VAT and France

Some services received in the UK have to be reverse charged if the supplier ‘belongs’ in France. It is therefore important to understand exactly what this means.

The place of belonging depends on the location of the supplier’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 supplier has its only establishment in France, that supplier will belong in France.
• If the supplier has establishments in France and in the UK, but the French office or agent is most directly concerned with the service, it is likely that the supplier will belong in France.
• If the supplier has establishments in France and in the UK, but the UK office or agent is most directly concerned with the service, it is likely that the supplier will belong in the UK.
• If the supplier has establishments in France and another country, and the office or agent in the other country is most directly concerned with the service, it is likely that the supplier will belong in the other country.
• If the supplier 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 most directly concerned with the service. This should reflect commercial reality, which may be different from the contractual position.

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