VAT for construction work in France: What VAT regime is applicable?
France has always been known as one of the most influential countries in Europe, playing a variety of roles throughout history. Thanks to this, France has been able to develop a unique architecture and many of its cities now make up what is considered to be the cultural heritage of the world.
As a result, the French have come to consider all property in France as part of this unique history and in wanting to preserve it, the French government has created a special taxation with a view to generating the funds to do so.
It is thanks to the preservation of this Romanesque architecture that France has become one of the most important touristic places in Europe, being one of the world’s leading destinations for foreign tourists. France boasts a wide array of cultural and creative excellence: the Louvre is by far the most visited museum in the world.
So, what does this mean in terms of VAT?
In terms of VAT, any service that involves any type of building or construction work in France is subject to the regime. However it is important to note that it is only France that applies this particular VAT to its buildings. The European VAT regulations do not apply to buildings or construction sites.
In France, both contractors and subcontractors have to comply with this particular French tax whether they are part of the European Union or not. In other words, any France related real-estate construction work must comply with this compulsory tax.
- What construction works/services are subject to this tax?
- All building services relating to stationary property
- Construction work
So, if you are doing any construction work on your property please keep in mind that the areas subject to this taxation are the land, any construction carried out on said land and any additions to said construction (drains, pipes, cables, etc.). In other words: building work that you cannot disassemble nor move without the help of a professional, and without incurring a significant cost.
In the second case, the term ‘construction work’ is very broad under French law. In short, construction work applies to all tasks needed to construct a building, or to make the equipment that aids with said construction.
The following services are recognized as construction works by French law:
- Construction of buildings
- Public works (roads, railways, parks and gardens facilities, etc.)
- Works prior to building construction (earthworks, masonry, carpentry, roofing, joinery, tiles, shutters, windows, etc.)
- Works to install permanent devices or materials (electrical devices, heating, plumbing, sanitary equipment, etc.)
- Building repair works
- What are the other services (those connected with the construction of a building)?
Within this category you can find the following services:
- Expert evaluation of real estate,
- Real estate services performed on behalf of an agent: sale, lease, purchase of property,
- Architect services,
- Cleaning services, monitoring, building repairs,
- Legal services: conveyance drafting, lease drafting,
- Network access services and gas delivery.
These services are taxable at a rate of 20%. In order to pay this tax, service providers must have a French VAT number and must include said number on their invoices. In terms of payment there are 2 options: the VAT can be paid upon receipt of invoice (payment, advance bill, etc.) or upon delivery of the work.
Please keep in mind that this scope will be updated as from 1st of January 2017 :
Next year, the following services will be excluded as property works:
- The making of initial building plans/designs,
- Advertising services,
- Management of real-estate investment portfolios.
Conversely, the following services will be included as property works:
- Surveillance and onsite security,
- Agricultural services (plowing, sowing, etc.),
- Leasing or rental of stationary property,
- Equipment rentals (if used to perform work on a building and if the service provider is responsible for the execution of said work).
Here at Maupard we would be more than happy to advise you on this matter and show you the way forward.
Do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]-fiduciaire.fr. Our team of experts will happily assist you with any queries you might have.
2° de l’Article 259 A du CGI
Cf BOI-TVA-CHAMP-20-50-30-20141216 n°130
CE 3 mars 1976 n°94749, Section, Fives Penhoët : RJF 4/76, p.136
Le c) du 2° de l’Article 269 du CGI
Article 79 de l’annexe III du CGI
Article 80 de l’annexe III du CGI
Article 289 du CGI
Le 3 de l’article 78 de l’annexe III du CGI