VAT reverse charge: cases, rules and errors

The VAT reverse charge is a tax mechanism that shifts the legal liability for VAT from the seller to the buyer. Instead of the supplier collecting and remitting the tax, the customer self-assesses and declares it directly to the tax authorities. This mechanism covers very different situations — goods importation, cross-border services, construction subcontracting — but shares a common logic: simplifying cash flows while securing the tax collection chain. In 2026, with the rollout of e-invoicing and strengthened algorithmic controls by the DGFiP, mastering VAT reverse charge is no longer an accounting option. It is a compliance imperative.

In brief: VAT reverse charge (Article 283 of the French Tax Code) transfers the tax payment obligation from the supplier to the customer. It applies notably to imports (mandatory ATVAI scheme since 2022), purchases from non-established taxable persons, and construction subcontracting (Article 283-2-nonies of the CGI). Non-compliance exposes companies to a 5% penalty on the VAT amount concerned.

Under the standard VAT regime, the seller charges tax to their customer and remits it to the State. VAT reverse charge reverses this scheme: the supplier issues a tax-free invoice, and the French customer calculates, declares, and deducts the VAT on their own CA3 return.

The mechanism is cash-flow neutral for the company applying the reverse charge. VAT appears simultaneously as "VAT collected" and "VAT deductible" on the same return, canceling the direct financial impact. But this apparent neutrality does not exempt any reporting obligations.

This mechanism is based on several articles of the French General Tax Code (CGI):

• Article 283 of the CGI — mandatory "Reverse charge" mention on the invoice;
• Article 283-2 of the CGI — cross-border services;
• Article 283-2-nonies of the CGI — construction subcontracting;
• Article 293 A of the CGI: import reverse charge (ATVAI scheme).

Since January 1, 2022, VAT reverse charge on imports has been mandatory for all French taxable persons. No more physical VAT payment at customs: the tax is now declared directly on the CA3 return, based on data transmitted by customs services.

How does ATVAI work in practice?#

Customs services monthly transmit import data for each company to the DGFiP. This information pre-fills your CA3 return. Specifically:

• the HT amount of imports appears as VAT collected (line "Purchases of goods or services from a non-established taxable person");
• the same amount is repeated as VAT deductible, subject to deduction rights;
• the company verifies, adjusts if necessary, and submits its return before the 24th of the following month.

Benefits and vigilance points#

The cash-flow advantage is real: no VAT advance is required at customs clearance. But attention to reconciliation is essential. Customs data does not always cover all your flows, particularly under suspensive regimes or inward processing. A monthly consistency check between your customs documents (DAU, MRN) and the CA3 pre-fill remains indispensable.

To learn more about customs formalities, see our guide on the EORI number.

When you purchase goods or services from a taxable person not established in France, the territoriality rule (Article 259 of the CGI) determines whether reverse charge applies.

B2B services#

For business-to-business services, the principle is the customer's place of establishment. If your company is established in France and purchases a service from a foreign supplier (SaaS, consulting, online advertising, etc.), French VAT is due and must be reverse-charged by you.

The foreign supplier invoices without tax. You must:

1. declare French VAT on your CA3 return (line "Other taxable operations"); 2. simultaneously deduct it, if the service is used for your taxable activity; 3. file a European Services Declaration (DES) if the supplier is established in the EU.

Goods and intra-community acquisitions#

For intra-community acquisitions of goods, reverse charge also applies. The EU supplier invoices without VAT if you provide a valid intra-community VAT number (verifiable on the VIES portal). French VAT is then reverse-charged on your return.

Hayot Expertise Advice: Always keep a dated screenshot of the VIES verification of your customer or supplier. In case of audit, this is your only defensible proof of the number's validity at the time of the transaction.

The reverse charge mechanism in construction subcontracting (Article 283-2-nonies of the CGI) is a classic DGFiP audit point. An invoicing error or contract misclassification is enough to create a tax adjustment risk.

Which works are covered?#

Reverse charge applies to subcontracting work involving:

• construction works of buildings and real estate structures;
• renovation, repair or restoration of buildings;
• equipment works for buildings (incorporation of movable property: piping, built-in appliances, etc.);
• public works and civil engineering;
• cleaning operations directly connected to construction works.

When construction reverse charge does NOT apply#

It is equally important to know the exclusions:

• supply of materials only (without installation) — this is a goods delivery, subject to the standard regime;
• intellectual services (design offices, architects, surveyors);
• routine maintenance contracts and regular cleaning not linked to works;
• subcontractors benefiting from the VAT franchise (annual turnover below €37,500 for services in 2026) — in this case, the main contractor has no VAT to reverse charge.

Supply and installation: which rule?#

If the subcontractor invoices both materials and their installation under a subcontracting agreement, reverse charge applies to the entire invoice. This is a frequent vigilance point: a mixed invoice (supply + installation) is not split.

Obligations of each party#

The subcontractor must:

• invoice without VAT with the mandatory mention "Reverse charge — Article 283 of the CGI";
• declare the HT amount as "Other non-taxable operations" on their VAT return;
• retain a subcontracting agreement, signed quote, or purchase order as proof of the contractual relationship.

The main contractor must:

• reverse charge VAT on their CA3 return under "Other taxable operations";
• apply the appropriate VAT rate based on the nature of the works (20%, 10% or 5.5%);
• charge VAT to their own end customer on all services.

Concrete example#

A general contractor renovates an apartment for €20,000 HT. They subcontract electrical work for €5,000 HT.

• The electrical subcontractor invoices €5,000 HT with the "Reverse charge" mention. They collect no VAT.
• The general contractor reverse charges €1,000 of VAT (€5,000 × 20%) on their CA3, then simultaneously deducts it. They invoice the end customer €24,000 TTC (€20,000 + 20%).
• Result: VAT is declared only once, by the general contractor.

Penalties for errors#

Failure to reverse charge by the main contractor results in a 5% penalty on the VAT amount that should have been declared. On a large-scale project, this penalty can quickly reach several thousand euros.

To complete, also see VAT and IOSS, our article on the VAT declaration and our guide on the EORI number.

Hayot Expertise Advice: In VAT, a poorly drafted invoice can contaminate the entire chain: accounting, CA3 declaration, supplier relations and tax audit. Reverse charge must be configured, not improvised.

The accounting entry for reverse charge is cash-neutral but must be rigorous. Take the case of an intra-community acquisition of €10,000 HT:

• Debit the relevant purchase account: €10,000;
• Debit account 4456 "VAT deductible": €2,000;
• Credit the supplier account: €10,000;
• Credit account 4457 "VAT collected": €2,000.

For construction subcontracting, the scheme is identical, debiting the appropriate subcontracting account (6251 or 611 depending on the case).

In our firm, we regularly identify the same errors during our VAT audits:

• charging French VAT when the operation should be reverse-charged — a classic error among construction subcontractors unfamiliar with the scheme;
• omitting VAT registration required for imports or intra-community acquisitions — without a VAT number, the foreign supplier may apply their local VAT;
• confusing import, intra-community acquisition and international services — each situation falls under a different reporting regime;
• forgetting CA3 reconciliation — ATVAI pre-filled data does not exempt verification;
• neglecting the DES (European Services Declaration) — a monthly obligation separate from CA3 for intra-community flows;
• applying reverse charge to a VAT-franchise subcontractor — if the self-employed subcontractor does not exceed the €37,500 threshold, the main contractor has nothing to reverse charge.

We audit flows, invoices and VAT settings to secure reverse charge on sensitive transactions. Our service covers review of mandatory mentions, CA3/customs reconciliation, and implementation of internal control procedures adapted to your activity.

Make your VAT processing more reliable with Hayot Expertise

VAT reverse charge is a compliance mechanism, not a mere technicality. In 2026, the most confident companies are those that know exactly when to apply it, how to document it, and how to declare it. Between strengthened DGFiP controls and the arrival of e-invoicing, the margin for error shrinks every year.

(Official sources: impôts.gouv.fr - VAT registration, impôts.gouv.fr - Import VAT, BOFiP - Reverse charge Article 283 CGI, service-public.fr - VAT and construction subcontracting, douane.gouv.fr - Import VAT)