France clarifies VAT reverse charge for subcontracted construction works

The Direction générale des finances publiques has published binding ruling BOI-RES-TVA-000269Impots on the value added tax reverse charge in 2 nonies of Article 283 of the code général des impôtsImpots for construction works relating to immovable property carried out by a subcontractor for a taxable customer. The customer, not the subcontractor, accounts for the taxImpots, including on Monegasque territoryImpots, since Monaco forms part of French VAT territoryImpots.

Where reverse-charge and other services sit in a single subcontract, the supply is one overall supply fully subject to reverse charge. In separate contracts each follows its own regimeImpots -- for example intellectual services, cleaning, supplies of movable goods including installation, equipment hire, maintenance or bespoke parts combined with works.

Network works and connections fall within reverse charge as immovable worksImpots. Fitted kitchens fall within it when incorporated into the building, adapted to the premises and part of a complete installation, but not freestanding storage fixed summarily for stabilityImpots. Audiovisual installations fall within it when incorporated into the building, but mere commissioning of a telephone, television or control device does notImpots. Fire-detection, safety and security equipment fixed into the building falls within it, as does pool waterproofing. Off-site workshop treatments, repair of dismantled pellet stoves at the repairer's premises, and mere adjustment and commissioning stay outside itImpots, though adjustments fall inside when combined in one contract with connections or network works.

All public works are construction works in relation to immovable propertyImpots: rock-face stabilisation, roadside safety and signalling equipment, speed cameras and road markings all fall within reverse charge. Railway signalling counts for infrastructure but not rolling stockImpots. Preliminary pruning counts only under the same contract as the construction. A permanent fence and land-shaping works such as quarry stripping fall within it, while temporary event lighting limited to movable goods does not, unless part of a single public-lighting contract including immovable works. In factories, hospitals, schools and offices, equipment falls within it when it loses its movable character through incorporation, but not when merely set down and fixed for stabilityImpots. Photovoltaic fields and farms are immovable constructions with or without foundationsImpots.

Maintenance contracts fall within reverse charge when the maintenance extends or is accessory to covered works, or provides replacement parts beyond minor suppliesImpots; only physical intervention with parts billed separately stays outsideImpots. Pre-commissioning checks, drain-clearing, video inspections, leak detection without repair, disinfection, disinfestation and rat control are outside itImpots, except treatment against xylophagous insectsImpots, as are water-treatment servicesImpots. Site cleaning, works signalling, scaffolding hire with assembly and waste removal are covered only when combined in one contract with other immovable works; site depollution, temporary site utilities, materials delivery and plant hire, including with an operator, stay outsideImpots.

For public contracts, box F of the DC4 form shows "Autoliquidation" in the rate line with only the maximum ex-tax amount inside the mechanismImpots. The flat-rate advance stays tax-inclusive and the principal self-assesses at payment, not invoice receiptImpots. The subcontractor's invoice carries the Article 242 nonies A particulars with "Autoliquidation"Impots, with no obligation to show the customer's intra-Community VAT number for 2 nonies supplies. A subcontractor under the franchise en base stays outside the mechanismImpots and invoices "TVA non applicable, article 293 B du CGI".

Legal basis: 2 nonies of Article 283 of the code général des impôts, Article 1 of Law No 75-1334 of 31 December 1975, Article 242 nonies A of Annex II to the CGI and Articles R. 2191-3, R. 2191-7 and R. 2193-11 to R. 2193-16 of the code de la commande publique, as construed by BOI-RES-TVA-000269 and BOI-TVA-DECLA-10-10-20.