Where are certain services taxed?

VAT, or Value Added Tax, is a key element in the French tax landscape. Determining the place of taxation, however, can be complex, especially in the case of certain services. In this article, we will clarify these subtleties, highlighting the crucial role of AlterTax Avocat’s tax lawyers.

In VAT matters, the general rule is that the place of taxation depends on the place where the customer is established for “B2B ” (business-to-business) relationships, and on the place where the supplier is established for“B2C” (business-to-consumer) relationships. However, there are exceptions and special rules for determining the place of taxation of certain services, as specified in article 259 A to 259 D of the French General Tax Code (CGI).

What are the special cases?

• Services related to real estate: In this case, VAT is due in the country where the real estate is located, regardless of the customer’s status. Transactions are taxable in France if the property is located in France.
• Short-term rentals of means of transport: For rentals of up to 90 days for sea transport and 30 days for other means of transport, VAT is payable in the country where the means of transport is made available to the customer, whether or not he is a taxable person. Services are subject to French law when the means of transport is actually made available to the customer in France.
• Long-term rentals of means of transport: If the lessee is a taxable person, VAT is payable in the country where he is established. If the customer is not a taxable person, VAT is payable in the supplier’s country of establishment, unless the supplier is located outside the European Union and the means of transport is used in France.
• Passenger transport: VAT is payable in the country where the transport takes place, according to the distances covered. If only part of the shipment takes place in France, French VAT is calculated on the corresponding portion.
• Cultural, artistic, sporting, scientific, educational and entertainment services: VAT is due in the country where these services are physically performed or take place. Transactions are taxable in France when performed in France.
• Sales for consumption on the premises: VAT is payable in the country where the sales are physically carried out or take place. Sales are taxable in France when made in France.
• Appraisals, work on movable tangible property: VAT is due in the country where these services are physically performed. Transactions are taxable in France when carried out in France.

Special case of intangible services

Certain intangible services, such as copyright assignments, consultancy services or leases of tangible assets, are subject to specific rules. Where the customer is a non-taxable person, VAT is payable in the country where the supplier is established, with certain exceptions.