Two questions shape every VAT analysis, yet they are often confused. The place of supply answers “in which country is VAT due?”. The tax point and the chargeable event answer “when must it be reported?”. A mistake on either one means reporting in the wrong country or in the wrong period.
For a foreign company, these two notions drive both the VAT registration in France and the calendar of your VAT returns. Here is how to tell them apart.
Place of supply: which country?
For goods, the place of supply is in principle where the goods are located when transport starts, or at the time of delivery if they are not transported. Specific rules apply to distance sales and to goods that are installed or assembled.
For services
- Between businesses, the general rule is the customer’s country.
- For services to consumers, the general rule is the supplier’s country.
- Exceptions exist: services linked to real estate, passenger transport, restaurant services, admission to events, electronic services to consumers.
Chargeable event and tax point: when?
The chargeable event is what gives rise to the VAT liability; the tax point (chargeability) is the moment from which the authorities can claim it. In France, VAT on supplies of goods is in principle chargeable on delivery, whereas VAT on services is chargeable when the price is received, unless the business opts for the debit basis.
Comparison table
| Transaction | Place of supply | Tax point |
|---|---|---|
| Supply of goods | Where transport starts (specific rules may apply) | On delivery |
| Supply of services | Customer (B2B) or supplier (B2C), with exceptions | On receipt of payment, unless debit option |
| Intra-Community supply | Goods leaving France | On invoice, or by the 15th of the following month at the latest |
Advance payments: a classic trap
An advance payment received for a service makes VAT chargeable on its amount, even before the service is performed. By contrast, for supplies of goods, an advance payment does not in principle trigger chargeability.
These differences have to be built into your invoicing and reporting tools, otherwise VAT may be reported too early or too late.
Why secure both questions
- Wrong place of supply: you may pay VAT in one country and then have to pay it again in another, with lengthy refund procedures.
- Wrong tax point: it leads to late reporting and interest.
In both cases, an upfront analysis costs far less than a correction, for instance through corrective returns.
How Hanoutax can help
Hanoutax, a French VAT agent for foreign companies, analyses your transactions and tells you, for each one, the country of taxation and the reporting period. See our Place of supply and tax point service, and our fiscal representative France page.
FAQ
What is the difference between place of supply and tax point?
The place of supply determines the country where VAT is due. The chargeable event and tax point determine when it must be reported. They are two separate analyses: a transaction can be correctly located but reported in the wrong period, or the other way round.
When does VAT on a service become chargeable?
In France, VAT on services is in principle chargeable when the price is received, unless the business opts for the debit basis. An advance payment received before the service is performed makes VAT chargeable on that amount.
When should an intra-Community supply be reported?
VAT becomes chargeable when the invoice is issued, or at the latest on the 15th of the month following the supply. This date determines the period of the VAT return and of the EC sales list in which the transaction must appear.
Does an advance on a sale of goods make VAT chargeable?
In principle not: for supplies of goods, an advance payment does not trigger chargeability, unlike for services. These rules must be configured in your invoicing tools to avoid reporting in the wrong period.
What is the risk of getting the place of supply wrong?
You may have paid VAT in one country when it was due in another, and have to pay it again before starting refund procedures that are often lengthy. That is why an analysis before the first return is worthwhile.
Need to secure the place and timing of your VAT?
Related reading
Informational content, not legal advice. The rules that apply depend on your situation.
