The equivalence surcharge is one of those tax concepts that causes confusion because it doesn't apply to everyone: it only affects a specific type of business, and whoever is subject to it has different VAT obligations from other self-employed workers.
What the equivalence surcharge is
It's a special mandatory VAT regime for retailers (individuals, not companies) who sell to the end consumer without substantially transforming the products they buy for resale. Under this regime, the retailer's supplier charges an additional VAT amount (the surcharge) on the sales invoice to the retailer, and in exchange, the retailer is exempted from filing periodic VAT returns for those transactions.
How the surcharge is calculated
The surcharge is applied as an additional percentage on the taxable base, which varies depending on the product's VAT rate:
| Product's VAT rate | Applicable equivalence surcharge |
|---|---|
| Standard (21%) | 5.2% |
| Reduced (10%) | 1.4% |
| Super-reduced (4%) | 0.5% |
The supplier charges this surcharge on the invoice itself, alongside the corresponding VAT, and it's the supplier, not the retailer directly, who pays it to the Tax Agency.
The main advantage: less administrative work
The most obvious advantage of the equivalence surcharge is that the retailer is freed from filing the quarterly form 303 for these transactions, and from keeping the usual VAT record books. For many small shops, this administrative simplification is a considerable relief.
The main drawback: you can't deduct input VAT
In exchange for that simplification, a retailer under the equivalence surcharge can't deduct the VAT they pay on their purchases, not even on general business expenses. This means the VAT paid on purchases and expenses becomes a definitive, non-recoverable cost, unlike under the general regime, where it can be deducted.
Who is required to use this regime
Retailers who are individuals (self-employed, not companies) and who sell goods without subjecting them to a transformation process are required to use it. It doesn't apply to the sale of certain products expressly excluded by regulation (such as vehicles, jewelry, or some specific products), nor to service-providing activities.
Always check your specific case
Determining whether the equivalence surcharge applies to you depends on the specific details of your activity, so it's worth checking with a tax advisor before registering. Once your regime is clear, our VAT calculator helps you quickly work out the amounts on your day-to-day invoices.