VAT on wine: a comprehensive guide

Whether you are a winemaker, restaurateur, or wine merchant, you are undoubtedly concerned by the topic of VAT on wine. What does it apply to? What is its rate? Who is responsible for paying it? Les Grappes provides a summary of the essential information regarding VAT on wine.

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What is VAT?

VAT, or Value Added Tax, is a consumption tax. It applies to all products and services provided by professionals in France. It is an indirect tax, not collected by the State itself, but by the company or professional conducting the commercial transaction. They are responsible for collecting and declaring it 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 all products sold in France, the sale of beverages is subject to VAT. These beverages are subject to different tax rates, depending on whether they are alcoholic or non-alcoholic.

By definition, a beverage is considered alcoholic when its acquired alcoholic strength by volume exceeds 1.2% vol. Beer is the sole exception: it is considered an alcoholic beverage when its acquired alcoholic strength by volume reaches or exceeds 0.5% vol.

VAT: What Rate for Wine?

Wine, like Champagne, and strong spirits such as gin, rum, vodka, or whisky, are classified as alcoholic beverages because their acquired alcoholic strength by volume typically ranges between 10% and 15% vol.

These beverages are therefore subject to the standard VAT rate of 20%.

VAT on Wine in Restaurants

Since 2009, France has implemented new measures aimed at reducing the VAT rate in the catering sector. In cafés and restaurants, this reduced rate applies to both takeaway sales and on-site consumption.

It is 5.5% for takeaway products and 10% for products consumed on-site.

However, this reduced rate does not apply to alcoholic beverages, whether sold for on-site consumption or takeaway. Therefore, all alcoholic beverages, including wine, retain the standard VAT rate of 20%.

VAT and Alcohol: The Special Case of Corsica

The rates presented above apply to alcoholic beverages sold in mainland France. In Corsica, alcoholic beverages sold in restaurants, bars, or cafés benefit from a reduced rate when consumed on-site. This rate is 10%.

For takeaway or delivery sales, the 20% rate applies as standard.

Other Taxes on Alcoholic Beverages

Alcoholic beverages are not solely subject to VAT. They are also subject to excise duties (or indirect taxes, or consumption duties), as well as social security contributions.

Excise Duties

Excise duty is an indirect tax related to the consumption of certain products. Products subject to this tax include alcohol, alcoholic beverages, and tobacco.

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

In the wine industry, these duties are generally paid by the winemaker when marketing their wines in France. In the case of export, they may be paid by the importer, the carrier, or a third party providing a guarantee of circulation.

Proof of excise duty payment is traditionally provided by affixing a duty-paid stamp (CRD - Capsule Représentative de Droits) to the wine bottle. However, since June 1, 2019, this stamp is no longer mandatory for wines and Champagne; in such cases, the seller must justify customs payment by attaching the Simplified Accompanying Document (DSA - Document Simplifié d'Accompagnement) to their goods.

Social Security Contributions

Some 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 the funding of health insurance, was implemented "due to the health risks associated with the immoderate consumption of these products."

Selling Wine in France

With this overview, you now have the key information regarding VAT on wine, as well as other taxes applicable to the sale of alcoholic beverages.

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