As a general rule, VAT is imposed on all taxable economic activities conducted or, in specific cases, used in France. For purposes of the imposition of VAT, France includes metropolitan France, Monaco and the continental shelf and territorial waters. The Overseas Departments and Regions are treated as foreign countries: such jurisdictions, however, have their own VAT which is imposed within their own territorial limits.
The territorial application of VAT is different for the two major categories of taxable economic activities: the sale of goods and the rendering of services.
Sales of goods are subject to VAT where the goods are located in France at the time they are shipped by the seller or delivered to the purchaser.
As a general rule, the rendering of services is subject to VAT whenever the person rendering the services is established in France. Two principal exceptions to this general rule exist. First, services that may be identified to a given physical location in France give rise to VAT liability whether or not the person who renders such services is established in France. The following types of services may be identified to a physical location in France:
1. leases of means of transportation by a lessor that is established outside of the EU if such means of transportation so leased is used in France,
2. leases of means of transportation by a lessor established in France, if such means of transportation so leased is used in France or in another Member State of the EU,
3. services rendered relating to real property situated in France,
4. services consisting of the transportation of individuals or goods in or through France, 9
5. cultural, artistic, educational, entertainment or similar services rendered in France,
6. repairs, maintenance or improvements made on tangible personal property which are physically performed in France, as long as the purchaser of the service has not supplied the service provider with a VAT identification number issued in another Member State of the EU and sent or transported the property out of France, and 10
7. hotel and restaurant services rendered in France (CGI, art. 259 A).
The second exception to the general rule providing that, in order to be taxable, services must be rendered by a person established in France concerns the following services relating to intangible personal property:
1. the sale and licensing of intellectual or industrial property rights,
2. advertising services,
3. leases of personal property other than means of transportation,
4. consulting or professional services,
5. the furnishing of information,
6. banking, financial or insurance services,,
7. loaning of employees,
8. intermediary services relating to categories of this list,
9. the compliance with a non-competition clause prohibiting the rendering of services described in categories [1-8] of this list,
10. telecommunications services,
11. radio and television broadcasting services, and
12. electronically supplied services (CGI, art. 259 B(1)).
VAT is imposed on services relating to intangible personal property if such services:
1. are rendered by a person who is established outside of France and if the beneficiary of such services is established in France and is a VAT taxpayer,
2. are rendered by a person established outside of the EC if the beneficiary of such services is established or domiciled in France but is not subject to VAT, provided, however, that the services are used in France, 11
3. are rendered by a person who is established in France if the beneficiary of such services is established in a Member State of the EC and is not subject to VAT in his country of residence,
4. are rendered by a person who is established in France if the beneficiary of such services is also established in France.
VAT is not imposed on services relating to intangible personal property in other cases.