VAT on wine: everything to understand

Winegrower, restaurant owner or wine merchant: you are inevitably concerned by the subject of VAT on wine. On what does it apply? What is its rate? Who has to pay it? Les Grappes offers you a summary of the essential information to know about VAT on wine.

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What is VAT?

VAT, or Value Added Tax, is a tax on consumption. It applies to all products or services provided by professionals in France. It is an indirect tax, which is not collected by the State itself, but by the company or the professional who carries out the commercial operation. It must be collected and declared to the competent authorities (the tax department).

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 any product sold in France, the sale of drinks is subject to VAT. These beverages are subject to different taxes, depending on whether they are alcoholic or not.

By definition,a beverage is considered alcoholic when it has an actual alcoholic strength by volume of more than 1.2%. 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 for wine?

Wine, like like Champagneas well as strong alcohols such as gin, rum, vodka or whisky, are alcoholic beverages because their 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 to lower the VAT rate in restaurants. In cafés and restaurants, this reduced rate applies to take-away sales and on-site consumption.

It is 5.5% for take-away products and 10% for onsite consumption.

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 a normal VAT rate of 20%.

VAT and alcohol: the particular case of Corsica

The rates we have presented above concern alcoholic beverages sold in France, on the mainland. In Corsica, alcoholic beverages sold in restaurants, bars or cafés benefit from a reduced rate when consumed on the premises. This rate is 10%.

For sales to be taken away or delivered, the 20% rate normally applies.

Other taxes on alcoholic beverages

Alcohol is not only subject to VAT. They are also subject to excise duties (or indirect duties, or consumption duties), as well as to social security contributions.

Excise duties

Excise duty is an indirect tax on the consumption of certain products. It concerns alcohol, alcoholic beverages and tobacco.

The amount of excise duty varies according to the tax category of the alcoholic beverage and is applied on the quantity of products sold and not on their value. Still wine, sparkling wine, cider, natural sweet wine, beer etc. do not have the same consumption rights.

In the wine industry, it is generally the winemaker who pays these duties when he sells his wines in France. In case of export, they can be paid by the person who imports the goods, the carrier or a third party providing a guarantee of circulation.

One attests to having paid his excise duties by applying a duty representative capsule (DRC) to the bottle of wine. Since June 1, 2019, however, this capsule is no longer mandatory for wines and Champagne; in this case, the seller is required to justify the payment of customs with by attaching the Simplified Accompanying Document (DSA) to his goods.

Social security contributions

Some alcoholic beverages are subject to a third tax: the Social Security Contribution. Introduced in 1983, it is applicable to beverages with an alcoholic strength exceeding 18% vol. Wine is therefore not concerned.

This contributionThis contribution, assigned to the financing of the health insurance, was set up "because of the risks that the immoderate use of these products involves for the health".

Selling wine in France

With this overview, you now have the main information about the VAT on wine but also about other taxes that apply to the sale of alcoholic beverages.

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Chloé Desaigues for Les Grappes