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Guidance: Territoriality – Definition of the territory of application of VAT

For value added tax (VAT), the territories of application are defined at national and European level.

Unless otherwise stated, in all documents of the official bulletin of public finances – Taxes relating to VAT other than this document:

  • when mention is made of France, reference is made to the part of the national territory where VAT applies (metropolitan France, Guadeloupe, Martinique, Reunion) as well as, for imports and cross-border trade, to the territory of Monaco;
  • when reference is made to the European Union (EU) or its Member States, reference is made to the part of the territory of these Member States included in the European territory where VAT is applied. This therefore does not include Guadeloupe, Martinique, Reunion, parts of the national territory where no VAT applies (in particular the department of Mayotte or Guyana) and similar territories of other EU Member States;
  • when mention is made of territories outside the EU, reference is made to all territories which are not included in the European VAT territory, including when they come under one of the Member States of the EU and even when these Member States apply VAT there. This is therefore the case not only of the department of Mayotte and Guyana but also of Guadeloupe, Martinique, Reunion and similar territories of other EU Member States;
  • for the application in Guadeloupe, Martinique or La Réunion of VAT on goods, metropolitan France and the territories of the other Member States are assimilated to third-party territories. Similarly, Guadeloupe and Martinique, considered as one and the same territory, and Reunion are, vis-à-vis each other, third territories.

I. Territories of application of VAT at the national level

A. General Rules

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The territory in which VAT applies at the national level includes:

  • the metropolitan territory, made up of mainland France (including the free zones of the Pays de Gex and Savoie), the coastal islands and Corsica;
  • the territory of Monaco defined by the customs convention signed in Paris on May 18, 1963 . In accordance with this agreement, the national rules relating to VAT on imports are directly applicable in this territory and the rules relating to VAT on other transactions are introduced by princely ordinances and reproduce the national provisions subject to the necessary adaptations;

Note: With regard to imports made by persons subject to VAT or persons not subject to VAT who are established in Monaco, it is accepted that the VAT be declared, collected and controlled by the Monegasque administration on the basis of the law local (whether the import is carried out on national territory or Monegasque territory). On the other hand, with regard to the obligations involved during the customs clearance process ( general tax code (CGI), art. 293 A, 3 and II § 30 to 130 of the BOI-TVA-DECLA-10-20 ), national law is applied directly, whether customs clearance takes place in Monaco or on national territory.

  • the territories of the communities of Guadeloupe, Martinique and La Réunion;

Note 1: The VAT provisions specific to e-commerce are not applicable to these local authorities ( § 10 of BOI-TVA-CHAMP-10-10-40-60 ).

Note 2: Unlike the metropolitan territory, VAT is applied in these communities on a purely national basis. Indeed, the harmonized European VAT framework ( Council Directive 2006/112/EC of 28 November 2006 relating to value added tax, article 6, 1, c ) does not apply to it and many derogatory regimes are fitted out. It follows that, from the point of view of the other Member States of the EU, these communities are, for the purposes of VAT, assimilated to territories outside the EU ( II-C § 160). It also follows that the exchanges of goods between these local authorities and mainland France or between these local authorities are treated as exchanges with territories outside the European customs territory and qualified as imports subject to VAT ( II-A § 100 and BOI- VAT-GEO-20-40 ).

Note 3: In any case, VAT is not applicable in Guyana, Mayotte, in communities governed by Article 74 of the Constitution (Saint-Martin, Saint-Barthélémy, Saint-Pierre-et-Miquelon , French Polynesia, Wallis-and-Futuna), in New Caledonia, in the French Southern and Antarctic Lands or on Clipperton Island. Trade in goods from these communities and destined for mainland France, Guadeloupe, Martinique or Reunion are also treated as imports subject to VAT.

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It is recalled that the aforementioned territories include the following elements:

  • internal waters as well as territorial waters, which are areas that extend up to a limit set at twelve nautical miles from the baselines;

Note 1: The baselines are the low-water line as well as the straight baselines and the closing lines of the bays which are determined by regulation ( decree no. 2015-958 of 31 July 2015 modified defining the lines of base from which the width of the French territorial sea adjacent to the territory of metropolitan France and Corsica is measured , amended decree no. 2017-1511 of 30 October 2017 defining the baselines from which the width of the sea is measured territorial sea adjacent to the French West Indies ,decree n° 2014-1309 of October 30, 2014 modified defining the baselines from which the width of the French territorial sea adjacent to the coasts of the department of La Réunion is measured ).

Note 2: The exclusive economic zone extending beyond the territorial waters is therefore not included in the VAT territory, subject to the rules specific to the bottoms and subsoils of the continental shelf ( IA § 30 ).

  • the bed and subsoil of the sea within the limits of territorial waters;
  • airspace.

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Pursuant to I of Article 19 of Ordinance No. 2016-1687 of 8 December 2016 relating to maritime areas under the sovereignty or jurisdiction of the French Republic , are also subject to VAT, according to the rules in force. force in mainland France, the economic activities authorized for the exploration or exploitation of natural resources or the use of marine environments in the continental shelf, within the meaning of Article 14 of Ordinance No. 2016- 1687 of December 8, 2016 , over which the French Republic exercises a right of sovereignty.

Concretely, this concerns the seabed and subsoil of the sea (excluding the waters and the overhanging airspace) located beyond territorial waters, or even the exclusive economic zone.

Note: National jurisdiction over the continental shelf results from the Convention on the Territorial Sea and the Contiguous Zone of April 29, 1958 (Geneva Convention), to which France acceded on June 14, 1965.

B. Operations carried out with foreign diplomats and international organizations

1. General rules

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While the diplomatic agents of foreign powers benefit from certain immunities, including in particular the inviolability of the embassy hotel, these immunities cannot have either the purpose or the effect of viewing the premises of the embassies, even belonging to foreign powers, as no longer forming an integral part of French territory. From which it follows that a contractor is not justified in maintaining that the work carried out by him, by virtue of an agreement concluded with a foreign government, for the construction in France of the hotel of his embassy, ​​constitutes, under tax law, a business carried out outside France and escaping, as such, turnover tax (CE, decision of July 22, 1942, No. 60485).

Sales made to foreign consuls and ambassadors are subject to VAT when the delivery of the goods is located in France.

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However, exceptions have been granted to this principle in favor of certain sales (cars for example) ( IB-2 § 60 of BOI-TVA-CHAMP-30-30-10-10 ).

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Moreover, a refund of the tax may be granted when an embassy or consulate makes major purchases of furniture or obtains services for its official administrative and diplomatic needs.

The request for reimbursement must be submitted by the heads of diplomatic missions and through the Ministry of Foreign Affairs (protocol service) to the VAT reimbursement service (SR TVA) of the non-resident tax department ( DINR).

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The same facilities are granted to international bodies (international organizations or intergovernmental unions) for which a franchise clause is expressly provided for in an international or bilateral agreement of which the French government is a signatory.

2. Special case of purchases of movable or immovable property made by the specialized agencies of the United Nations

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Section 10 of Article 3 of the Convention of 21 November 1947 on the privileges and immunities of the specialized agencies of the United Nations provides that the specialized agencies are exempt from VAT on the basis of purchases of movable and immovable property which they make for their official use.

France grants this advantage by way of reimbursement. Consequently, the invoices addressed to the specialized institutions must be systematically drawn up with all taxes included.

To benefit from reimbursement, the institution concerned must send to the VAT SR of the DINR through the Ministry of Foreign Affairs (protocol service, sub-directorate of diplomatic privileges and immunities) its reimbursement requests accompanied by invoices relating to expenditure eligible for this benefit.

II. European VAT territory

A. Principles

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VAT is harmonized at European level. As a result, transactions carried out between two territories (trading of goods and provision of cross-border services, etc.) are governed by different rules depending on whether or not these two territories are governed by this harmonized framework.

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Are thus distinguished:

  • trade between States within the European VAT territory, which corresponds to the union of the territories of the Member States of the EU, subject to certain reservations developed in II-C § 170 and 180 (territories excluded from the treaty or from the customs territory European) and II-C-4 § 190 (special tax territories). These exchanges are, for the purposes of VAT, qualified as intra-community deliveries or acquisitions ( BOI-TVA-CHAMP-10-10-40-20 );
  • exchanges with “ third territories ” , which means all territories outside the European VAT territory. These exchanges are, for VAT purposes, qualified as imports ( § 1 of BOI-TVA-CHAMP-10-30 ).

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The precise definition of the European VAT territory results from a combination of Article 256-0 of the CGI , Article 4 of the Union Customs Code (UCC) ( Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 establishing the Union Customs Code ), Articles 5 to 7 of Council Directive 2006/112/EC of 28 November 2006 and the stipulations governing exit from the United Kingdom of the EU.

The statuses of the various territories of the Member States of the EU resulting from this with regard to customs and fiscal obligations (customs duties, VAT and excise duties) are summarized on the website of the European Commission .

B. Territories included

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The European VAT territory comprises two categories of territories: those which fall under EU Member States and those which do not. In both cases, these are territories integrated into the European customs territory defined in Article 4 of the UCC .

1. Parts of the territory of each EU Member State which are included in the European customs territory, with the exception of “special tax territories”

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This is metropolitan France as well as the territory of the other EU Member States (Germany, Austria, Belgium, Bulgaria, Cyprus, Croatia, Denmark, Spain, Estonia, Finland, Greece, Hungary, Ireland, Italy, Latvia , Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Czech Republic, Romania, Slovakia, Slovenia and Sweden), excluding their overseas countries and territories, their other territories outside the European customs and their special tax territories ( II-C-4 § 190 ).

2. Territories which are not part of the EU but which are integrated within the European customs territory due to dedicated agreements

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Territories which are not part of the EU but integrated within the customs territory of the EU where the European VAT appliesTerritories concernedApplicable textsStatus of territories with regard to VATAny comments

Territory of Monaco Article 1 of the Customs Convention signed in Paris on May 18, 1963 taken over by Decree No. 63-982 of September 24, 1963 publishing the agreements of May 18, 1963 between France and Monaco For VAT purposes, this territory is assimilated to French territory. The European texts on VAT are only applicable there with regard to trade with EU Member States. However, it has been decided locally to also apply them for inland operations ( IA § 10 ).
British Sovereign Areas of Akrotiri and Dhekelia located on the island of Cyprus Treaty relating to the establishment of the Republic of Cyprus, signed at Nicosia on 16 August 1960 (United Kingdom Treaty Series, No. 4 (1961) Cmnd. 1252) For VAT purposes, this territory is treated as Cypriot territory. The European texts on VAT are only applicable there with regard to trade with the Member States. However, it has been decided locally to also apply them for domestic operations.
Territory of Northern Ireland of the United Kingdom, only with regard to goods (deliveries, intra-Community acquisitions, imports) Article 8 of the Protocol on Ireland and Northern Ireland included in the Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Energy Community atomic and its appendix 3 For VAT purposes, this territory is assimilated to the European VAT territory as far as the goods are concerned. For the provision of services, Northern Ireland is considered as a third territory not included in the European VAT territory. Not applicable

C. Excluded Territories

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Third territories, ie all territories not included in the European VAT territory, include four categories according to a greater or lesser degree of integration within the EU single market.

1. Territories of States which are not members of the EU and which are not integrated into the European customs territory by virtue of agreements concluded with an EU Member State or with the EU

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A third party is any territory not integrated into the customs territory of the EU even when it has privileged relations with this territory, particularly with regard to customs formalism or customs duties:

  • Member States of the EU Customs Union (Turkey, Andorra, San Marino);
  • Other states party to the European Economic Area (Iceland, Liechtenstein, Norway);
  • Other member states of the Council of Europe (Switzerland, Turkey, Armenia);
  • Other states with the right to mint euro coins (Vatican);
  • Other states that have concluded a free trade agreement with the EU.

Note 1: Third parties are also the territories of the United Kingdom and the British Crown dependencies (the Channel Islands and the Isle of Mans), subject to transactions relating to goods and territorialized in Northern Ireland ( II- B-2 § 145 , third line of the table).

Note 2: On the other hand, the territories of Monaco ( II-B-2 § 145 , first line of the table) and the areas of British sovereignty of Akrotiri and Dhekelia located on the island of Cyprus ( II -B-2 § 145) are not third parties. B-2 § 145 , second line of the table).

2. Territories of EU Member States to which the Treaty on the Functioning of the EU does not apply, referred to by this Treaty as “overseas countries and territories”

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Territories of EU Member States to which the Treaty on the Functioning of the EU does not apply, qualified by this Treaty as “overseas countries and territories”Member State concernedTarget territory

For France
  • Saint-Barthélemy;
  • Saint Pierre and Miquelon;
  • French Polynesia ;
  • Wallis and futuna ;
  • New Caledonia ;
  • French Southern and Antarctic Lands;
  • Clipperton Island.
For the Kingdom of Denmark
  • Faroe Islands ;
  • Greenland.

3. Territories of EU Member States to which the Treaty applies, but which are excluded from the European customs territory

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Territories of EU Member States to which the Treaty applies, but which are excluded from the European customs territoryMember State concernedTarget territory

For the Federal Republic of Germany
  • Island of Helgoland;
  • Territory of Büsingen.
For the Kingdom of Spain
  • Ceuta;
  • Melilla.
For the Italian Republic
  • Municipality of Livigno.

4. Territories of EU Member States included in the European customs territory, but specially excluded from the scope of VAT (“special tax territories”)

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Territories of EU Member States included in the European customs territory, but specially excluded from the scope of VAT (“special tax territories”)Member State concerned Target territory

For France
  • Saint-Martin ;
  • Communities governed by article 73 of the Constitution (Department of Mayotte, Reunion, Guadeloupe, Guyana, Martinique).
For the Hellenic Republic
  • Mount Athos.
For the Kingdom of Spain
  • Canary Islands.
For the Republic of Finland
  • Åland Islands.
For Italy
  • Campione d’Italia;
  • Italian waters of Lake Lugano.

Note 1: Specific customs rules are provided for in order to manage, within the customs territory of the EU, the exchanges between the special tax territories and the European VAT territory ( II-B § 170 to 220 of the BOI-VAT- FIELD-10-30 ).

Note 2: Although the status of “special tax territories” is provided for by the CDU (CDU, art. 1 , par. 3), this qualification is not used by the CDU itself, but by its tax regulations. application ( Commission Implementing Regulation (EU) 2015/2447 of the 24th number 2015 laying down detailed rules for the application of certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council establishing the Customs Code of the Union and Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council on the detailed rules of certain provisions of the Customs Code of the ‘Union). This qualification designates the parts of the European customs territory where harmonized tax law does not apply in terms of VAT or excise duties (energy, alcohol, tobacco). The special tax territories for VAT and for excise duties are identical, with the exception of Mount Athos, Campione d’Italie and the Italian waters of Lake Lugano, which are included in the European territory for excise duties ( tax code on goods and services, article L. 311-3 ) but not in the European VAT territory.

Source: gouv.fr

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