France’s 2025 VAT Reform: Implications for Online Service Providers

France’s 2025 VAT reform introduces new territoriality rules for virtual services, taxing online access to cultural, educational, and entertainment events based on the customer’s EU country of residence under Article 259 A of the General Tax Code.
Non-taxable EU customers (individuals) must be charged VAT in their country of residence, affecting non-EU providers like those in the UAE offering virtual services to European consumers.
Taxable EU customers (businesses) remain subject to the reverse charge mechanism, paying VAT in their own country, while bank domiciliation in the EU does not affect VAT obligations tied to service consumption location.
Providers should update invoicing, reporting, and VAT collection processes to ensure compliance, especially for B2C sales in the EU, as non-compliance risks tax adjustments during audits under the evolving European regulatory framework.