French court confirms VAT reverse charge on non-resident provided services
In a decision dated 4 June 2025, the Paris Administrative Court of Appeal reaffirmed the importance of France’s reverse charge VAT mechanism when it comes to services supplied by foreign businesses to taxable persons established in France.
The ruling clarifies and reinforces the obligations of French-based recipients of services when the service provider is established outside France, regardless of whether the French recipient is ordinarily liable for VAT on its own activities.
If in doubt, our VAT Advisor can determine French reverse charge obligations on any transaction in seconds.
Understanding the French VAT reverse charge mechanism
In general, when services are provided cross-border within the EU or from a non-EU country, VAT is not charged by the foreign supplier. Instead, under the reverse charge mechanism, the responsibility for reporting and paying VAT shifts from the foreign supplier to the domestic recipient. This rule is designed to simplify VAT collection and ensure proper reporting when dealing with international transactions.
Under Article 196 of the EU VAT Directive (implemented into French law), the reverse charge applies when:
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The supplier is not established in the country where VAT is due (in this case, France), and
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The customer is a taxable person for VAT purposes in France.
See more in the our French VAT guide.
Key Point from the Court’s Ruling
The Court ruled that even a taxable person who is not liable for VAT on its own transactions—for example, a business engaged in VAT-exempt activities such as healthcare or education—must still apply the reverse charge when receiving taxable services from abroad.
This means that:
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These businesses must register for VAT in France, not for the purpose of collecting VAT on their own sales, but solely for reporting reverse charge VAT on services received from foreign suppliers.
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The absence of a VAT registration number does not excuse non-compliance. All French-based recipients of taxable cross-border services must comply with this obligation.
VAT registration obligation for non-registered entities
Businesses that are exempt from VAT, such as non-profit organizations, healthcare providers, financial institutions, and educational institutions, often assume they are not affected by VAT rules. However, this judgment makes it clear that receiving services from abroad creates a separate obligation—even if the business does not generally charge VAT to its own customers.
For instance, a French medical clinic that receives digital marketing or consultancy services from a U.S. firm must:
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Register for VAT in France, and
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Self-assess and report the VAT due on that foreign service.
The business may not be able to recover this VAT (due to its exempt status), but it still has a duty to report and pay it correctly.
VAT compliance obligations
This ruling has significant implications for compliance:
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Any French taxable person, even those not actively collecting VAT, must be vigilant when receiving services from abroad.
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Failure to obtain a French VAT registration number and fulfill reverse charge reporting duties could result in penalties and assessments from French tax authorities.
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VAT registration in such cases is for reporting only, not for charging VAT on the business’s own outputs.
France VAT country guide
| Highlights | Local term | Taxe sur la valuer ajoutée - TVA |
| VAT Rates - standard | 20% | |
| VAT Rates - reduced | 5.5%; 10%; 2.1%; 0% | |
| VAT number format | FR 12345678901 | |
| Latest news | 2026 VAT & e-invoicing reforms passed in Budget | |
| Jan 2026 VAT registration threshold rises | ||
| Solar panel rate cut to 5.5% Oct 2025 | ||
| 2026 e-Reporting mandate | ||
| Registration threshold | Goods €85,000; Services €37,500 for resident; nil for non-resident businesses; €10,000 for pan-EU digital services and goods OSS return. Intracommunity acquisitions €10,000 | |
| VAT Group | French VAT group rules | |
| VAT recovery foreign businesses | Yes | |
| Fiscal Representative | French fiscal representative rules | |
| Currency | Euro €, January 1999 | |
| Administration | Introduction | VAT was introduced in France in 1954. It is a founding member of the European Union |
| VAT laws | Code Général des Impôt - CGI - the French Tax Code. Livre des Procédures Fiscales (Fiscal Procedures Code). Also EU VAT Directive which takes supremacy as part of EU membership | |
| Tax Authorities | Ministry of Economic Affairs and Finance (Ministère des Finances et des Comptes publics). For foreign entities: Service des impôts des entreprises étrangères (SIEE) at Noisy | |
| VAT Rates | Standard rate | 20% |
| Latest news | 2025 rates changes | |
| Solar panel rate cut to 5.5% Oct 2025 | ||
| Reduced rates | 5.5%: foodstuffs; cultural; live cultural and sport events; cinema; domestic Green spend; social housing; domestic power; books. 10%: takeaway foods; overnight accommodation; certain fish produce for consumption; public passenger transport; medicine; 2.1%: press publications; theatre; certain medicines; | |
| Zero-rated | Air and sea transport; sea vessels; exports outside of the EU; intra-community supplies of goods | |
| Exempt | Immovable property; betting; newly constructed property under 5 years old; financial services; education; healthcare; social welfare | |
| Scope of VAT | Scope of VAT | Provision of domestic taxable goods and services; EU imports; intra-community acquisitions; Distance selling of goods B2C (OSS or IOSS); receipt of services or goods via the reverse charge |
| Time of supply | Goods & Services (general rule) | Goods transfer of control which generally means delivery. Services when performed; |
| Reverse Charge | Time of supply of the service for both domestic and non-resident supplies | |
| Continuous Services | Generally at payment VAT period end | |
| Imports | Time of clearance into free circulation; or import VAT deferment | |
| Goods on approval and return | VAT liability arises at switch in ownership, so potentially only when approval period ends. | |
| Registration | VAT registration threshold | Goods €85,000; Services €37,500 for resident; nil for non-resident businesses; €10,000 for pan-EU digital services and goods OSS return. Intracommunity acquisitions 10,000 |
| Voluntary VAT registration | Yes, for resident businesses | |
| VAT number format | FR 12345678901 | |
| VAT Group | Until 2023, there is only a simple VAT group credit/debit offset regime. From 2023, linked companies may form full VAT group https://www.vatcalc.com/France/france-vat-groups-from-2023/ | |
| Non-residents | Extensive use of reverse charge for goods and services exempting non-French businesses from registering if customer (French or not) is French VAT registered. IOSS or OSS for distance selling from third countries | |
| Fiscal Representative | Non-EU countries must appoint an accredited French resident as fiscal representative unless reciprocity agreement (UK, Norway and several more which have bi-lateral agreement) https://www.vatcalc.com/vat/France-confirms-vat-fiscal-representation-countries/. The non-resident is then provided a SIRET-only number. Limited fiscal representation available for certain transactions with no VAT liability. IOSS B2C import VAT registrations requires 'Intermediary' for non-EU, and does share client's VAT liabilities. | |
| Digital Services | France participates in the EU single One Stop Shop (OSS) VAT return for digital, telecoms and broadcast services. This was formerly the MOSS regime until 30 June 2021 | |
| Pre VAT registration costs | Permitted for set-up and preparation costs | |
| VAT Invoices | Issuance | Immediately at time of supply (delivery; provision; payment) |
| Content | Date; unique, sequential invoice number; Name and address of supplier; VAT number; Description, quantity and date of supply of goods/services; name and address of customer; gross, VAT and net price; VAT rate applied; any discount applied; reasons and legal reference for any exemption; fiscal representative details if applicable | |
| E-invoices | French e-invoice & e-reporting mandate Sept 2026 | |
| Simplified invoices | If not exceeding €150; limited customer requirements for certain B2C sectors such as café or restaurants etc; No invoice required for retail unless requested | |
| Self-billing | Permitted if agreed between customer and supplier. | |
| Retention of invoices | Six years. Records may be kept in France or another EU member state | |
| FX rules | European Central Bank on date of VAT payment due | |
| Invoice corrections | Via credit note only with reference to original invoice number | |
| Compliance | Right to deduct | Excluded: Staff accommodation. Staff mobile phones; VAT on goods used less than 10% for business; business gifts above €73 (2021); passenger transport; costs related to exempt supplies (partial exemption may apply) |
| Call-off stock | Non-residents may avoid the obligation to VAT register and record goods transfers where placed under the exclusive control of a French-resident taxpayer - Call Off Stock. This is limited to 3 months of the goods' movement. Goods held by supplier in warehouse where eventual customer is not yet known (B2B or B2C) requires French VAT registration (Consignment Stock). | |
| Reverse Charge - B2B | Foreign taxpayers if VAT registered or not - sales to French and non-French VAT registered taxpayers; supply and install; supply of gas and electricity even if both parties French resident; electronic communications; carbon trading; gold; waste and recycling goods; certain construction and repairs to immovable property | |
| Cash discounts | No requirement to issue a credit note if discount taken up; adjustment through VAT returns of seller and customer. | |
| Bad debt relief | VAT on bad debts may be reclaimed if reasonable proof of failed legal actions to recover before the end of the calendar after the original invoice date. | |
| Import VAT deferment | French import VAT deferment rules | |
| VAT warehouse | France has introduced a customs and VAT warehousing scheme in accordance with the EU VAT Directive. Non-residents typically need to VAT register to trade goods under such a scheme. Authorisation is required to operate a warehouse or use third party facilities. | |
| Supply & install | French VAT registration required where the goods manufactured and installed in France. If the supplier is non-resident, the customer becomes liable for VAT under reverse charge. | |
| Use and enjoyment services | Only on certain B2C services provided by non-EU supplier, including consulting and advertising require a French VAT registration. | |
| Capital goods adjustment period | Movable property: four years. Immovable property: 19 years | |
| Non-residents VAT recovery | EU businesses may reclaim French VAT through their home country's VAT portal under 8th Directive quarterly returns above €400, including annual claim by 30 Sept following year. Non-EU businesses may apply directly to French authorities via new (2021) online portal which requires invoice upload. No country reciprocity agreements required | |
| VAT on Digital Services | France follows the EU VAT on digital services regime, introduced in 2015. This includes participation in the One-Stop-Shop (OSS) single EU VAT return (formerly MOSS until 30 June 2021) | |
| Live events | No VAT registration by non-residents | |
| Distance selling threshold for goods | Nil. Following the EU ecommerce VAT package reforms from 1 July 2021, local French VAT must be charged on all sales by non-French EU e-commerce sellers shipping from within the EU. Imported distance sales not exceeding €150 liable to French sales VAT with IOSS return option | |
| Cash accounting scheme | For resident businesses with turnover below €300,00 per annum and no intra-community supplies | |
| VAT registered cash tills | Fiscal cash register obligations | |
| Statute of limitations | Three years | |
| Other | ||
| VAT Returns | Frequency | Monthly. Annual if taxable turnover below €4,000 per annum. |
| 2027 new quarterly returns option | ||
| Filing method | Electronic via TéléTVA on the government VAT portal | |
| Deadlines (inc payments) | 20th of month following return period for non-residents. By 25th for resident taxpayers *or next working day if holiday or weekend. Payment of any VAT on the same date via direct debit only. | |
| VAT credits | Excess input VAT may be reclaimed if above €760 in the monthly return (may trigger audit); or rolled over to next return | |
| Corrections | Either by replacement return or via credit return (which overwrites wrong entry with correct VAT liability). New return if above €4,000 corrective return | |
| Non-residents | 19th of month following return period for non-residents. | |
| Other filings | Intrastat and EC Sales Listing are combined into single monthly Déclaration d'echanges des biens - DEB. Intra-community Dispatches and Arrivals listed separately within the DEB.Threshold of €460,000 per annum for both. Due by 20th of following month. EC Sales Listing for services (Déclaration Européenee de Services - DES) due by 10th of following month. | |
| SAF-T | French SAF-T rules | |
| 2026 e-Reporting mandate | ||
| Penalties & interest | 5% of VAT due for late payments plus 0.2% per month ongoing interest charge; 10% for late filings | |
| B2C Distance Selling returns | France participates in the One-Stop-Shop pan-EU VAT return for distance selling, introduced in July 2021. |
