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France raises VAT on house improvements

  • Mar 22, 2014 | Richard Asquith

France raises VAT on house improvements

Following the rise in French VAT to 20% and changes to reduced VAT rates in January 2014, the French VAT authorities have last week confirmed  that the reduced VAT rate on home improvements will now be 10%.

The rate had been 7%, but this rate has now been abolished with goods or services moving to either 5.5% or 10% reduced VAT.

There are however a number of exceptions whereby the old 7% VAT rate may be applied. This includes works started before the 1 January 2014 inception date, and where there has been at least 30% of the final fees paid-up in advance. This concession has been granted because of very poor weather in France over the winter.

Only a small number of the 28 EU member states apply a reduced VAT rate for improvements to home dwellings. These include: Czech Republic; Denmark; Spain; Ireland; Netherlands; and Poland. The European Commission only permits member countries to used reduced VAT rates in a number of limited situations, as defined in the EU VAT Directive.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.