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Determining the place of supply for VAT on transport services is a particularly complex subject, for both passenger and freight transport.
The applicable rules vary depending on the nature of the service, contractual terms, the route taken, and the tax status of the parties involved.
In this article, we explore the main scenarios encountered in practice, drawing on regulatory frameworks and key principles of territoriality.
In principle, charging for transport costs constitutes an independent operation that must follow its own VAT regime when invoiced separately from the sale of goods. The place of taxation is then determined by the applicable territoriality rules which differ depending on the status of the client:
Passenger transport, however, falls outside this logic: it is taxable in proportion to the distances covered in France, regardless of the status of the recipient (CGI, art. 259 A, 4°). The rule regarding the client's place of establishment therefore only concerns the transport of goods.
Thus, a French carrier performing a transport operation on behalf of a French company within the national territory must charge VAT at the standard rate of 20%. Consequently, they must correctly configure their invoicing system so that delivery costs follow a specific regime based on the applicable territoriality rules.
This classification is fundamental: the distinction between a supply of goods and a supply of services directly determines the rules regarding territoriality, tax point, and applicable rates, as specified in administrative guidance (BOI-TVA-CHAMP-10 and BOI-TVA-CHAMP-20).
Transport services do not always fall under the general rule of the place of establishment of the recipient (for B2B transactions) or the supplier (for B2C transactions).
Transport services are indeed subject to derogatory rules regarding the place of taxation, alongside other services such as short-term rentals of means of transport, services related to immovable property, or cultural and sporting events.
A clarification is necessary for flows executed outside the European Union. Transport of goods provided to a taxable person remains taxable at the place of establishment of the recipient, even when the journey takes place entirely outside the Union and both parties are established in France (BOI-TVA-CHAMP-20-60, § 1).
Therefore, it is not a rule regarding the place of performance that neutralizes the tax, but rather the exemptions specific to international transport:
When a company hires a carrier to move goods from one warehouse to another, the transport is an independent operation subject to the standard VAT rate of 20% when it takes place within France.
When transport costs are invoiced together with goods sold by a company, they follow the VAT rate applicable to those goods. Transport costs billed by the seller to their client are considered an integral part of the selling price of the goods, in accordance with Article 267-I-2 of the French General Tax Code (CGI).
This presumption applies whenever the seller carries out the transport of the sold goods themselves or orders and pays for the transport. In practice, these are known as "free delivery" sales: the cost of transport is included in the price of the goods, just like packaging or other components.
For example, a French company selling food products subject to the reduced rate of 5.5% has every interest in including transport costs in the selling price so that this rate also applies to the transport service. This approach contributes to genuine VAT optimization for the company.
This rule also applies when transport costs are linked to an exempt transaction: intra-Community supply, export, or exempt goods. In these cases, the transport follows the tax treatment of the principal transaction.
When goods are sold in conjunction with transport, the transport cost may be separated from the sale price if two conditions are met:
In practice, this applies to companies that sell products under "ex-works" commercial terms, where the buyer takes ownership of the goods as soon as they leave the warehouse and arranges the transport themselves.
In this scenario, the transport is covered by a separate invoice issued by the carrier, at the standard rate of 20%, regardless of the rate applicable to the goods.
For VAT-exempt intra-Community deliveries, transport costs included by the seller in their price follow the same exemption regime, pursuant to Article 267-I-2° of the French General Tax Code (CGI). The situation differs when transport is invoiced separately by the carrier: there is no exemption for the intra-Community transport of goods, which remains taxable according to its own territoriality rules. The only exceptions apply to routes to or from the Azores and Madeira (CGI, art. 262, II-11° bis) and, for Corsica, the portion of the journey located outside the mainland territory (CGI, art. 262, II-11°).
This reasoning does not apply to exports. For exports to countries outside the European Union, transport costs are exempt when they are directly linked to the export operation, including when invoiced by the carrier themselves, provided that proof of exit from the European Union territory is held.
Passenger transport in France is subject to the intermediate VAT rate of 10%, in contrast to the standard rate of 20% applicable to the vast majority of services. This distinction must be taken into account when preparing quotes or invoices that include passenger transport services.
A specific case deserves special attention: goods intended for sale on board transport during intra-Community passenger travel are not treated as standard intra-Community supplies.
When a travel operator organizes trips that include passenger transport services, a special VAT scheme applies: the profit margin scheme. This scheme applies to taxable persons who organize trips in their own name and, to do so, use the services of other taxable businesses, such as carriers.
The single service thus created is taxable at the place where the operator has established their business or has a fixed establishment from which the service is provided (CGI, art. 259 A, 8°), rather than at the place where the purchased services are performed.
VAT is then calculated on the margin earned by the operator, which is the difference between the total price paid by the customer and the cost of services purchased from third parties (transport, accommodation, catering, etc.). A major feature of this scheme is that the operator cannot deduct VAT charged on these purchased services.
This scheme is not limited to travel agencies in the strict sense. A hotel offering transport services, an organizer of sports competitions hiring a coach operator, or an event management company may also qualify, provided that the service sold includes at least transport or accommodation and the operator acts in their own name using resources provided by third parties (purchased transport services).
It is important to note that this special scheme does not apply when the travel agency provides services using its own operating resources. For example, if it owns the coaches used for transport, these services are taxed according to standard VAT rules.
Finally, the exemption provided for in Article 262 bis of the French General Tax Code (CGI) only applies to the portion of the service relating to services performed outside the European Union. A mixed stay therefore requires a breakdown, payment by payment and expense by expense, between the taxable portion and the exempt portion.
In supply chains, the involvement of an intermediary (whether transparent or opaque) can change the VAT treatment applicable to transport services.
A transparent intermediary acts in the name and on behalf of others: their commission constitutes an autonomous service, taxable under its own specific rules. Conversely, an opaque intermediary acts in their own name: they are deemed to have personally acquired and then resold the transport service, which creates two distinct transactions subject to VAT according to the rules applicable to the nature of the intermediary service.
In the case of an intra-Community supply exempt from VAT, the associated intermediation service is also exempt, in accordance withArticle 263 of the CGI.
The project ViDA (VAT in the Digital Age) introduces significant changes for the transport sector. Starting January 1, 2030 (or July 1, 2028, at the option of the Member State), online platforms will be required to pay VAT on road passenger transport services and short-term accommodation rentals in most cases where individual service providers do not charge VAT. This measure aims to close a significant tax loophole, particularly within the collaborative economy.
As of July 1, 2030, VAT reporting obligations will be fully digitized for cross-border business-to-business transactions, featuring a system of electronic invoicing and real-time reporting. Companies must therefore anticipate these developments and reassess their structures, particularly regarding fixed establishment criteria and the place-of-supply rules applicable to their transport flows. To better understand these changes, it is recommended to navigate the electronic invoicing reform with the help of experts.
Managing VAT on transport services requires careful attention at several levels. First, it is essential to correctly determine the nature of the contracts and the resulting tax obligations, as delivery methods will have both tax and accounting implications. Reviewing the methods used to determine VAT rates for transport costs is never redundant and can lead to margin optimization.
Furthermore, within the framework of the electronic invoicing reform, managing transport-related invoicing flows is a major challenge. Companies must ensure their billing systems are correctly configured to reflect the VAT regimes applicable to different transport scenarios. Implementing a reliable audit trail helps ensure the traceability of these operations.
Finally, regular verification of VAT numbers of clients and suppliers involved in intra-community transport operations remains essential to secure these flows and demonstrate the validity of the numbers at the date of the transactions to the authorities. In case of doubt or a complex situation, benefiting from tax audit assistance helps secure your positions.
If the seller organizes and pays for the transport ("carriage paid" sale), the shipping costs are part of the selling price and follow the rate of the goods sold, including a reduced rate of 5.5% or 10%. If the buyer organizes the transport themselves ("ex works" conditions), the service is distinct and subject to the standard rate of 20%.
Passenger transport is subject to the 10% rate, regardless of the mode of transport used (CGI, art. 279, b quater). Ancillary services that do not constitute a genuine transport contract remain at the standard rate of 20%.
For the transport of goods, no: the transaction is taxable at the place where the recipient is established, and the invoice is issued without French VAT, with the mention "reverse charge." The German client self-assesses the tax in their own state. For passenger transport, the answer is different: taxation follows the distances traveled in each state.
Only if it is included by the seller in the price of the exempt delivery. If invoiced separately by the carrier, it constitutes a taxable service according to its own territoriality rules: there is no general exemption for intra-community transport of goods.
Only the portion of the journey traveled in France is taxable. If the price of this portion is not clearly identified, the tax base is obtained by applying the ratio between the length of the journey within France and the total length of the transport to the total price (CGI, ann. III, art. 68), subject to exemptions specific to international transport.
Yes, services directly related to exports are exempt (CGI, art. 262, I-1°, and the list in article 73 G of Annex III to the CGI). The exemption is conditional upon providing proof that the goods have left the territory of the Union: without a conclusive file, the tax reassessment will apply to the entire transport cost.
Yes, provided they sell services in their own name that include at least transport or accommodation purchased from taxable third parties. The scheme does not apply to services provided using their own operational resources.
Platforms that facilitate road passenger transport services will be deemed the supplier and liable for VAT when the underlying service provider does not charge it. Implementation is mandatory as of January 1, 2030, with an early adoption option available from July 1, 2028, depending on the choice made by the Member State.
Yes. The validity of the number on the date of the transaction determines the application of the declared tax regime and must be demonstrable. Systematic, archived verification is part of the reliable audit trail expected by the tax authorities.
The references cited are those of the General Tax Code in force as of September 1, 2026. Articles 262, 262 bis, 263, and 267 of the CGI are repealed effective January 1, 2027, by Ordinance No. 2025-1247 of December 17, 2025, with their provisions incorporated into the Code of Taxes on Goods and Services (CIBS).
The solutions outlined above remain unchanged: only the legal references will be updated.
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