For the determination of the place of supply of services and the methods of taxation, a distinction should be made according to whether the service is provided to a customer subject to VAT (“B to B” for “Business to Business” relations) or to a non-taxable lessee (“B to C” relations known as “Business to Consumer”).
Services provided to a VAT taxable person: a business (“B to B”)
General rule
The services provided by a taxable service provider in mainland France are:
- taxable at DOM rates (normal rate: 8.5%; reduced rate: 2.1%) when the taxable lessee is established in Martinique, Guadeloupe or Réunion;
- not subject to VAT when the taxable buyer is established in French Guiana or Mayotte.
Please note that certain services may however be subject to the VAT rate of the place of performance, and not to the VAT rate of the place of establishment of the taxable customer.
For this, the service providers and customers subject to the tax must be established in France (in mainland France or in the overseas departments).
The following services are exclusively concerned: transport of goods other than intra-Community transport, ancillary services to transport other than intra-Community transport of goods, such as loading, unloading, handling and similar activities, work and appraisals on movable property bodily.
Regardless of the place of taxation (metropolis or DOM), the VAT must be paid by the service provider.
Special rules
Certain services are subject to specific rules of territoriality such as short-term rentals of means of transport, services relating to a building, passenger transport, sales to be consumed on site, and intra-Community transport of goods .
These services are subject to metropolitan rates or DOM rates depending on whether the place of delivery, determined according to these special rules, is located in metropolitan France or in a DOM. If the service is located in Guyana or Mayotte, VAT is not applicable.
For more information, you can consult the BOFIP by clicking HERE.
Services provided to a non-taxable person: final consumer customer (“B to C”)
General rule
The services are taxable at metropolitan rates (normal rate: 20%; intermediate rate: 10%; reduced rate: 5.5%) when the service provider is established in metropolitan France, regardless of the place of establishment of the customer not taxable person (DOM, including French Guiana and Mayotte)
Special rules
The same special rules as indicated above (1-B) apply here.
However, a measure of tolerance exists for the immaterial services listed in article 259 B of the general tax code (CGI).
These services, when provided by service providers established in France, may be taxed at the VAT rate of the place of establishment or residence (in mainland France or in an overseas department) of the non-taxable customer.
When this place is located in Guyana or Mayotte, the service is not subject to VAT.
Source: gouv.fr
