VAT and France

Place of belonging

Some services are subject to French VAT rather than UK VAT if they are being received for business purposes by a customer who ‘belongs’ in France. It is therefore important to understand exactly what this means before deciding whether or not a particular service is outside the scope of UK VAT.

An individual receiving a service for a non-business purpose will always belong in the country where he usually resides.

In other cases, it depends on the location of the customer’s business ‘establishments’. Generally, these are permanent places that have the human and technical resources necessary to carry on a business. However, they can also include the registered office of a company, even if no business is carried on there. They also include a branch or agency (for example, a subsidiary company) through which a business is carried out.

• If the customer has its only establishment in France, that customer will belong in France.
• If the customer has establishments in France and in the UK, and the service is more directly used by the UK office or agent, it is likely that the customer will belong in the UK.
• If the customer has establishments in France and in the UK, and the service is more directly used by the French office or agent, it is likely that the customer will belong in France.
• If the customer has establishments in France and another country, and the service is more directly used by the office or agent in the other country, it is likely that the customer will belong in the other country.
• If the customer has no establishments at all, an individual will be treated as belonging in the country in which he usually resides. A company will be treated as belonging in the country in which it is legally constituted.

When there is more than one relevant establishment, it is necessary to look at the whole picture to decide which one is the most direct user of the service. This should reflect commercial reality, and may be different from the contractual position.

Location of internet customers

Confirming that a customer is based in France can be difficult when supplying electronically supplied services, so in these cases HMRC will accept self-declaration by the customer combined with a reasonable level of verification. This could be one of the following:

1. Previous use of a postal address in France for that customer, where the mail has not been returned as undelivered.
2. Payment by credit card or debit card, where the customer’s home address and billing address are both in France.
3. Payment by credit card or debit card, where the issuing bank is located in France.
4. Use of geo-location software or any other similar IT systems that suggest that the customer is in France.

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