CPA for food and agri-business

If you are a foreign food company entering the French market, an international food brand building a distribution network in France, or an expat entrepreneur launching a food business, navigating French accounting and tax rules in the agri-food sector is not straightforward. Multi-rate VAT, strict labeling regulations with accounting implications, complex stock management and tight cash flow cycles make specialist accounting support essential.

France applies three different VAT rates to food products, and the distinctions matter enormously for correct invoicing, pricing and quarterly VAT returns:

• 5.5% VAT: Applies to most basic food products intended for human consumption — bread, pasta, fresh vegetables, canned goods, dairy products, non-alcoholic drinks. This is the standard rate for grocery-type items
• 10% VAT: Applies to prepared food consumed on-site (restaurant meals, food sold for immediate consumption), certain animal feed products, and some agricultural inputs
• 20% VAT: Applies to alcoholic beverages, confectionery with alcohol content, some luxury food items, and catering services with entertainment components

The classification is not always obvious. For example:

• A sandwich bought to take away: 5.5%
• The same sandwich eaten at a table in your shop: 10%
• Food sold through a vending machine: 20%
• Prepared meals sold frozen for home consumption: 5.5%

Applying the wrong rate creates both a tax liability and cash flow distortion. For foreign food companies, particularly those new to the French market, getting this classification right from day one is critical. We review your entire product catalogue against the French General Tax Code (CGI) and document the correct VAT treatment for each line.

France enforces strict EU and national food labeling requirements through the DGCCRF (Direction Generale de la Concurrence, de la Consommation et de la Repression des Fraudes). For international food brands entering France:

• All labels must be in French (even if the brand is foreign)
• Nutrition information, allergen declarations, origin labeling for certain products, and the Nutri-Score system apply
• Non-compliance results in product recalls, fines and potential market withdrawal

From an accounting standpoint, labeling compliance has real cost implications:

• Adaptation costs for French market labeling are capitalizable or expensable depending on how they are structured
• Product recall provisions must be properly booked as liabilities once the risk is identified
• Regulatory penalties are non-deductible for French corporate tax purposes

We work with foreign food companies to correctly account for market entry costs, compliance expenses and potential provisions so that neither your accounts nor your tax position is distorted.

French accounting standards (Plan Comptable General — PCG) require rigorous stock valuation. For perishable food items, key rules include:

• FIFO (First In, First Out) or Weighted Average Cost are both accepted; consistency across periods is required
• Write-downs for DLC/DDM (dates limites de consommation / dates de durabilité minimale): perishable stock past or near expiry must be provisioned at the lower of cost or net realizable value
• Inventory count requirements: French companies must conduct a physical inventory count at least once per year (more frequently for perishables)
• Shrinkage, waste and loss: These must be documented and recorded separately to avoid overstating gross margin

For foreign food companies with French subsidiaries or distribution entities, stock accounting connects directly to corporate tax (your cost of goods sold) and to customs/import duties on goods entering France from outside the EU.

Food companies operating through a French entity (SAS or SARL) pay French corporate income tax at 25% (15% on the first 42,500 EUR for SMEs). Key deductions for the food sector:

• Raw material costs, packaging, transport and cold chain costs are deductible
• Research and development for new food formulations may qualify for the French CIR (Credit d'Impot Recherche)
• Equipment investment in food processing may qualify for accelerated depreciation schemes
• CICE-related replacement schemes for payroll-intensive food production

For foreign groups with a French food entity, transfer pricing rules apply to intra-group transactions (purchasing raw materials from a parent company, shared services, royalties for brand use). French tax authorities actively audit transfer pricing in the food sector.

Foreign food companies enter France through various routes:

• French subsidiary (SAS): Most common for brands with serious French market ambitions. Allows full control and clear P&L ownership
• Distribution agreement: Many foreign food brands start with a French distributor — no French entity required, but the distributor handles all French obligations
• Import/wholesale entity: If you are importing and wholesaling in France, you need a French entity, VAT registration, customs import declarations and proper stock accounting
• E-commerce into France: Selling direct to French consumers online requires French VAT registration once turnover exceeds the EU OSS threshold (10,000 EUR across all EU countries)

We advise foreign food entrepreneurs and companies on the right entry route, help set up the French entity, register for VAT and URSSAF obligations, and provide ongoing English-language accounting support.

• VAT rate classification across your product catalogue
• French entity setup and registration
• Ongoing bookkeeping under French PCG standards
• Stock management adapted to food sector constraints
• Corporate tax filing and transfer pricing documentation
• Payroll for French food production and distribution staff
• Cash flow management to handle the purchase-production-collection cycle

The EGalim laws (EGalim 1 in 2018, EGalim 2 in 2021, EGalim 3 in 2023) profoundly reshaped commercial relations between food producers, processors and retailers in France. For foreign food businesses supplying French distributors, these obligations have direct accounting consequences:

Multi-year forward contracts (EGalim 2): agricultural suppliers to food processors must offer multi-year contracts covering at least part of production volumes. Contracts must reference publicly indexed raw material costs (grain indexes, milk indexes, etc.) and allow price revision when input costs change by more than a defined threshold. This — unusually for France — creates volume and price commitments that must be disclosed in your accounts as contingent assets or liabilities.

SRP+ (Seuil de Revente à Perte Plus): distributors cannot resell branded food products at a price below purchase price + 10%. For food processors, this SRP+ obligation creates a price floor on your products at retail, which must be verified in negotiations and monitored.

Annual commercial negotiations (NAO): all annual commercial agreements between food processors and large retailers must be concluded by 1 March (1 April for SME suppliers under EGalim 3). Prices, volumes, trade promotions, logistics services, and back margins must all be documented in signed agreements. Late or absent agreements expose both parties to heavy DGCCRF fines.

Accounting entries for trade promotions and back margins: discounts granted to distributors for listing fees, volume bonuses, or promotional support are recorded as reductions in revenue (net revenue principle) — NOT as external charges. French tax audit teams closely scrutinise any attempt to classify commercial discounts as services purchased, as this creates both a VAT exposure (VAT on the service vs no VAT on the price réduction) and an IS/IR deductibility risk.

For French-established food companies exporting to EU countries or outside the EU, specific accounting and administrative obligations apply:

DEB / Ééchange de Données en Base: from 2022, intra-EU trade declarations (formerly Intrastat DEB) were replaced by the Enquête de Commerce Extérieur (ECS) for exports and the Déclaration Statistique à l'Introduction (DSI) for imports. Thresholds: obligatory above €460,000 for exports or €400,000 for imports (variable by year). Failure means administrative fines.

Export customs documentation: food products exporting outside the EU require export customs declarations (EX1 form), health certificates for regulated food categories, and often certificate-of-origin for preferential trade agreement access. We work with customs specialists to ensure document flows are managed alongside the accounting entries.

VAT on exports: food exports outside the EU are zero-rated for French VAT purposes. Intra-EU sales to VAT-registered businesses use the reverse charge mechanism. However, the zero-rating / reverse charge only applies when the physical goods actually leave France and the tax documentation (transport document, customs export declaration) proves it. Missing this documentation converts the export into a domestic taxable sale.

Background: Green Roots Inc., a Vermont-based organic food brand (granola bars, nut butters, oat drinks), set up a French SAS to import and distribute. Registered for VAT and URSSAF in Q1 2024.

VAT classification review: We reviewed their catalogue:

• Granola bars: 5.5% ✓
• Nut butters: 5.5% ✓
• Oat drinks: 5.5% ✓ (confirmed EC ruling)
• Protein powders (>75% protein): 20% — dietary supplement, not basic food
• Plastic gift set packaging sold separately: 20%

Green Roots had applied 5.5% across the board. The correction triggered a €4,200 VAT regularisation for Q1–Q2 2024.

Year 1: Revenue €280,000. Gross margin 38% after import duties (MFN rates 0–17.5% depending on product), freight, and COGS. IS loss: €−34,000 (market entry). Carried forward.

Year 2: Revenue €520,000. EGalim 2 multi-year contract templates in place for 3 retail chain clients. After carry-forward offset, IS on €28,000 net: €4,200 at 15%. Net free cash flow: +€68,000.

Year 3 projection: Revenue €900,000. Breakeven on all entry costs. SELARL possible for the two founders operating as gérants.

• Year-end stock at cost or NRV (whichever lower). Perishables approaching use-by dates require a mandatory provision pour dépréciation des stocks — even if not yet disposed of.
• Waste tracking: spoilage booked to account 6031 (pertes et rebuts). Unexplained stock variances in a tax audit trigger an automatic taxable profit adjustment.
• Cold chain costs: refrigerated transport directly attributable to bringing goods to their present condition must be capitalised into inventory cost under French PCG — not expensed as logistics.

French food businesses are subject to DGAL (Direction Générale de l'Alimentation) and DGCCRF audits. Non-compliance costs have accounting consequences:

• Product recall costs must be provisioned as a provision pour risque once the risk is probable and measurable — even before the formal recall decision
• DGCCRF fines are non-deductible for French IS purposes
• Compliance capex (HACCP infrastructure upgrades, traceability software) may qualify for accelerated depreciation if purchased new

We help food businesses build compliance provisions into their quarterly accounts rather than discovering a large one-off at year-end close.

Contact our food sector specialists — 58 rue de Monceau, 75008 Paris | Request a quote