VAT on internet and website services supplied to France


The steady development of the internet has resulted in a whole range of business opportunities for internet services, and the global nature of the internet means that it is easy to provide such services to overseas customers. This page looks at whether a UK business needs to charge VAT on internet services supplied to a customer in France.

Internet services are likely to fall into 2 main groups:

Electronically supplied services

Typically these are automated services that are necessarily provided over the internet, to a customer who belongs in France. They require minimal human input.

They include:

  • Providing an online website (but not bespoke website design or development services)
  • Supplying web hosting
  • Providing online data storage or warehousing
  • Providing access to standardised downloads, such as software, images, digitised books, music, films and games
  • Subscriptions to Software as a Service (Saas)
  • Subscriptions to online newspapers, journals and blogs
  • Providing online news, traffic and weather information
  • Providing access to online databases
  • Providing advertising space on a web page
  • Providing automated online education courses
  • Access to automated online games
  • Web-based broadcasting
  • Automated online auction services

They do not include:

  • General services, such as legal services, which just use the internet as a more efficient form of communication than sending documents by post.
  • Electronic information sent on physical media, such as a tape, CD or DVD.
  • Goods ordered online from e-commerce websites.
  • Broadcasting over the internet at the same time as over TV or radio networks.
  • The provision of internet access by suppliers who provide little content of their own as part of the package.
  • Internet telephone services, such as Skype.

Other internet services supplied to a business in France

Other services connected with the internet may fall elsewhere under Schedule 5 of the Value Added Tax Act 1994. This covers a range of intangible and intellectual services, and in the context of internet business this is likely to include:

  • General web design, development and coding
  • Creating a bespoke complete website
  • Taking a custom photograph for a website
  • Creating a piece of artwork or a logo for a website
  • Writing content for a website
  • Creating custom music or sound effects for a website
  • Creating flash or other applications for a website
  • Translating a website into another language
  • Providing SEO (Search Engine Optimisation) services on a website
  • Keyword research and other market research for a website
  • Providing PPC (Pay Per Click) management services, such as managing a Google AdWords campaign
  • Selling advertising space on a website which relies on some human input, rather than being computer-generated
  • Legal or accountancy (excluding basic bookkeeping) services provided to a website business.

In most cases it does not matter whether the service is provided by email, directly over the internet, or by sending papers or CDs in the post. However, the UK treats the sale of standardised software (for example, Microsoft Office) by physical media as a sale of goods rather than a service, and accordingly the VAT situation would be different.

Whether UK or French VAT needs to be charged

Where a UK business supplies any of these services to a customer who belongs in France, who receives them for a business purpose, the supply is treated as being outside the scope of UK VAT. UK VAT does not need to be charged. The customer will account for French VAT under the reverse charge procedure.

Where a UK business supplies one of these services to a customer who belongs in France, who receives them for a non-business purpose, the supply is treated as being in the UK for VAT purposes. If the UK business is registered for VAT, and the service is not normally exempt from UK VAT (for example, some gambling, financial or education services), UK VAT must be charged. If the UK business is not registered for VAT, any non-exempt income will need to be included when determining whether the UK business is obliged to register for VAT due to exceeding the turnover threshold.

There is an additional rule that applies to electronically supplied services sold to a French business. Where the service is effectively used and enjoyed outside the EC (for example, Jersey), the place of supply will also be outside the EC. This takes the service outside the scope of both UK and French VAT.

The VAT rules on electronically supplied services between the UK and France are due to change in January 2015.