Reverse Charge VAT & Intra-EU Transactions in France: Rules, Examples & FAQs

Cross-border transactions within the EU bring unique VAT challenges. One of the most important mechanisms that businesses must understand is the reverse charge, known in France as autoliquidation. 

Key Takeaways

• Reverse charge shifts VAT responsibility from seller to buyer, ensuring compliance without cross-border VAT registrations.
• Intra-EU B2B goods sales are invoiced VAT-free, and buyers self-assess VAT in France
• French buyers must declare acquisitions and reverse charge VAT, making transactions cash-neutral if fully deductible.
• Cross-border services follow customer-location rules, with France requiring reverse charge under Article 283-2 CGI.
• Domestic fraud-prone sectors like construction, scrap, telecoms, and energy trading apply reverse charge to curb VAT fraud.
• Since 2022, import VAT in France is reverse charged via CA3 returns, improving business cash flow.
• Invoices must exclude VAT, display both VAT numbers, and mention “TVA due par le preneur” or “Autoliquidation.”
• Reverse charge doesn’t apply to B2C; suppliers remain liable unless OSS is used for digital or distance sales.

What is the Reverse Charge Mechanism?

Normally, when a business sells goods or services, it charges VAT on the invoice, collects it from the customer, and remits it to the tax authority.

With reverse charge, this process is flipped:

• The seller issues the invoice without VAT.
• The buyer declares the VAT due on their VAT return as if they were both the supplier and the customer.
• If the buyer has the right to deduct input VAT, they claim it back in the same return.

The outcome is often “cash neutral,” but the transaction is properly recorded for tax purposes.

Why does reverse charge exist?

The mechanism was introduced to solve two main problems:

1. Cross-border B2B trade within the EU: Without reverse charge, sellers would need VAT registrations in every country they export to, creating huge administrative burdens. Reverse charge simplifies this by making the buyer account for VAT in their country.
2. Domestic fraud-prone sectors: Certain industries (construction, scrap metal, telecoms, etc.) have seen “missing trader fraud,” where a supplier charges VAT but disappears without remitting it. Reverse charge removes this weak link by shifting the liability to the buyer.

Reverse Charge in Intra-EU Goods Transactions (B2B)

When goods move from one EU country to another between VAT-registered businesses, the reverse charge applies.

Example: France to Germany

• A French company sells machinery to a German company.
• The French company invoices without VAT, noting “Exonération TVA – article 262 ter I du CGI / intra-Community supply.”
• The German buyer self-assesses German VAT at the applicable rate and reports it in both output and input VAT fields on their German return.
• Both companies declare the transaction in their respective EC Sales List (DES) and Intrastat reports.

From the French perspective, this sale is VAT-exempt as long as:

• The buyer has a valid EU VAT number.
• The goods are transported outside France.

Example: Italy to France

• An Italian company sells €20,000 worth of parts to a French manufacturer.
• The invoice is zero-rated, showing the French buyer’s VAT number.
• The French manufacturer declares the €20,000 as an “acquisition intracommunautaire” on its CA3 VAT return, calculating French VAT at 20% (€4,000) as output tax, and deducting the same amount as input tax (if fully recoverable).

Important Note: If the buyer is not VAT-registered (e.g., a private consumer), reverse charge does not apply. Instead, the supplier must charge VAT in their own country or use the OSS scheme for B2C distance sales.

Reverse Charge in Cross-Border Services (B2B)

For services, the general EU rule is that VAT is due in the country of the customer (Article 44 of EU VAT Directive).

That means when a French business buys services from abroad, it must reverse charge French VAT on them.

Examples

• A French company hires a UK consultancy post-Brexit. The UK invoice shows no VAT. The French buyer self-assesses 20% VAT in France (€2,000 on a €10,000 invoice).
• A German software company provides SaaS licenses to a French business. The invoice is VAT-free. The French buyer reverse charges 20% VAT and reclaims it.
• For invoices, French law requires wording like: “TVA due par le preneur – Article 283-2 du CGI.”

Exceptions

Some services are taxed where performed (e.g., catering, passenger transport, short-term vehicle hire). However, France applies reverse charge even in many of these cases if the supplier is not established in France.

This broad application makes compliance easier for foreign suppliers—they rarely need a French VAT number if their clients are VAT-registered.

Reverse Charge in the French Domestic Context

France also applies reverse charge rules domestically for certain industries. These measures are designed to prevent VAT fraud and simplify compliance.

• Construction Sector: Since 2014, if a sub-contractor (builder, plumber, etc.) does work on a building for a main contractor who is VAT-registered, the sub-contractor does not charge VAT – instead, the main contractor reverse charges it. This is to prevent fraud where subs disappeared without paying VAT. So a small construction firm working for a large developer will invoice “HT” (no VAT) and mention “Autoliquidation – Article 283-2 du CGI” on the invoice. The developer declares both output and input VAT for that.
• Sale of Waste and Scrap: Supplies of certain waste materials and scrap metal are under reverse charge when sold to a taxable dealer.
• Investment Gold: Sale of investment gold can be exempt or opted, but if opted, often reverse charge mechanism is used with dealers.
• Energy Trading: Supplies of gas and electricity to a taxable trader or if the customer is VAT-registered in France are reverse charged. E.g., wholesale gas sales – the buyer accounts for VAT (with reference “Article 283-2 quinquies CGI” on invoice.
• Greenhouse Gas Emission Allowances: Reverse charged (due to big carousel fraud cases in past).
• Telecom Services: Certain electronic communication services between operators are reverse-charged in France if the customer is VAT-registered

Practical Examples of Reverse Charge

Here are some major examples of reverse charges in France under different senators

Intra-EU Goods (B2B)

A French retailer orders €50,000 worth of goods from a supplier in Spain. The Spanish supplier verifies the French retailer’s VAT number via VIES and issues an invoice with 0% Spanish VAT, stating it's an intra-Community supply. The French retailer, in its next VAT return, declares €50,000 as acquisitions at 20% = €10,000 output VAT, and simultaneously €10,000 as deductible VAT (assuming goods for taxable resale). Net zero, but documented. If the French retailer resells the goods locally, it will charge French VAT to its customers in the usual way.

Import of Goods (non-EU to FR)

Suppose the same French retailer buys $100k of goods from China. At import into France, French customs does not collect VAT (post-2022 change) – instead, the import VAT (say €X) will be accounted by the French importer on its VAT return. That import VAT is effectively a reverse charge on imports (France made it compulsory). The retailer will list the import value and VAT due in its return (often via info from its “déclaration d’importation” and the monthly statement from customs) and deduct it simultaneously. If the retailer wasn’t VAT-registered, they’d have to pay at customs, but as they are, it’s reverse charged.

Cross-border Service

A French company uses a software-as-a-service platform from an Irish provider for €1,000/month. The Irish provider charges no VAT (because it zero-rates under B2B rule). Each month, the French company will on its CA3 declare €1,000 under “services received from abroad” and calculate €200 VAT (20%). It also deducts €200. If that French company was partially exempt, say 50% deductible, then it would only reclaim €100, effectively bearing the other €100 as cost – reverse charge ensures that portion is collected by French tax authorities.

Domestic Construction

A French property developer (VAT-registered) hires a small local mason to do part of a building’s foundation. The invoice for labor and materials is €10,000 and since it’s a subcontract to a VAT-able developer, the mason puts “Autoliquidation – art. 283-2 nonies CGI” and no VAT. The developer will add €2,000 output and input on its VAT return. The mason doesn’t have to worry about collecting and remitting that €2,000 – simpler for them, and tax authorities are assured the big developer (who is easier to monitor) accounts for it.

Domestic Scrap Sale

A French factory sells scrap metal (leftover) to a metal recycler for €5,000. The law says scrap metal sales to a taxable reseller are reverse charged. The factory invoices €5,000 with note “Autoliquidation – art. 283…” no VAT. The recycler declares VAT on €5,000 (at 20% = €1,000) on its return and deducts it because it will resell that scrap likely (or use it in taxable activity). This closed a fraud where scrap dealers used to disappear with VAT.

Reverse Charge after e-Invoicing Mandate

Under France’s e-invoicing rules, reverse-charged invoices are still structured e-invoices (UBL, CII, or Factur-X). Key differences versus a “normal” VAT-charged invoice:

• The VAT amount is not charged by the supplier (often shown as 0 on the tax line).
• The invoice carries a tax category/code indicating reverse charge and a reference note such as “Autoliquidation – Reverse charge.”
• The supplier must include the buyer’s VAT number and the legal reference or wording required for the scenario (e.g., intra-EU supply of services, domestic reverse charge for specific goods).

Your PDP (platform) will transmit these flags so the buyer’s system knows to self-assess VAT, and the e-reporting payload will reflect that the VAT was reverse-charged rather than collected by the supplier.

Conclusion

The reverse charge system in France (autoliquidation) is designed to simplify VAT compliance while reducing fraud risks. Instead of suppliers charging VAT, buyers account for it directly in their VAT returns, recording both output and input tax in the same declaration. This applies not only to intra-EU trade but also to domestic sectors where VAT fraud has historically been high, such as construction, scrap metal, telecoms, and energy. 

For imports, France streamlined the process in 2022 by shifting VAT collection to the CA3 return, improving business liquidity by removing the need for upfront payments at customs. While neutral in most cases where buyers can deduct VAT, this mechanism ensures traceability for tax authorities and prevents revenue loss. For non-deductible sectors, part of the VAT becomes an actual cost.