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12.2. VAT on the Supply of Services by Non-Residents

The supply of services by non-residents carrying on economic activities from or through a fixed place in France is subject to VAT in France. The supply of services by a non-resident without a permanent establishment to any VAT-registered payer (B2B) in France is subject to a reverse charge VAT in the hands of the service recipient.

Non-resident businesses established within the EU or in one of a specified list of non-EU jurisdictions (see above) are not required to appoint a fiscal representative but may either register for VAT directly or appoint a VAT agent. Business established outside the EU or one of the specified non-EU jurisdictions (see above) is required to appoint a tax representative in France.

As mentioned above, the rendering of services is subject to VAT whenever the person rendering the services is established in France.

Two principal exceptions to this general rule exist, the first one relating to services that can be identified to a physical location in France, and the second one with respect to specifically listed supplies.

With respect to the first exception, services that may be identified to a given physical location in France give rise to VAT liability whether or not the person who renders such services is established in France. The following types of services may be identified to a physical location in France:

  • Leases of means of transportation by a lessor that is established outside of the EU if such means of transportation is used in France;
  • Leases of means of transportation by a lessor established in France, if such means of transportation is used in France or in another EU Member State;
  • Services relating to real property situated in France;
  • Services consisting of the transportation of individuals or goods in or through France;
  • Cultural, artistic, educational, entertainment, or similar services rendered in France;
  • Repairs, maintenance, or improvements made on tangible personal property which are physically performed in France, as long as the purchaser of the service did not issue to the provider of the services a VAT identification number issued in another EU Member State and sent or transported the property out of France; and
  • Hotel and restaurant services rendered in France.

Under the second exception, the following services, including services relating to intangible personal property, are deemed to be rendered and liable to VAT (see conditions for VAT liability below) in France:

  • The sale and licensing of intellectual or industrial property rights;
  • Advertising services;
  • Leases of personal property other than means of transportation;
  • Consulting or professional services;
  • The furnishing of information;
  • Banking, financial, or insurance services;
  • Intermediary services relating to categories of this list; and
  • Compliance with a non-competition clause prohibiting the rendering of certain services.

The above-mentioned services are deemed to be rendered in France and are liable to French VAT if they are:

  • Rendered by a person who is established outside of France and if the beneficiary of such services is established in France and an entrepreneur for VAT purposes;
  • Rendered by a person established outside of the EU and the beneficiary of such services is a non-entrepreneur for VAT purposes who is established or domiciled in France, but provided, however, that the services are used in France;
  • Rendered by a person who is established in France if the beneficiary of such services is established in an EU Member State and is not subject to VAT in his country of residence; or
  • Rendered by a person who is established in France if the beneficiary of such services is also established in France.

Effective 1 January 2015, new place of supply rules for electronically supplied services, telecommunications, and broadcasting services to consumers located in the EU Member States became applicable. As per this rule, these services are, in general, taxable at the customer’s location irrespective of whether the customer is a taxable person (B2B) or a consumer (B2C). As an exception to this rule, effective 1 January 2019, electronic services provided to a non-taxable person (B2C) are taxable at the location of the supplier, provided the total amount of consideration received for the relevant services does not exceed EUR 10,000. Simultaneously, taxpayers will have the possibility to opt for the use of the Mini One Stop Shop (MOSS) scheme for the supply of these services. If the services are supplied electronically via online marketplaces and platforms by an intermediary who is a taxable person, the intermediary is considered acting as in their own name but on behalf of the supplier of those services. As a result, the intermediary is deemed as the supplier of the electronically supplied services via the online marketplaces and platforms. The online marketplaces and platforms are jointly liable for VAT effective from 1 July 2021.

Mini One Stop Shop (MOSS) Scheme:

MOSS is an optional online service provided to taxpayers who provide electronically supplied, telecommunication, and broadcasting services to consumers in EU Member States. MOSS Scheme entered into force on 1 January 2015. Under the scheme, an opportunity is given to the taxpayer to register in one EU Member State (referred to as the Member State of Identification) and declare all supplies covered by the special scheme and pay the VAT due on these supplies. If a taxpayer exercises the option for MOSS, there is no obligation to register, file tax returns, and issue VAT payments in each Member States where electronically supplied services, telecommunications, and broadcasting services are carried out.

VAT due for supplies covered by the MOSS is paid via the Member State of identification. Payments have to be made to a special account designated for the MOSS supplies. Payments are linked to the underlying VAT returns and have to be made when submitting the return, or at the latest by the 20th day of the month following the return period.

Note that input taxes cannot be deducted by using MOSS. Input deduction has to be effected through the VAT refund mechanism.

A taxpayer using the MOSS can opt-out of the scheme, regardless of whether it continues to supply services which are eligible for the special scheme by providing a prior notice of at least 15 days before the end of the calendar quarter to the Member State of Identification. Once opted-out, the taxpayer will be excluded from using the MOSS in any Member State for two calendar quarters (quarantine period).

There are two schemes within the Mini One Stop Shop scheme: (i) the non-Union scheme for taxable persons that have no establishment within the EU; and (ii) the Union scheme for taxable persons that have an establishment within the EU (but are making supplies to Member States in which they are not established).

MOSS cannot be used in relation to the following:

  • Supplies of services other than telecommunications, broadcasting, or e-services;
  • Supplies to non-taxable customers in a Member State where the supplier has established his or her business or has a fixed establishment (VAT on those supplies will be accounted for in the normal VAT return of that Member State);
  • Business to business supplies (including telecommunications, broadcasting, or e-services); and
  • Supplies of goods.