For VAT, what counts is not where a service is physically performed but where it is deemed to be supplied. That place-of-supply rule decides which country taxes the transaction, at what rate, and who owes it. It follows from Directive 2006/112/EC and sits in France at articles 259 and following of the Code général des impôts.
Three questions, in that order
Is the customer a taxable person or a private individual? Does the service fall under the general rule or an exception? Who is liable, and what returns follow?
The first question misleads more often than expected, because the notion of a taxable person is broad. It covers anyone carrying on an economic activity independently, whether or not they charge VAT. A small business under the French exemption is still a taxable person for place-of-supply purposes. So is an entity registered only for certain intra-Community transactions.
Business customers: tax follows the customer
Where the customer is a business, VAT arises in the country where that customer is established. The French supplier invoices without tax, and the customer applies its own VAT through the reverse charge. The rule holds inside and outside the European Union.
| Customer | Wording | Further requirement |
|---|---|---|
| in the European Union | “Autoliquidation” | both intra-Community VAT numbers on the invoice |
| outside the Union | “TVA non applicable – article 259-1 du CGI” | invoice issued without tax |
A French firm billing legal advice to a Swiss company therefore invoices without tax. A French agency running a campaign for a Spanish business invoices without tax under the reverse charge, and the VAT is settled in Spain.
What the supplier still has to report
Invoicing without tax is not a release from anything. The amount goes on the “CA3” return under non-taxable transactions, and for customers in the Union the European services return, the “DES”, is mandatory. Leaving it out is penalised.
Before invoicing, the customer’s VAT number is checked against the European VIES database. That is a minute of work which saves a correction.
Private customers: tax follows the supplier
Where the customer is a private individual, VAT is in principle due in the supplier’s country. A French business therefore charges French VAT, even to a customer abroad.
The exceptions are many and they matter. Work on property follows the location of the property. Transport has rules of its own. Electronic services to private customers in the Union are taxed in the consumer’s country above an annual threshold of 10,000 euros, with the OSS one-stop shop to pull the returns together. Intangible services supplied outside the Union often fall out of French VAT altogether.
When geography wins
Some transactions follow neither rule: hiring means of transport, work on a building, a cultural or sporting event, and catering consumed on the spot. There the physical location of the activity prevails.
A French expert working on a Paris building charges French VAT to a Luxembourg client. A seminar held in Spain for a Belgian company falls under Spanish VAT.
The five recurring mistakes
- Charging French VAT on a business-to-business supply within the Union.
- Omitting the reverse-charge wording.
- Not checking the customer’s VAT number.
- Confusing the place of performance with the place of taxation.
- Skipping the “CA3” and the “DES” because no VAT was charged.
Goods follow different rules again: only the place of delivery counts, and where the invoice is issued changes nothing. See tax advisory
Sources: Directive 2006/112/EC; articles 259 and following of the Code général des impôts. Position as at 13 June 2026.