The New Paradigm of Post-Brexit Trade: An Overview of the New VAT Landscape
Brexit has permanently altered the way UK companies trade with Europe. Since the UK formally left the European Union on January 1, 2021, British firms are no longer treated as EU members but as “third country” traders. This change is more than political; it has reshaped the mechanics of taxation and created new layers of responsibility for businesses that want to sell in France or Monaco. In the past, trade within the EU benefited from a streamlined system of intra-Community VAT.
That framework has disappeared. Today, British exporters face the detailed rules of import and export VAT, which demand far more administration. A company sending goods to France, for example, must now prepare customs declarations, pay Import VAT in France, and understand the correct commodity codes for their products. These steps directly affect delivery times, costs, and even customer satisfaction. Services have also become more complicated. Take the case of a UK consultancy providing advice to a French company.
Under the new regime, the place of supply is considered France. This removes the service from UK VAT but places the reporting obligation on the French client. The French business must account for VAT under the reverse charge mechanism, and the UK supplier must clearly show this on the invoice. Such obligations form the backbone of Cross-border VAT compliance and are now unavoidable for firms looking to maintain smooth operations. The position is different when selling directly to French consumers. A UK firm offering digital subscriptions or professional advice to individuals in France may still need to charge UK VAT.
Yet certain services, such as streaming or software subscriptions, follow the customer’s location rather than the suppliers. In these cases, completing the VAT registration in France process may be required. For many UK firms, this has introduced a new level of complexity in everyday business. What is clear is that compliance is no longer a routine task hidden in the accounts department.
For businesses hoping to expand or retain clients in Europe, International VAT compliance must be treated as part of the wider market-entry strategy. A strong Cross-Border Compliance framework, covering VAT in the EU post-Brexit, national thresholds, and jurisdiction-specific rules, is now essential for any UK company planning sustainable growth across France and Monaco.
A Tale of Two Jurisdictions: Understanding the Monaco–France VAT Connection
For many UK firms, Monaco appears to be an entirely separate market from France. It is, after all, an independent state and not a member of the European Union. Yet the reality is more complicated. Through a long-standing agreement with France, the Principality’s tax and customs system has been closely tied to its neighbor for well over a century. The foundations of this relationship date back to a customs union signed in 1865, later formalized under the Franco-Monegasque Customs Convention of 1963.
Because of this, Monaco is treated as part of France’s VAT and customs territory, even though politically it stands apart. This unusual arrangement has very practical consequences. Businesses entering Monaco are subject to the same VAT regime as France. That means the standard rate of 20% applies, along with reduced rates such as 5.5% for particular goods and services. In other words, Monaco VAT rules are not unique to the Principality but mirror French legislation in almost every respect.
For UK companies, the implications are clear. A business offering digital subscriptions, consulting, or consumer goods in Monaco cannot rely on a local exemption. Unlike in France, where thresholds can sometimes ease the initial burden, Monaco requires non-resident providers to register for VAT immediately. This process falls under the French system, so the business receives a French VAT number rather than a separate Monegasque identifier.
From a compliance perspective, this is a central feature of Business VAT registration in Monaco. At first glance, this dual status might seem confusing, but it simplifies operations. By aligning Monaco with France, companies can approach both jurisdictions through a single regulatory framework. Instead of dealing with two sets of rules, they can prepare their filings, handle VAT returns, and ensure Cross-Border Compliance using one consistent process. Customs procedures follow the same principle. Goods entering Monaco are treated as though they were imported into France. This effectively merges Monaco customs and VAT with French regulations, reducing duplication and cutting down the risk of conflicting paperwork.
Of course, UK exporters must still manage import declarations and French VAT returns, but the unified system makes these tasks less daunting than if Monaco operated completely independently. For UK businesses trying to navigate Cross-border VAT compliance, understanding this Franco-Monegasque connection is vital. It means that selling to Monaco cannot be separated from selling to France. By treating the two as a single market for VAT purposes, British firms can streamline their compliance strategies while avoiding unnecessary errors and penalties.
French VAT Registration: Requirements and Thresholds for UK Businesses
One of the areas where many British companies run into difficulties after Brexit is understanding how VAT thresholds operate in France. For firms based in France itself, the France VAT registration threshold is relatively high: €85,000 for goods and €37,500 for services. Domestic businesses can therefore trade up to those levels before having to register for VAT. For UK businesses, however, the picture looks very different. Because the UK is no longer part of the EU, there is effectively no VAT registration threshold in France for non-resident companies.
A British company making even a single taxable sale in France is required to complete VAT registration in France immediately. This rule applies equally to small e-commerce sellers and large multinationals, which means the scale of the business no longer provides any buffer. The contrast with the UK system, where the domestic threshold sits at £90,000, is stark and often comes as a surprise to SMEs hoping to test the French market. Securing an EU VAT number of registration as a non-resident business involves a structured process. UK firms must apply through the Service des Impôts des Entreprises Étrangers (SIEE), which is the French tax authority’s unit for foreign companies.
Applications can take several weeks, often up to eight, to be processed. The documentation requirements are extensive and include a French-translated copy of the company’s articles of association, recent proof of registration from Companies House, a copy of the director’s passport, and a supporting document such as a customer invoice or contract that justifies the need for VAT registration. Another critical element is the appointment of a fiscal representative. For non-EU companies, this is not optional; it is a mandatory step in the submission process.
The representative, usually a local accountant or tax adviser, acts as the official liaison with French authorities and ensures that the business remains compliant with ongoing obligations such as French VAT returns. This “zero-threshold” model underscores how the EU views third-country businesses after Brexit. While French firms enjoy the benefit of trading below generous domestic limits, UK businesses are treated in the same way as companies from the United States or Asia.
The result is that even a small-scale online retailer must meet the same French VAT requirements for UK company’s requirements as a large corporate enterprise. For many SMEs, this creates both a financial and administrative challenge that needs to be carefully factored into any expansion strategy.
Category | VAT Registration Threshold |
French Resident Businesses (Goods) | €85,000 |
French Resident Businesses (Services) | €37,500 |
Non-EU Businesses (UK) | Nil – Must register on first taxable sale |
Mandatory Fiscal Representation: The Cornerstone of French VAT Compliance
If you’re a UK business looking to sell in France, one rule will hit you straight away: you need a fiscal representative. Since Brexit, every non-EU company must work through a local professional, usually a tax adviser, accountant, or lawyer. Their job is to take care of VAT registration in France, ongoing filings, and communication with the French tax office. For many firms new to the market, this feels like the biggest initial hurdle in tackling French VAT for UK companies. But here’s the catch: a fiscal representative isn’t just a friendly middleman.
French law makes them jointly and severally liable for any VAT you fail to pay. Put simply, if your company collects VAT from customers and doesn’t pass it on, the tax office can chase the representative directly. This arrangement protects the French state but also means that your representative is taking on a serious financial risk. Because of that risk, representatives don’t sign up without protection. Most will insist on some kind of financial guarantee, either a bank bond or a deposit. The amount depends on how much business you expect to do in France.
A small e-commerce seller may face a few thousand euros; a larger exporter could be asked for far more. For many SMEs, this comes as an unwelcome surprise and can make market entry more expensive than first planned. The costs don’t stop there. Beyond the guarantee, representatives usually charge a setup fee plus regular service charges. These cover the preparation and submission of French VAT returns, updates on compliance rules, and advice on wider Cross-Border Compliance issues. The representative becomes both your safeguard and your watchdog, helping you stay on the right side of the rules while protecting themselves at the same time.
Take the example of a mid-sized UK clothing retailer expanding into France. Before sending its first shipment, it must register for VAT. To do that, it hires a French accounting firm as its representative. The firm asks for a €10,000 security deposit, charges a one-off fee for registration, and then bills quarterly for filings. First, the retailer sees this as an unnecessary cost.
But when filing deadlines approach and new rules around VAT in the EU post-Brexit emerge, the value of having a representative on the ground becomes clear. For British firms, appointing a fiscal representative is more than a box to tick. It’s a partnership that shapes how you manage compliance in France. Yes, it adds expense and complexity, but it also provides a layer of security that is impossible to bypass. In the end, it’s the price of doing business in a post-Brexit Europe and an essential part of long-term success with Cross-Border Compliance.
Managing Goods and Import VAT: Life After Regime 42:
For years, France has been the go-to entry point for many UK exporters because of one simple rule: Regime 42. This scheme, officially Customs Procedure Code 4200, lets companies bring goods into France, send them on to another EU country, and avoid paying Import VAT in France at the border. Instead, VAT was declared later in the destination country using the reverse-charge method. For businesses running on tight margins, that flexibility was worth its weight in gold. All those changes on 1 January 2026. From that date, Regime 42 will be abolished.
No more deferring VAT, no more shortcuts on cash flow. Every UK company moving goods through France will need to register, file, and pay upfront. That means more admin, more cost, and, in many cases, mandatory fiscal representation. The days of using France as a simple gateway into Europe are coming to an end. Why is this happening? The French government is tightening the rules to improve Cross-Border Compliance and crack down on VAT fraud. Too many businesses were using the old system to slip through the cracks.
At the same time, the EU is shifting towards real-time digital reporting and stricter oversight. France is simply getting ahead of the curve. For UK exporters, the knock-on effects are serious. Paying VAT at customs ties up cash that could otherwise fund stock, wages, or marketing. Extra filings mean higher compliance costs, with regular French VAT returns now becoming part of the routine. Even shipping times could lengthen, as goods are held until paperwork is processed.
Picture this: a British electronics company sends pallets of goods through Calais each month before distributing them to clients across Spain and Italy. Under Regime 42, VAT was only declared when the goods reached the final customers. From 2026, the same business must pay VAT the moment those goods enter France, then wait to reclaim it later. That delay eats into cash flow and forces managers to juggle finances far more carefully. It’s no wonder many firms are already weighing alternatives. The Netherlands and Belgium, for example, offer postponed accounting systems that let VAT be declared in returns rather than paid upfront.
For some UK businesses, shifting supply chains to those countries may soon make more sense than relying on France. The end of Regime 42 isn’t a technical tweak; it’s a turning point. UK businesses that once used France as a quick and cost-effective entry route now face a tougher landscape. Planning, budgeting for VAT outlays, and exploring other EU hubs are no longer optional; they’re the only way to stay competitive in a post-Regime 42 Europe.
Case Study: A UK Business’s Journey into the French and Monegasque Markets:
Sometimes the best way to understand the challenges of VAT is to look at real-world situations. Below are two scenarios that highlight how UK companies must adapt when trading in France and Monaco after Brexit.
Scenario A: Global Solutions Ltd: A B2B Goods Supplier:
Global Solutions Ltd, a UK manufacturer, decides to expand by selling its products directly to a French client. To strengthen its foothold in the market, it also plans to keep stock in a French warehouse for faster local distribution.
The Challenges:
The moment the first consignment is shipped, Global Solutions Ltd triggers the zero VAT registration in France threshold. Unlike French businesses, which benefit from the France VAT registration threshold, the UK company has no buffer; it must register immediately. Because it is a non-EU business, appointing a fiscal representative becomes mandatory. That representative demands a financial guarantee before agreeing to act and takes on responsibility for handling French VAT returns and import declarations. The goods themselves are treated as imports, which means customs paperwork and Import VAT in France also come into play.
The Solutions:
To avoid delays and penalties, Global Solutions Ltd hires a specialist VAT compliance partner. The partner acts as fiscal representative manages all filings, and ensures the company meets French requirements from day one. By outsourcing, the business protects itself against errors and gains peace of mind while focusing on growth.
Scenario B: Tech Innovations Ltd: A Digital Services Provider
Tech Innovations Ltd is a UK-based SaaS firm selling software subscriptions. Its customer base includes both French business clients and individual consumers in Monaco.
The Challenges:
For the French B2B sale, the company cannot charge UK VAT. Instead, it must check the client’s VAT number and apply the reverse charge, which shifts the reporting duty to the French customer. For the Monaco consumer sale, the rules are different. The place of supply is Monaco, and the VAT registration threshold in France is equivalent to nil for digital services. This forces Tech Innovations to complete a Business VAT registration in Monaco, which means registering under the French system, and charge the 20% rate on its invoices.
The Solutions:
The company registers early, secures a French VAT number, and puts systems in place for monthly and quarterly filings. Its compliance partner double-checks invoices for B2B sales to ensure the reverse-charge wording is correct and monitors B2C sales in Monaco to keep VAT reporting accurate.
The Takeaway
Both scenarios show the same truth: selling into France or Monaco is no longer simple for UK companies. The “third country” status means there is no VAT registration threshold in France, fiscal representation is compulsory, and compliance must be treated as part of the business strategy, not an afterthought. Companies that embrace Cross-Border Compliance as a cost of doing business in Europe will find the framework predictable and manageable. Those who ignore it risk cash flow problems, delays, and penalties.
Ongoing VAT Compliance and Reporting Obligations
Once registered for VAT in France, a UK business is subject to ongoing compliance and reporting obligations that must be met to avoid severe penalties. For non-resident businesses, French VAT returns are typically filed monthly, with a deadline between the 19th and 24th of the month following the reporting period.
All returns must be filed online, and any VAT due must be paid at the same time, often via direct debit. The penalties for non-compliance are substantial. A late filing can incur a penalty of 10% of the VAT due, which can escalate to 40% if the return is filed more than 30 days after a reminder from the tax authorities. If the authorities discover any undeclared activity, an additional penalty of 80% of the VAT due may be imposed.
French VAT Filing Deadlines and Penalties | Details |
Filing Frequency
| Monthly for most non-EU businesses |
Filing Deadline | Between the 19th and 24th of the month following the end of the tax period |
Late Filing Penalty | 10% of the VAT due, escalating to 40% |
Penalty for Undeclared Activity | Up to 80% of the VAT due |
Businesses can offset the VAT on their sales (output VAT) with the VAT they have paid on French supplies (input VAT). This includes
Import VAT France and VAT on the purchase of goods for resale, capital expenditures, and even restaurant and catering expenses for a clear business purpose. However, not all expenses are recoverable, with a notable exception being VAT on hotel accommodation for employees, which is generally not deductible. Proper record-keeping is crucial, as businesses must retain all VAT invoices and records for a minimum of six years. Common pitfalls to avoid include failing to register when required, not maintaining proper records, and missing filing deadlines.
How Lanop Can Help with Cross-Border VAT Compliance:
For many UK companies, keeping up with the rules of Cross-Border Compliance in France and Monaco is not just complicated, it’s also time-consuming. Each country applies its own criteria for registration, filing, and reporting, which can easily lead to confusion or costly mistakes. That’s exactly where Lanop Business and tax advisors make a difference. Our tax specialists have hands-on experience guiding businesses through the maze of International VAT compliance.
We work closely with firms that are expanding into Europe, whether they are tackling the French VAT registration threshold, setting up Business VAT registration in Monaco, or preparing for ongoing French VAT returns. Instead of offering generic advice, we focus on practical solutions shaped around each client’s industry, trade model, and long-term goals.
Here’s how Lanop supports your VAT journey:
- Helping UK businesses secure the correct EU VAT number registration.
- Advising on Import VAT France, as well as managing Monaco customs and VAT processes.
- Preparing and filing accurate France VAT returns to keep your company penalty-free.
- Offering clear strategies for VAT in the EU post-Brexit, ensuring that UK exporters and service providers remain compliant and competitive.
With Lanop, you’re not just getting a filing service; you’re gaining a partner who understands the pressures of running a business abroad. Our team takes on the technical work, reduces risks, and frees up your time so you can focus on growth. By combining professional knowledge with a proactive approach, we make sure your operations in France and Monaco stay fully compliant while positioning your business for success in Europe.
Frequently Asked Questions
How to register for VAT in France?
A UK business needs to find out if its sales go over the French VAT limit before it can sign up for VAT in France. When you get there, you begin by sending in an application to the French business tax office, which is called the Service des Impost des Entreprises. Businesses from other countries usually require a tax representative to communicate with government agencies. Once registration goes through, the company gets a VAT number, and then they can start submitting French VAT reports.
How do UK businesses register for VAT in Monaco and France?
Companies in the United Kingdom growing into France or Monaco must follow each country’s rules before they start to sell things there. Businesses in France register for value-added tax with the tax authority when they reach a certain sales level. They frequently use a tax expert to help with this process. In Monaco, tax officials manage things. Businesses from the UK might require a local agent, too. Once a business gets the go-ahead, it obtains a VAT number. This lets the business create invoices, collect VAT, and file reports regularly.
Can a UK business claim VAT back in France and Monaco?
Businesses in the UK get back the value-added tax they paid in France, also in Monaco. However, the way to do this varies between the two places. People in France generally file requests with their local tax authority; they need bills, other papers to show they qualify. Monaco has a process like other places; however, companies might require a local agent to manage paperwork. You usually get your money back for things like trips, hotels, or items you buy for work, as long as the company follows the rules from official organizations.
How does VAT registration in France and Monaco affect UK businesses post-Brexit?
Now that the UK has left the European Union, businesses there do not automatically get the old VAT benefits. This creates more difficulty when dealing with taxes across borders. Companies that sell goods to people in France need to keep track of the VAT limits. They should also name someone to handle the tax paperwork. Businesses in Monaco need to follow Monaco’s sales tax rules, as well as local tax laws. These changes require more forms, closer oversight, also you might need to pay VAT on imports. Getting things properly registered takes a little more money, a little more time, yet it makes trade easier, keeps you out of trouble with fines, and lets businesses in the UK do well when selling in Europe.
Conclusion: Strategic Compliance for a Competitive Advantage
Expanding into France and Monaco after Brexit isn’t simple, and most UK businesses realize that quickly. The rules are tougher, with no VAT registration threshold in France for non-EU companies and the unavoidable need to appoint a fiscal representative. For many firms, those two requirements feel like the biggest barriers. The reality, though, is that these rules don’t have to be obstacles if they’re planned for from the start.
Registering early, working with a reliable local partner, and keeping up with France VAT filing for UK companies reduces risks that can otherwise result in trade penalties, shipment delays, or unexpected costs. More importantly, it helps protect cash flow and allows managers to focus on customers instead of chasing tax deadlines.
For UK exporters, VAT is now part of the strategy. Building a clear system for VAT for UK businesses expanding in Europe shows regulators, clients, and distributors that the company is serious about compliance and long-term stability.
That kind of credibility can make a difference when competing for contracts in a crowded market. In the end, mastering Cross-Border VAT compliance in France and Monaco isn’t just about following the law. It’s about turning what looks like red tape into a source of resilience. Businesses that approach it strategically won’t just manage risk; they’ll put themselves in a stronger position to grow in Europe’s post-Brexit economy.
