TLDR: If you provide a service to a taxable person established in French Guiana, Mayotte or abroad, the service is in principle located where the customer is established. French VAT is therefore not applicable under Article 259, 1° of the CGI. This is a territoriality rule, not an exemption.
The general rule under Article 259, 1° of the CGI
In your dealings with a taxable person for VAT purposes, the service is located where your customer is established, regardless of where you are established as the service provider.
The service provider performs the service. The recipient, or customer, receives it. Under this general rule, the location depends primarily on where the customer is established.
When French VAT is not applicable
If your taxable customer is established in French Guiana, Mayotte or abroad, French VAT is not applicable to the service covered by Article 259, 1° of the CGI.
The service is then subject, according to the applicable rules, to the VAT of the place where the customer is established. The expression “VAT not applicable” therefore means that French VAT does not apply because of the location of the service. It does not refer to an exemption for a transaction located in France.
The customer’s taxable-person status
You may apply this rule only if your customer is a taxable person for VAT purposes. The principle of locating the service where the customer is established applies to relations between taxable persons.
If your customer is not a taxable person, you must examine the territoriality rules specific to that customer. They do not fall under Article 259, 1° of the CGI.
Specific situations related to the place of performance
Certain services may be linked to the place where they are performed when the taxable service provider and customer are established in mainland France, Guadeloupe, Martinique or Réunion. The applicable rule then depends on the nature of the service concerned.
VAT is not applicable when the service is performed in French Guiana or Mayotte and the taxable service provider and customer are established in mainland France, Guadeloupe, Martinique or Réunion, under the conditions provided for this situation.
What you need to remember
To determine whether French VAT is not applicable under Article 259, 1° of the CGI, check the following in succession:
- that the transaction constitutes a supply of services;
- that your customer is a taxable person;
- that the place where the customer is established means that the service is located outside the territorial scope of French VAT;
- that no specific rule related to the nature or place of performance of the service applies.