Reverse Charges : What are the services subject to a reverse charge of VAT ?
In principle, the provision of services are taxable in France if the service provider’s main seat of his economic activity is in France. Since Directive 2006/112 / EC of the 28th November 2006, the VAT is paid by the customer if the service is carried out by a service provider established outside of France.
What is the reverse charge (Autoliquidation)?
Normally VAT is paid by the customer and it is declared and paid back by the service provider to the government. The service provider must be registered at the French tax authorities and obtain an identification number for VAT in France.
But if the service provider is “outside of France”, or in other words, when the service provider “makes a taxable provision of services in France and it disposes of a permanent establishment that is not involved in the performance of this service”, the customer himself must pay the tax equal to its reverse charge, as long as it has an identification number for VAT in France.
For the customer to reverse the charge of VAT, in essence, means to bill themselves the VAT. The customer must collect the VAT as a newly licensed payer and has the right to deduct it as a client.
Consequently, the service provider must issue an invoice HT (excluding VAT) and bearing the words “Reverse charge” (Autoliquidation) and the client must report the net amount under the section “Other taxable transactions” on the VAT return form.
What are the services concerned?
1- The services that are localized
These are the services that can be linked to a geographic location due to the service nature. They are deemed to be located in France where they are physically carried out. The customer must reverse charge the VAT in France when the VAT is identified in France and the service provider is established abroad.
Including in particular :
- The services which relate to immovable property in France including services of property experts and real estate agents
- Services that grant access to cultural, artistic, sporting, scientific, educational, entertainment when they take place in France.
- The short term rentals of transport (<30 days or 90 days in the case of maritime transport) when the transport system is actually put at the customer’s disposal liable to France
- The long term rentals of transport (>30 days or 90 days in the case of maritime transport) when the client is an established taxable person, identified for VAT in France
2- Non-Detectable services
Also called “intangible” services, these services cannot be geographically located in the territory of a State. This includes:
- Transfers and copyright concessions, patents, licenses, trademarks
- Rentals of movable property (excluding transport)
- Advertising services
- Advising services, engineers, consultants
- The data processing operations and supplies information
When the service provider and the customer are companies established in the EU, the services provide are subject to VAT of their own country. However, if the client is subject and identified for VAT in France, the customer must reverse charge the VAT regardless of the country of the provider of the service.
Here at Maupard Fiduciaire we would be happy to help you in your administrative tasks according with the French tax administration.
Do not hesitate to contact us by telephone on +33 (0) 1 53 93 94 20 or by e-mail to [email protected], so we can work out the needs of your business. Our team of experts is here to answer any questions you may have.