Winemaker, restaurateur, or wine merchant: you are inevitably affected by the issue of VAT on wine. What does it apply to? What is the rate? Who has to pay it? Les Grappes offers you a summary of the essential information you need to know about VAT on wine.
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What is VAT?
VAT, or Value Added Tax, is a consumption tax. It applies to all goods and services provided by businesses in France. It is an indirect tax, not collected by the government itself, but by the business or professional carrying out the transaction. They are responsible for collecting and declaring it to the relevant authorities (the tax office).
Depending on the sector of activity, the nature of the product or service, and the location of the taxable transaction, the VAT rate may vary. It can range from 5.5% to 20%.
VAT on alcoholic beverages
Like all products sold in France, the sale of beverages is subject to VAT. These beverages are subject to different taxes depending on whether they are alcoholic or non-alcoholic.
By definition, a beverage is considered alcoholic when it has an actual alcoholic strength by volume greater than 1.2% vol. Beer is the only exception: it is considered an alcoholic beverage when its actual alcoholic strength by volume reaches or exceeds 0.5% vol.
VAT: what rate applies to wine?
Wine, just like Champagne , as well as strong spirits such as gin, rum, vodka or whisky, is therefore part of the alcoholic beverages because its acquired alcoholic strength by volume is generally between 10 and 15% vol.
These drinks are therefore subject to the standard VAT rate of 20%.
VAT on wine in restaurants
Since 2009, France has implemented new measures aimed at lowering the VAT rate in the restaurant sector. In cafes and restaurants, this reduced rate applies to both takeaway sales and on-premises consumption.
It is 5.5% for takeaway products, and 10% for products to be consumed on the premises.
However, this reduced rate does not apply to alcoholic beverages, whether sold on the premises or for takeaway. All alcoholic beverages, including wine, therefore retain the standard VAT rate of 20%.
VAT and alcohol: the special case of Corsica
The rates mentioned above apply to alcoholic beverages sold in mainland France. In Corsica, alcoholic beverages sold in restaurants, bars, or cafés benefit from a reduced rate of 10% when consumed on the premises.
For takeaway or delivery sales, the 20% rate normally applies.
Other taxes on alcoholic beverages
Alcoholic beverages are not only subject to VAT. They are also subject to excise duties (or indirect duties, or consumption duties), as well as social security contributions.
Excise duties
Excise duty is an indirect tax levied on the consumption of certain products. These products include alcohol, alcoholic beverages, and tobacco.
The amount of excise duty varies depending on the tax category of the alcoholic beverage and is applied to the quantity of product sold , not its value. Still wine, sparkling wine, cider, naturally sweet wine, beer, etc., do not have the same excise duties .
In the wine industry, it is generally the winemaker who pays these duties when selling their wines in France. In the case of exports, they may be paid by the importer, the carrier, or a third party providing a guarantee of transport.
Payment of excise duties is certified by affixing a duty receipt (CRD) to the wine bottle. However, since June 1, 2019, this receipt is no longer mandatory for wines and Champagne; in this case, the seller is required to provide proof of customs payment by including the Simplified Accompanying Document (DSA) with the goods.
Social security contributions
Certain alcoholic beverages are subject to a third tax: the Social Security Contribution. Introduced in 1983, it applies to beverages with an alcohol content exceeding 18% vol. Wine is therefore not affected.
This contribution , allocated to financing health insurance, was put in place “because of the health risks associated with the excessive use of these products”.
Selling wine in France
With this overview, you now have the main information regarding VAT on wine as well as other taxes that apply to the sale of alcoholic beverages .
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Chloé Desaigues for Les Grappes
