VAT on CBD: a quick tax reminder is in order
A short course on VAT is necessary before going any further. Don’t worry, it will be quick.
VAT is an indirect tax borne by the consumer. When you buy CBD flower, full spectrum hemp oil or an e-cigarette with cannabidiol on 321CBD, for example, you pay the price of the product, but also a little extra which is donated by our online store to the State. Companies therefore play the role of intermediary by collecting VAT from the consumer and then remitting it in full to the tax authorities. This is why VAT is part of indirect taxes.
In France, there are three main VAT rates: the standard rate (20%), the intermediate rate (10%) and the reduced rate (5.5%), to which comes add a special rate (2.1%).
Each category of product is therefore taxed differently depending on the political and economic choices of the government. As we will see, the taxation of CBD and, more broadly, of products containing non-psychotropic cannabinoids, will give us interesting information on the perception of legal hemp by the State.
What VAT rate for CBD flowers?
CBD flowers are taxed at the normal (and maximum) VAT rate, namely 20%. Let's take an example: the Orange Bud Indoor CBD flower (25%) is currently generating enthusiasm among our customers! It is priced at €69 for 10 grams, free shipping.
The price displayed for this CBD flower is said to be All Taxes Included (TTC). It therefore already includes the 20% VAT. In detail, we can break down the price of this CBD flower as follows:
The price excluding taxes (HT) is €57.5. This is the price determined by 321CBD to sell this CBD product;
The VAT for this product is €11.5, a value that we obtain by multiplying the price excluding tax of this CBD flower by the current VAT rate, namely 20%;
The price including tax is obtained by adding the price excluding tax (€57.5) and VAT (€11.5), i.e. €69;
321CBD therefore collects €57.5 and pays €11.5 to the State.
CBD flowers are therefore taxed at the maximum VAT rate. This is a signal from the State which considers that these flowers have a use which is not necessarily encouraged, because they unfortunately continue to be smoked by many consumers. This maximum rate is undoubtedly also the consequence of a legal saga, since CBD flowers had been banned in France before the State backpedaled to ratify their legalization.
What VAT rate for food products containing CBD?
Food products (or assimilated as such) which contain CBD or any other non-psychotropic cannabinoid are taxed at the reduced VAT rate, namely 5.5% We are talking, for example, about CBD herbal teas and infusions, legal hemp candies, CBD honey, etc.
Let's take a concrete example with the anti-stress organic hemp infusion, sold at €9.90 including tax. This price therefore includes a VAT rate of 5.5%, applicable to food products containing CBD. In detail:
The price excluding tax of the infusion is €9.38. This amount represents the base price set by 321CBD before the application of VAT;
The VAT for this infusion is €0.52. This value is calculated by multiplying the price excluding VAT by the VAT rate of 5.5%;
The final price including tax, which is the amount paid by the consumer, is €9.90. This price is obtained by adding the price excluding tax (€9.38) and VAT (€0.52);
Thus, of the €9.90 paid by the consumer, 321CBD receives €9.38, and €0.52 is returned to the State as VAT.
VAT on CBD: what you need to remember
Overall, the VAT structure applied to CBD products in France reveals a multi-faceted tax policy.
On the one hand, the rate of 20% imposed on CBD flowersreflects a certain caution on the part of the authorities, not necessarily for the product in question. itself which is perfectly safe if it is traceable and legal, but rather for certain uses, such as smoking it. This high rate can also be interpreted as the vestige of a hesitant legislative journey, marked by changes of direction in the regulation of CBD flower in France.
Then, the reduced rate of 5.5% on CBD-based food products such as infusions and oils can be interpreted as recognition by the State of the interest of CBD in the daily lives of several million consumers. Remember that CBD without THC (less than 0.3%) has soothing and relaxing properties, pain-relieving properties, anti-inflammatory effects and antioxidant action.
We are therefore in a duality of taxation. In our opinion, it reflects a delicate balance that the State seeks to maintain in the regulation of CBD: on the one hand, controlling and limiting uses deemed problematic (smoking flowers) while supporting the development of a legal market for beneficial CBD products.
