French VAT Rates Explained: Standard, Reduced & Exempt Categories

France applies a multi-tier VAT system designed to strike a balance between revenue collection and affordability for essential goods and services. The standard 20% rate covers most goods and services, while reduced rates make essentials cheaper, which are 10%, 5.5%, 2.1% and 0%.

Key Takeaways

• Standard rate: 20%. Applies to most taxable goods and services unless a special category is defined.
• Reduced rates: 10% for food, certain medicines, hotel stays, and cable/pay TV; 5.5% for books, soft drinks, medical devices, and sports/cultural tickets; 2.1% for newspapers, magazines, TV license, and some cultural programs; and 0% for specific healthcare services like medical and dental.
• Exempt categories: Micro-enterprises under thresholds, education, healthcare, financial services, exports, and betting revenues.
• Cross-border rules for outside the EU: Exports are VAT-free; imports pay VAT at entry (deductible).
• Within the EU: Reverse charge applies for B2B; consumer sales depend on a €10,000 threshold.

What Is VAT in France?

In France, VAT (Value-Added Tax) is a consumption tax. It is added at every step of making and selling goods or services:

1. Every business in the supply chain charges VAT on sales.
2. They can deduct the VAT already paid on their purchases (input VAT).
3. The final consumer pays the tax in full, without deduction.

This makes VAT a tax on final consumption, not on businesses. France, like other EU members, operates under EU VAT directives, but with its own national rates and exemptions.

VAT Rates in France

France has various VAT rates, each covering different goods and services: standard, reduced (10% & 5.5%), super-reduced, and zero.

French VAT Rates: Summary Table

Here’s a table showing exact VAT rates on various goods and services categories:

Standard VAT Rate in France: 20%

20% is the standard VAT rate. It applies to all taxable goods and services unless a reduced, super-reduced, or zero rate is specified. For example, clothing, alcoholic beverages, household appliances, cosmetics and perfumes, cars and fuels, etc. If your activity doesn’t fall into a special category, you’re charging 20%. From August 1, 2025, a 20% VAT rate is now applied on the subscription part of the electricity bill due to EU harmonization rules.

Reduced VAT Rates in France

France reduced VAT rates are applied for socially important or essential goods and services. These rates make them more affordable for the population.

10% Reduced Rate applies to:

• Most food products (non-basic food items like prepared foods and restaurant meals)
• Certain pharmaceutical products (excluding some medicines eligible for super-reduced rate)
• Cable and pay TV subscriptions
• Hotel accommodation and some catering services
• Public passenger transport
• Some cultural events and works on buildings

5.5% reduced rate applies to:

• Basic food products (bread, fruits, vegetables)
• Books including e-books
• Soft drinks and non-alcoholic beverages
• Medical devices and some medicines
• Tickets for sporting and cultural events

As of August 1, 2025, the reduced VAT rate of 5.5% no longer applies on electricity bills’ subscription part. Also, from October 1, 2025, this 5.5% rate will apply to small residential solar panel installations under 9 kW as a green incentive aligned with EU VAT policies.

2.1% super-reduced rate applies to:

• Newspapers and magazines (printed and online versions)
• Television license fees
• Admission to certain cultural programs such as theater and museums
• Certain medicines reimbursed by social security

0% VAT tax rate France mostly applies to:

• Exports outside the EU
• International transport (air and maritime)
• Intra-community supplies of goods within the EU

VAT-Exempt Categories in France

Some sectors don’t charge VAT at all. Exemption means no VAT is collected, but input VAT on related purchases cannot be recovered.

VAT exempt categories France include:

• Micro-enterprises under turnover thresholds
• Education services – schools, universities, training centers
• Healthcare services – hospitals, clinics, and medical professionals
• Financial and insurance services
• Exports – sales between mainland France and overseas territories are exempt
• Betting revenues – excluding intermediary services

VAT Rates for Cross-Border & Intra-EU Transactions

French VAT interacts with both EU and non-EU rules. Whether you’re selling or buying, the rules differ.

Outside the EU

• Selling goods: No VAT charged. Input VAT may still be deducted.
• Selling services: Usually no VAT, but the customer’s country may apply its own. Input VAT is still deductible.
• Buying goods: VAT must be paid at import. Deductible later through VAT returns.
• Buying services: You pay VAT using the reverse charge mechanism at the French rate. Deductible if your sales are taxed.

Within the EU

• Selling goods to another business: No VAT if customer has a valid EU VAT number. If not, VAT is charged at the French rate.
• Selling goods to consumers: If annual cross-border sales exceed €10,000, VAT is due in the customer’s country. Below this threshold, VAT is due in France.
• Selling services to another business: No VAT charged. Customers account for VAT in their country (reverse charge).
• Selling services to consumers: For all digital and virtual services (including e-learning, webinars, streaming, downloadable products, and online events), VAT must be charged based on the customer’s country of residence.
• Buying goods: Self-account for VAT at the French rate, then deduct if applicable.
• Buying services: Reverse charge mechanism applies.

Note: EU VAT rules don’t apply in territories like the Canary Islands, Åland Islands, Büsingen, Heligoland, Ceuta, and Melilla. They do apply in Monaco.

How to Apply the Correct VAT Rate in France

Correct application depends on turnover, sector, and type of transaction. Here’s a clear step-by-step guide on how to apply the correct French VAT rates:

1. Identify the Type of Goods or Services You Provide

Determine whether your product/service falls under standard, reduced, super-reduced, zero, or exempt categories. Also, determine if VAT is chargeable or exempt. For exempted items, no VAT is charged. However, input VAT cannot be recovered. 

2. Check the Customer Type and Location

For domestic sales within France, charge VAT based on the category of goods or services.

However, here’s how you apply VAT rates for sales within the EU:

• Business customers with valid VAT number: No VAT (reverse charge applies).
• Consumers with annual cross-border sales ≤ €10,000: VAT charged at French rate.
• Consumers with annual cross-border sales > €10,000: VAT charged at buyer’s country rate.

For sales outside the EU:

• Goods: 0% VAT (exports).
• Services: Usually 0%, but customer’s country rules may apply.

3. Check Thresholds for Registration

For goods, the registration threshold is €85,000/year, while for services, it is €37,500/year. If your turnover exceeds these thresholds, VAT registration in France is mandatory. For EU-wide distance sales exceeding €10,000/year, register and charge VAT in the buyer’s EU country. Non-resident businesses have no minimum threshold and must register regardless of turnover.

4. Calculate and Charge VAT

First, determine the net price of the good/service. Then, multiply by the correct VAT rate (20%, 10%, 5.5%, 2.1%, or 0%). Add the VAT amount to the invoice total. 

For example, here’s how to apply the correct VAT rate for selling a book (5.5% VAT) for €20:

VAT = €20 × 5.5% = €1.10

Total invoice = €20 + €1.10 = €21.10

Conclusion

French VAT rules are closely tied to EU legislation but adapted to France’s social and economic priorities. The correct rate depends not only on the type of good or service but also on the customer’s status (business vs. consumer) and their location (domestic, EU, or outside the EU). For cross-border EU transactions, VAT treatment hinges on whether the buyer is VAT-registered. Exports to non-EU countries remain zero-rated, while imports require VAT to be declared on entry though this is usually deductible for registered businesses.