French Reverse Charge
French reverse charge for non-established companies
According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses. France has introduced an extended version of this reverse charge.
Where a non-established supplier sells goods or services to a VAT registered client, domestic reverse charge applies. It is not relevant if the supplier is registered or not. Regarding the customer, it is not relevant if it is established. As long as the customer has a VAT number, reverse charge applies.
Not established in France
(irrelevant if the supplier is registered or not for VAT)
(irrelevant if the customer is established or not)
All supplies of goods
Supplies of services located in France (exceptions to the B2B rule).
The following reference should be included in the invoice when domestic reverse charge by a non-established supplier applies: “Autoliquidation – Article 283-1 du CGI”."
Reverse charge on B2B Services in France
Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located.
According to the general B2B rule, any business not established in France supplying services to a French registered customer will not charge any VAT and the transaction will be reverse charged by the customer.
There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in France:
- Services connected to immoveable property are located where the property is located.
- Passenger transport services will be located where the transport takes places (apportioned if necessary).
- Catering services are located where the catering takes place.
- Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
- Access to conferences, fairs and exhibitions is located where the event takes place.
French use and enjoyment rules
Member states can introduce another exception to the B2B rule according to the place where the services have been used and enjoyed. This exception may be introduced to avoid double taxation (positive use and enjoyment rules) or avoid non-taxation (negative use and enjoyment rules) or both. Check out our article for more information on use and enjoyment rules in the EU.
France has introduced both, the negative use and enjoyment in a number of B2C services and positive use and enjoyment rules on certain B2B services.
The law (article 259 C of the French VAT Code) brings the place of supply to France on services when the customer is non-taxable person established or domiciled in France, the supplier is outside the EU and the service is effectively used and enjoyed in France. The following services are excluded: services linked to immoveable property, cultural services, passenger transport and transport of goods, travel agencies, electronically provided services, intermediary services and short term means of transport. In case the supplier is established in France, the usual B2C rules apply as per the VAT Directive.
Use and enjoyment rules also apply on certain B2B services rendered to a French established customer when the service is used and enjoyed outside the EU. Where applicable, the place of supply is deviated to the country where these services are used. The following services are included: processing services (repair, transform, etc.), transport of goods, vehicle leasing and storage, loading, unloading of goods (usually ancillary to transport services).
Reverse charge on specific goods in France
Domestic reverse charge may also apply on certain goods with different conditions in each case. This regime is often introduced on products that are more likely to be used for carousel fraud purposes.
The conditions for reverse charge to apply change depending on the goods traded.
Gas and electricity: The following rules apply on French reverse charge on gas and electricity:
- Reverse charge applies always applies on supplies of gas and electricity by non-established suppliers to customers established in France
- If the gas and electricity is ultimately used France, reverse charge also applies if the customer is only VAT registered in France
- If the gas and electricity is used for other purposes than their actual consumption in France, reverse charge applies on all directly related transactions to gas and electricity supplies. In these cases, reverse charge applies even if the supplier is established in France, the only requirement is that the customer is registered for VAT purposes
The following reference should be included in the invoice: "Autoliquidation – Article 283-2 quinquies du CGI"
Other goods and services: Reverse charge applies to the following goods and services under the applicable conditions.
- Recycling and waste services when the customer is VAT registered. Reference on the invoice: "Autoliquidation – Article 283-2 sexdecies du CGI"
- Supplies of investment gold. Reference on the invoice: "Autoliquidation – Article 298 sexdecies D du CGI"
- Supplies of services connected to immoveable property to a VAT registered subcontractor. Reference on the invoice: "Autoliquidation – Article 298 sexdecies D du CGI"
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