French lawmakers approve a VAT deferral for cognac suppliers

France’s National Assembly approved an amendment on Monday, November 2, that would let suppliers in export-heavy wine and spirits sectors avoid advancing value-added tax on part of their production activity, a change aimed above all at easing cash pressure in the cognac business.

The amendment was adopted during debate on France’s 2027 budget and had the backing of the government. It does not amount to final enactment of the measure, and the text itself proposes that the new rules would apply starting July 1, 2027, if they survive the rest of the budget process.

The measure was introduced by Sandra Marsaud, a lawmaker from the Charente department, where cognac production is concentrated. According to amendment I-968, the change would apply to sectors organized through an interprofessional body when more than 85% of their annual sales are made through exports or deliveries within the European Union. That threshold is defined at the sector level, not by the individual export share of each supplier.

The distinction matters because France already has a system that allows exporters to buy goods without first paying VAT, but that system does not cover the same purchases when they are made by suppliers working upstream in the production chain. The new amendment is meant to extend similar treatment to transactions and services tied to production, including distillation, blending, storage and aging, when they are carried out by registered operators or on their behalf.

For cognac houses that keep spirits in aging stock before sale, the main effect would be financial rather than commercial. The measure is designed to reduce the need to pre-finance VAT during long production and maturation cycles. No official estimate of the cash savings has been published, and the amendment does not cut the tax paid by consumers.

The proposal comes as the cognac sector is under pressure from weaker shipments. During the August 2025 to July 2026 marketing year, global cognac shipments totaled 143.7 million bottles with a value of 2.25 billion euros, according to the figures cited in the budget debate. That was down 7.1% in volume and 16.4% in value from a year earlier.

Secondary coverage by La Revue du vin de France, citing Agence France-Presse, said lawmakers and the government presented the amendment as a targeted response to the strain on an industry that sells almost all of its output abroad. The publication said the downturn in cognac sales has been linked to trade tensions, including higher U.S. tariffs, a Chinese surcharge on brandies and a broader decline in alcohol consumption.

French customs data cited in that coverage showed cognac accounted for about 3 billion euros in exports in 2024, with the United States representing 36% and China 20%. Those figures help explain why lawmakers treated cognac as the clearest beneficiary of the change, even though the amendment is written broadly enough to cover other export-led wine and spirits businesses that meet the threshold.

Public Accounts Minister David Amiel supported the amendment during the Assembly debate, saying the measure would mainly relieve company cash flow at a time of crisis in the cognac sector. The government’s support was notable because lawmakers also adopted several other VAT-related changes during the same budget debate against the government’s wishes.

Even so, the November 2 vote does not settle the issue. France’s budget still has to move through the rest of the legislative process, and governments often revise or remove amendments before final passage. In this case, the approved text is best understood as a political and fiscal signal that lawmakers are prepared to give the cognac supply chain a specific VAT accommodation, rather than as an immediate change in tax law.