPLESSIS. The social levies will be ignored.
You can try to check your calculation with the site impot.gouv.fr
Taxation ESC MGE2 2019-2020
31
PRACTICAL CASE Calculation of 2019 Income Tax on 2018 income DUPLESSIS Tax Household
1- Number of Shares:
2- Taxable Global Net Income: – A/ the Global Income = Sum of income categorical members of the household
– Mrs.’s net wages – Mrs’s net wages – Net Real Estate Income
– b/ the Global Gross Income = GI – Previous global deficit – c/ the Global Net Icome = GGI – deductible expenses on total income
– d/ the Taxable Global Net Income = GNI – Special abatements
3- The Family Quotient (FQ): 4- The gross income tax :
5- The net payable income tax