II: Deductions

I. - 1. The value added tax that has been charged on the price components of a taxable transaction is deductible from the value added tax applicable to that transaction.

2. The right to deduct arises when the deductible tax becomes chargeable to the person liable.

However, persons who carry out occasional transactions subject to value added tax only exercise the right to deduct at the time of supply.

3. The tax charged on the goods and services is deducted from the tax due by the taxpayer in respect of the month during which the right to deduct arose.

II. - 1. Insofar as the goods and services are used for the purposes of their taxable transactions, and provided that these transactions give rise to the right to deduct, the tax from which the taxable persons may deduct is, as appropriate:

a) That shown on the invoices drawn up in accordance with the provisions of Article 289 and if the tax could legally have appeared on the said invoices;

b) That paid by the taxpayers themselves for imports or exits from the suspensive arrangements mentioned in I of article 277 A;

c) That paid by the taxpayers themselves on the purchase or self-delivery of goods or services ;

d) That corresponding to the intra-Community acquisition invoices drawn up in accordance with Community regulations, the amount of which appears on the revenue declaration in accordance with b of 5 of article 287;

e) (Repealed).

2. The deduction may be made:
a) For the supply of goods and services, if the persons liable for payment are in possession of the invoices;
b) For other transactions, if the persons liable for payment have entered on the declaration provided for in Article 287, in accordance with Article 287(5), all the information required to establish the amount of tax due in respect of these transactions and if they are in possession of:

1° For intra-Community acquisitions, invoices drawn up in accordance with European Union regulations;
or 2° For imports, either the import declaration, or the documents showing the number and date of this declaration and the taxable amount established in accordance with the last paragraph of article 292, by means of which the person fulfilling, on their behalf, the obligations laid down in article 293 A reports to them;

3° For withdrawals from the suspensive arrangements referred to in I of Article 277 A, the documents certifying withdrawal from these arrangements and the invoices, import declarations or other documents on the basis of which the taxable amount was calculated. However, in the cases provided for in b of this 2, taxpayers who have not entered the amount of tax due in respect of these transactions on the return are authorised to make the deduction where the substantive conditions are met, without prejudice to the application of the fine provided for in 4 of Article 1788 A.

3. When these invoices or documents are subject to an adjustment, taxpayers must make the corresponding adjustments to their deductions and mention them on the return they submit for the month in which they become aware of this adjustment.

III. - To this end, taxable persons, who are authorised to offset value added tax globally, are required to make an adjustment:

a) If the goods have disappeared;

b) If the transaction is not actually subject to tax;

IV. - The deductible tax which could not be deducted may be reimbursed under the conditions, according to the procedures and within the limits set by decree in the Conseil d'Etat.

V. - Open the right to deduct under the same conditions as if they were subject to value added tax:

a) Insurance and reinsurance transactions and insurance and reinsurance brokerage transactions where they concern:

1° Insured or reinsured persons domiciled or established outside the European Union;

2° Exports of goods;

b) Banking and financial services exempt under the provisions of a to e of 1° of article 261 C when they are rendered to persons domiciled or established outside the European Union or relate to exports of goods;

c) Transactions exempt pursuant to the provisions of 8 of article 261, the articles 262, 262-00 bis and 262 bis, I and III of article 262 ter, article 263, 1° and 2° bis of II and 2° of III of article 291 ;

d) Transactions not taxable in France carried out by taxable persons insofar as they would give rise to a right to deduction if their place of taxation were in France. A decree of the Conseil d'Etat sets the terms and conditions and the limits for reimbursement of the tax deductible in respect of these transactions; this decree may establish different rules depending on whether the taxable persons are domiciled or established in the Member States of the European Union or in other countries.

VI. - For the purposes of this article, a transaction lawfully carried out free of value added tax, in accordance with article 275, or under suspension of payment, in accordance with I of article 277 A, is deemed to have been subject to value added tax up to the amount of the sum benefiting from the exemption or the payment of which has been suspended.