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The standard VAT rate for services in France is 20% by default. Reduced rates (10% or 5.5%) apply to specific categories expressly provided for by the French General Tax Code (CGI).
VAT becomes due upon receipt of payment, unless an option for accounting based on invoices is chosen. For intra-community B2B transactions, VAT is localized at the place of the recipient and is subject to reverse charge.
VAT on services is not just an administrative burden; it is a tool for compliance and optimization.
Mastering its rules (including rates, territoriality, and tax point) helps you avoid audits and ensures every transaction is an informed decision.
A definition by exclusion. Under Article 256-IV of the French General Tax Code (CGI), a service provision is defined as any transaction that does not constitute a supply of goods. This broad definition covers intellectual services, work on movable property, assignment of rights, rentals, financial transactions, and digital services.
The distinction between goods and services is fundamental. It determines the applicable VAT regime: rates, the taxable event, chargeability, and territoriality rules differ depending on the classification chosen. A classification error automatically leads to incorrectly calculated or reported VAT.
Three categories account for most practical issues:
The VAT rate for service provisions depends on the nature of the transaction, not the status of the service provider. The principle is simple: the standard rate applies by default; reduced rates are the exception, strictly regulated by law.
The 20% rate is the general rule. It applies to all service provisions that do not benefit from any derogatory provisions provided for by the CGI or the BOFiP. Consulting, auditing, IT services, marketing, engineering: the vast majority of B2B services are subject to it.
No prior verification is required to apply this rate. Conversely, any application of a reduced rate requires verifying that the legal conditions are met, under penalty of tax reassessment.
The 10% intermediate VAT rate applies in particular to improvement, transformation, and maintenance work on housing completed more than two years ago, as well as to accommodation services, catering, and certain personal services performed at home (housekeeping, childcare, assistance for the elderly).
The 5.5% rate primarily targets energy renovation work and services VAT for personal services related to the essential daily living activities of disabled or dependent elderly persons, provided by approved organizations.
Three cumulative conditions govern access to reduced rates:
Exemption is not a systematic benefit. Certain services are exempt from VAT: medical and paramedical care, school and university education, banking and insurance operations, and certain non-profit association activities. Exemption deprives the provider of the right to deduct VAT on their purchases—a financial impact that should not be overlooked.
Exemptions are subject to strict interpretation. Any extension by analogy is excluded. The classification of an operation as exempt must be based on a precise analysis of the applicable regulations.
The VAT territoriality for services determines the country in which the tax is due. It dictates invoicing, the applicable rate, and reporting obligations. The rules derived from Directive 2006/112/EC, transposed into Articles 259 et seq. of the French General Tax Code (CGI), distinguish between two main regimes based on the status of the recipient.
In B2B, VAT is localized at the recipient's location. When the client is a taxable person acting as such, the service is taxable at the recipient's place of business (head office or fixed establishment). This is the rule under Article 259-1° of the CGI, in accordance with Article 44 of the EU VAT Directive.
Direct consequence: a French company invoicing a B2B service VAT to a taxable client established in Germany does not charge French VAT. The VAT is due in Germany, and it is the German client who self-assesses the tax.
In B2C, VAT follows the service provider. When the recipient is not a taxable person (an individual or a non-taxable association), the service is taxable at the provider's place of business, in accordance with Article 259-2° of the CGI. A French provider invoicing a Belgian individual therefore applies French VAT.
This rule has significant exceptions, particularly for electronic services, telecommunications services, and broadcasting services provided to individuals in the EU: since 2021, these services are taxed in the consumer's country, with reporting handled via the OSS portal.
Certain services deviate from the general rules, regardless of the recipient's status. These exceptions are exhaustively listed in the CGI:
Note that as of January 1, 2025: cultural, artistic, sporting, or educational events accessible virtually to taxable customers are now taxed at the customer's place of business, rather than at the location of the event.
For services, VAT becomes due upon receipt of payment. This is the rule established by Article 269-2-b of the French General Tax Code: VAT becomes due at the time the deposit, price, or remuneration is received. This rule differs from the one applicable to the supply of goods, where VAT is due upon delivery.
Opting for accounting based on debits changes this schedule. The service provider may opt to have VAT become due based on debits, meaning at the time the amount is debited to the client's account, typically upon invoicing. While this option offers a cash flow advantage for taxable clients who can recover VAT sooner, it requires the provider to remit the tax before actual payment is received.
Three practical points to watch:
The intra-Community VAT on services follows a specific mechanism that shifts the collection obligation from the service provider to the recipient. This system, based on the B2B rule of Article 44 of the VAT Directive, simplifies cross-border trade while maintaining tax neutrality.
The taxable recipient established in France self-assesses the VAT. When a French company purchases services from a provider established in another EU Member State, it is liable for French VAT instead of the foreign provider. The provider invoices excluding VAT and must include the mention "reverse charge" on the invoice, in accordance with Article 242 nonies A of Annex II to the French General Tax Code (CGI).
The mechanism is neutral for companies with a full right to deduction. The French company simultaneously declares the VAT collected (debit) and the deductible VAT (credit) on its CA3 tax return. The cash flow impact is zero, but the reporting obligation remains.
Two conditions are essential:
The CA3 return is the primary document. French businesses subject to the standard real tax regime must report intra-Community service purchases on their monthly or quarterly CA3 return: the pre-tax amount on line A3 (EU provider) or A2 (non-EU provider), the output VAT on lines 08 to 13 depending on the rate, and the input VAT on line 20.
The European Statement of Services (DES) remains mandatory. For French providers selling B2B services to taxable clients in other Member States, the DES must be filed monthly with the customs authorities, with no minimum threshold.
As of March 1, 2025, businesses benefiting from the VAT exemption threshold are still required to self-assess VAT on their intra-Community service purchases, even if they do not collect VAT on their own sales.
VAT on services is a recurring area of risk during tax audits. Identifying these risks allows you to take action before, not after, they become an issue.
Mistake #1: Applying the standard rate without checking for reduced rates. The opposite approach is just as dangerous: applying a reduced rate without meeting the legal requirements. The VAT rate for services must be determined on a transaction-by-transaction basis, relying on official regulations and BOFiP guidelines.
Mistake #2: Confusing tax point on payment with tax point on invoicing. Reporting VAT at the time of invoicing without having opted for the debit system is a timing error. It can lead to late payment penalties, even if the total amount of VAT reported is correct.
Mistake #3: Charging French VAT on an intra-Community B2B service. When the client is a taxable person established in another Member State, French VAT does not apply. Charging French VAT in this case means collecting tax that is not due—and creating a risk for both parties.
Mistake #4: Omitting the DES or mandatory invoice details. Missing the client's intra-Community VAT number, failing to include the "reverse charge" statement, or neglecting to file the DES exposes the company to fines and the potential loss of the exemption status.
Mistake #5: Misclassifying the transaction (goods vs. services). Delivering software on physical media is a supply of goods; providing online access to the same software is a supply of services. The classification determines the entire applicable VAT regime.
The standard VAT rate for services is 20%. This rate applies to all services not specifically covered by a reduced rate under the French General Tax Code (CGI). The 10% rate applies primarily to certain housing renovation work, accommodation, and catering. The 5.5% rate mainly targets energy renovation and certain services for dependent persons.
VATon services is generally due uponreceipt of payment (including deposits), in accordance with Article 269-2-b of the CGI. By opting in, the service provider may choose to have VAT become due upon invoicing, i.e., at the time of billing. This option applies to all transactions and must be formally exercised.
For intra-community B2B services , VAT is localized in the country of the taxable recipient. The provider issues an invoice excluding VAT with the mention "reverse charge." The client then self-assesses the VAT in their own country on their tax return. Additionally, the French provider must file a monthly European Sales Listing (DES) to report services sold to EU-taxable entities.
The VAT on personal services varies depending on the nature of the service and the organization's status. Services for disabled or elderly dependent individuals provided by approved organizations benefit from a 5.5% rate. Home cleaning or childcare services are subject to a 10% rate. Certain non-profit associations may be fully exempt.
The intermediate VAT rate of 10% is the "median" reduced rate between the standard rate (20%) and the super-reduced rate (5.5%). It applies in particular to improvement and maintenance work on older homes, tourist accommodation services, catering, passenger transport, and certain personal services performed at home. Its application is subject to compliance with the criteria set out by the CGI and the BOFiP.
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