Rentals of tangible movable property (professional equipment, industrial machinery, vehicles, vessels, aircraft, containers) are supplies of services for VAT purposes, subject to VAT as of right under article 256 of the French Tax Code when carried out by a taxable person acting as such. The applicable rate is in principle the standard rate of 20%. The place-of-supply rules are laid down by article 259 of the French Tax Code (general BtoB / BtoC rule) and by article 259 A, which provides special connecting rules by way of derogation, notably for rentals of means of transport (short-term / long-term), but also for other services attached to the place where they are physically performed or made available. The BOFiP doctrine summarises these rules in the BOI-TVA-CHAMP series. This page sets out the main applications.
Rentals of tangible movable property are, in the language of the French Tax Code, supplies of services. They are subject to VAT under the ordinary rules when the lessor is a taxable person acting as such (art. 256 and 256 A). The rate is in principle the standard rate of 20%, save for specific cases (rentals to public bodies, specific transactions).
The complexity lies mainly in the place-of-supply rules. The general rule of article 259 of the French Tax Code distinguishes: (a) BtoB rentals (taxable customer), VAT in the customer's country; (b) BtoC rentals (non-taxable customer), VAT in the supplier's country. Article 259 A introduces numerous derogating rules attaching the supply to a physical location (effective making available, physical performance, etc.); it is not limited to transport. For means of transport, article 259 A lays down special rules depending on duration (≤ 30 days = short-term; > 30 days = long-term).
The firm advises professional lessors, equipment-leasing companies and rental platforms on tax characterisation and the contractual securing of cross-border transactions.
Rental of equipment (machinery, tools, business furniture) to a French taxable person. The general rule of article 259 of the French Tax Code places the VAT in the customer's country, here France. The lessor invoices VAT at the 20% rate.
Rental of equipment to a taxable person established in another EU Member State. VAT is due in the country of the customer (art. 259 of the French Tax Code). The French lessor invoices without VAT with a reverse-charge mention. The customer accounts for VAT in its own country. This mechanism prevents double taxation.
Rental to a final consumer (non-taxable person) in France. The French lessor invoices VAT-inclusive at the 20% rate. Typical case: rental of equipment to a private individual (DIY, house moving).
For short-term rentals (≤ 30 days, or 90 days for vessels), VAT is due in the country where the means of transport is made available to the customer (art. 259 A, 1° of the French Tax Code). Typical case: a holiday car rental, VAT in the country where the vehicle is picked up.
For long-term rentals (> 30 days) to a non-taxable person, VAT is due in the country where the customer is established or domiciled (art. 259 A, 1° b) of the French Tax Code). Typical case: long-term car leasing to a private individual established in France, French VAT whatever the lessor's country.
The firm advises professional lessors and equipment-leasing companies on the VAT characterisation of rental transactions, place-of-supply analysis (BtoB / BtoC, France / EU / third countries), the drafting of contractual terms consistent with the tax regime, and the updating of reporting processes (European declaration of services, reverse charge).
For complex cross-border transactions (rentals of means of transport, containers, industrial equipment), we coordinate the characterisation on both sides of the border to avoid double taxation or non-taxation.
It depends on the client's status and the type of asset. For a BtoB rental (foreign taxable client), VAT is in principle due in the customer's country (art. 259 of the French Tax Code), invoicing without French VAT with a reverse-charge mention. For a BtoC rental, VAT is in principle due in the supplier's country (France for a French lessor). For means of transport, special rules apply (art. 259 A).
Short-term: ≤ 30 days (90 days for vessels). VAT in the country where the vehicle is made available (art. 259 A, 1° of the French Tax Code). Long-term: > 30 days (90 for vessels). For BtoC, VAT in the country where the customer is established or domiciled (art. 259 A, 1° b)). For long-term BtoB, the general rule applies (art. 259, the customer's country).
The standard rate of 20% applies in principle. A few exceptions: rentals to public bodies under a specific regime, rentals of certain goods at a reduced rate (rare in practice for tangible movable property). The applicable rate always follows the country where VAT is due under the place-of-supply rules.
The French lessor invoices without French VAT with the mention "VAT due by the customer, reverse charge" on the invoice. The customer established in the other Member State declares and pays VAT in its own country under its own rules. On the French side, the transaction is reported on the European declaration of services (DES) in addition to the CA3 return.
It depends on which element is predominant, the rental or the services. If the rental is the main element and the services are ancillary (maintenance, insurance), the whole follows the rental regime. If the services are predominant (rental of equipment with an operator, the operator being the central element), the transaction may be recharacterised as a differently qualified supply of services, with different place-of-supply rules. The line is assessed case by case.
For intra-Community BtoB cross-border transactions: a monthly European declaration of services (DES), in addition to the CA3 return. For transactions with third countries: no DES, but a precise characterisation (import, export of services). For long-term rentals to non-taxable persons in several EU countries: the OSS scheme (One Stop Shop) may be available to centralise the returns.
The VAT framework for real-estate transactions and its interaction with movable property.
Voir la page VATA place-of-supply question for foreign lessors with resources in France.
Voir la page VATThe reporting framework and the reverse charge for BtoB rentals.
Voir la page VATThe distinction between an economic supply and private wealth management.
Voir la pageA confidential first exchange to characterise your transactions, secure the VAT place-of-supply analysis and coordinate cross-border obligations.
© BENSAID Avocats — The information on this site does not constitute legal advice and cannot replace a personalised tax analysis.