Tax policy directorate – Bureau a

PART II: 
TAXES ON EXPENDITURE 
Taxes on expenditure are levied on household and business consumption and investment. 
Taxes on expenditure traditionally took the form of indirect consumption duties, circulation duties and 
customs duties. 
The introduction of VAT and its widespread application have considerably reduced the scope of such 
indirect taxes and hence the revenue they raise, although one of them, the domestic tax on energy 
products, still yields significant amounts. 

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CHAPTER 1: 
VALUE ADDED TAX 
In order to create a single market between EU Member States, a number of VAT directives have been 
issued since 1967 which Member States have had to enact into their domestic law. Rules on the 
scope, tax base, liability for the tax, territoriality of the supply of goods and service provision and 
reporting requirements have been harmonised. Member States may apply transitional provisions 
relating to rates, exemptions and deduction entitlements. 
I – CHARACTERISTICS OF VAT 
A. VAT IS A TERRITORIAL TAX 
VAT is a general consumption tax levied on all goods supplied and services provided in France. 
The territory in which VAT applies includes continental France, Corsica, the Principality of Monaco, 
territorial waters, the continental shelf and the départements of Guadeloupe, Martinique and La 
Réunion. However, the three overseas départements are deemed export territories with regard to 
metropolitan France, in the same way as third countries. VAT is temporarily not applicable in the 
départements of French Guiana and Mayotte. 
Supplies of tangible movable goods are deemed to be made in France where the good is situated in 
France: 
• 
At the time of shipment or transport by the seller or the buyer or by another party on their behalf 
to the buyer 
• 
On assembly or installation by the seller or on the seller's behalf 
• 
When it is made available to the buyer, if it is not shipped or transported 
• 
At the time of departure of a transport, the place of arrival of which is on the territory of another 
Member State of the European Community, in cases where delivery, during such transport, is 
made on board a boat, an aircraft or a train 
The place where a service is provided is deemed to be in France where the customer is liable to the 
tax, acts as such and has the registered office of his business or a permanent establishment to which 
the service is provided or, failing that, his domicile or usual home in France. Moreover, the place where 
a service is provided to persons not liable to the tax is in France when the service provider has the 
registered office of his business or a permanent establishment from which the service is provided or, 
failing that, his domicile or usual home in France. 
However, where services are not taxed following the application of these principles in the place where 
they are actually used, there are derogations to ensure such taxation. For example, some services are 
taxed in the location of the building to which they relate (accommodation, services related to real 
property as defined in Article 13 ter of EU Directive 2006/112/EC, in force since 1 January 2017, works 
on property, etc.), some in the location where they are physically provided (catering, cultural and 
sporting services, etc.), and some in other more specific locations such as the place where the means 
of transport is provided to the customer in the case of short-term vehicle rentals. 

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Since 1 January 2015, telecommunications, broadcasting and electronic services are subject to VAT in 
the Member State where the non-taxable consumer resides. 
As a result, the supplier must declare and pay VAT in each Member State where services are 
consumed. 
The supplier of telecommunications, broadcasting or electronic services may pay VAT due on these 
services through a VAT Mini One Stop Shop (MOSS) provided by the Member State in which it is 
established. This arrangement enables suppliers to avoid VAT registration in each Member State 
where their services are consumed. 
Foreign trade transactions (exports of tangible goods and similar supplies, provision of services relating 
to international trade in goods or transactions relating to ships and aircraft, intra-Community supplies 
and similar transactions) are generally exempt from VAT under certain conditions. However, taxpayers 
who carry out such transactions are entitled to deduct the VAT they have paid on the purchase of 
goods and services used in such transactions. 
Intra-Community imports and acquisitions and similar transactions are in principle liable to VAT in 
France if that is where the transaction takes place.