- General VAT Principle: In international transactions, the VAT applicable is generally that of the customer’s location. The service provider issues an invoice excluding VAT, and the customer self-liquidates VAT at their country’s rate, following Articles 259-1 and 283-2 of the French Tax Code.
- Exceptions for Localizable Services: For certain services, such as the rental of means of transport, local VAT may apply. Specifically, short-term rentals (up to 30 days, or 90 days for maritime transport) are subject to the VAT of the country where the vehicle is made available.
- Short-Term Rental VAT: Short-term rentals (not exceeding 30 days) are taxed in the country where the vehicle is provided. For example, renting a commercial vehicle in Latvia for 20 days would incur Latvian VAT. The lessee can recover VAT by registering for VAT in the rental country or by requesting a VAT refund through the impots.gouv.fr website.
- Long-Term Rental VAT: Long-term rentals (over 30 days, or 90 days for maritime transport) apply the VAT of the lessee’s location. The service provider does not charge VAT on the invoice, and the customer self-liquidates VAT at their country’s rate. For instance, a 50-day rental of a vehicle by a French lessee would involve self-liquidating 20% French VAT.
- Special Case for Passenger Vehicles: For long-term rentals of passenger vehicles, VAT rules differ. In France, VAT on passenger vehicle rentals is not recoverable. The lessee would reverse charge VAT but only partially deduct it, reflecting the non-deductibility of VAT on passenger vehicle expenses in France.
Source Legifiscal
