French Assembly backs VAT deferral for suppliers to the Cognac sector
France’s National Assembly approved a government-backed amendment to the 2027 budget that would ease VAT pre-financing for qualifying suppliers in export-oriented wine and spirits sectors. The measure, aimed chiefly at Cognac’s cash-flow pressures, could apply from July 1, 2027, but has not yet completed the legislative process.
Assembly approval is not final enactment
The National Assembly adopted amendment I-968 on November 2 during debate on France’s 2027 budget. The French government supported the proposal, which would allow qualifying suppliers in export-dependent wine and spirits sectors to avoid advancing value-added tax on specified production operations. The approved text proposes an effective date of July 1, 2027, provided the measure survives the remaining stages of the budget process.1
Sandra Marsaud, a member of the National Assembly representing the Charente department, introduced the amendment. It would apply to sectors organized through an interprofessional body when exports and deliveries within the European Union account for more than 85% of annual sales. Eligibility would be determined by the sector’s sales profile rather than the export share of each individual supplier.1
Production and maturation activities covered
French rules already permit exporters to purchase goods without paying VAT in advance, but equivalent treatment does not cover the same purchases by suppliers further upstream in the production chain. The amendment seeks to extend that treatment to transactions and services connected with distillation, blending, storage and aging when performed by registered operators or on their behalf.1
For Cognac houses holding spirits in inventory during maturation, the intended benefit is financial rather than commercial: reducing the VAT that businesses must pre-finance over lengthy production and aging cycles. The proposal would not lower the tax ultimately paid by consumers, and no official estimate of the potential cash-flow savings has been published.1
Cognac shipments decline
The proposal comes amid weaker Cognac shipments. In the marketing year from August 2025 through July 2026, global shipments totaled 143.7 million bottles worth €2.25 billion, according to figures cited in the budget debate. Compared with the preceding year, volume fell by 7.1% and value by 16.4%.1
The industry’s downturn has been associated with trade tensions—including higher United States tariffs and a Chinese surcharge on brandies—as well as a wider decline in alcohol consumption. French customs figures cited in coverage of the debate valued Cognac exports at about €3 billion in 2024; the United States represented 36% and China 20%.1
A measure designed chiefly for Cognac
Although the amendment is drafted broadly enough to include other export-led wine and spirits sectors that meet its criteria, lawmakers presented Cognac as its clearest beneficiary because the industry sells nearly all its production abroad. Public Accounts Minister David Amiel backed the change, describing it as a way to relieve corporate cash flow during the sector’s crisis.1
Government support was notable because the Assembly adopted several other VAT changes during the same budget debate despite the government’s opposition. The November 2 vote nevertheless creates no immediate tax change: the budget must continue through the legislative process, during which amendments can be revised or removed before final passage.1
Sources
Written by the Dionysus editors from the sources above.
