French VAT applies to almost all products and services sold. There are currently several VAT rates: the standard rate, reduced rates, and a special rate. But what is the VAT rate for renovations ? What are the reduced rates ? How to know if the VAT is 10% or 20%? This article examines the details of the reduced rates – one set at 10% and the other at 5.5%. You’ll also find details on the VAT applicable to renovation work.

What’s in this article?

• What is VAT?
  
• What are the reduced VAT rates?
  
• When is 10% VAT applied?
  
• When is 5.5% VAT applied?
  
• Why are there reduced VAT rates?
  
• VAT on renovation work: A special case
  

What is VAT?

Value-added tax (VAT) is an indirect consumption tax that customers pay when they buy from a business that is subject to VAT. These businesses must collect VAT on behalf of the French State and invoice their customers at the time of sale.

What are the reduced VAT rates?

VAT rates in France differ based on the specific goods or services involved. Currently, there are four rates: the standard rate is 20%, the intermediate rate is 10%, the reduced rate is 5.5%, and the special (or super-reduced) rate is 2.1%. The reduced rates are therefore set at 10% and 5.5%. You can learn more about the different VAT rates in our related article.

When is 10% VAT applied?

The 10% intermediate rate (also referred to as a reduced rate) applies mainly to prepared foods, restaurants, unprocessed agricultural products, and certain home renovations.

Camping services, firewood, and admission to museums, zoos, fairs, exhibitions, amusement rides, and historical monuments are also subject to the 10% reduced rate. The same applies to private tuition, passenger transportation, and waste disposal.

When is 5.5% VAT applied?

Unprepared food, gas, and electricity are taxed at a reduced rate of 5.5%. This rate also applies to all feminine hygiene products, equipment, and services for persons with disabilities, as well as basic necessities, and emergency or social housing. Books, school meals, certain live performances and films, and specific imports and supplies of works of art also qualify for the 5.5% VAT rate.

This reduced rate applies specifically to work to improve dwellings’ energy efficiency and home ownership.

Why are there reduced VAT rates?

Reduced VAT rates benefit customers by allowing them to save on major purchases. VAT is reduced on renovation work, particularly energy and thermal efficiency projects, to encourage homeowners to invest in improvements. Renovation and energy improvement projects can be costly, so reduced rates help ease the financial burden of these investments.

VAT on renovation work: A special case

Renovation work must meet certain criteria to qualify for a reduced VAT rate.

Premises criteria

To qualify for reduced-rate VAT, premises must meet the following criteria: they must be designated solely for residential use – such as a single-family home, apartment, unit in a block of flats, light housing, collective accommodation, or staff housing. A courtyard, garage, or terrace connected to residential premises are also eligible for the reduced rate. Additionally, the premises must have been completed more than two years before the work begins.

Eligible renovations

Generally, projects aimed at improving, transforming, fitting out, or maintaining premises and supplying certain equipment, are billed at the 10% VAT rate.

In contrast, services aimed at improving energy efficiency (often involving renewable or high-performance solutions) are subject to a reduced rate of 5.5%. The complete list of work eligible for the reduced VAT rate is on the French government’s website.

Mandatory procedures

When the total value of the work exceeds €300 (including tax), the client must provide a VAT certificate to the supplier before the project begins. The VAT certificate confirms the application of a reduced rate to the service offered.

For insulation, plumbing, electrical, chimney, and non-structural equipment work, you need to complete the simplified certificate. In contrast, the standard certificate must be completed for structural work, including foundations, walls, columns, floors, facades, etc.

You can streamline your tax compliance by using an advanced tool like Stripe Tax, which automates VAT calculation and collection and the filing of VAT declarations through a single integration.

How to know whether VAT is fixed at 10% or 20%?

Work that goes beyond basic renovation, such as new construction, alterations, and additions, does not qualify for a reduced VAT rate. In addition, the standard rate of 20% applies to the cleaning and maintenance of green areas, as well as the purchase of household appliances and furniture.

Thus, the 10% VAT rate is reserved exclusively for basic renovation work on premises that meet the specified criteria (e.g. VAT on the renovation of a single-family house is 10%).