Do French Companies Need to Charge VAT When Billing Chinese Clients? (Part 1)
If you’re a French company providing services to a Chinese business, you’re likely wondering: “Do I need to apply French VAT (TVA) when billing my Chinese client?” This is one of the most common questions we encounter from French entrepreneurs expanding internationally.
Quick Answer: VAT Generally Not Required for B2B Services to China
The short answer is: No, French companies typically do NOT need to charge French VAT when providing B2B services to Chinese companies. However, the complete picture involves several important considerations that every French business owner should understand.
Understanding French VAT Rules for Cross-Border Services
The General Principle: Place of Supply
When you provide services to B2B clients based outside the EU, these services are not subject to French VAT. The key concept here is the “place of supply” rule.
For B2B services provided by French companies to non-EU businesses (including Chinese companies), the place of supply is generally considered to be where the customer is established – in this case, China. Since China is outside the EU VAT system, French VAT typically doesn’t apply. This principle is established under Article 259 A of the French Tax Code.
Key Conditions for VAT Exemption
For your services to Chinese companies to be exempt from French VAT, the following conditions must be met:
- Business-to-Business Transaction: Your Chinese client must be a registered business entity
- Service Nature: The service must be deliverable across borders (consulting, digital services, etc.)
- Proper Documentation: You must maintain proper records proving the B2B nature of the transaction
- Invoice Compliance: Your invoices must clearly indicate the VAT exemption status
For more detailed guidance on cross-border VAT compliance, you can consult the official French tax administration (DGFiP) guidelines.
When French VAT Might Still Apply
While most B2B services to Chinese companies are VAT-exempt, there are important exceptions:
Services Performed in France
If your service involves physical presence or performance within French territory (such as training sessions, on-site consulting, or events), French VAT may apply regardless of your client’s location.
Specific Service Categories
Certain services have special VAT rules:
- Real estate services related to French property
- Transportation services originating in France
- Cultural and entertainment services performed in France
French VAT Registration Requirements
For French companies serving Chinese clients:
- Domestic threshold: €37,500 annually for services (changing to €25,000 from June 2025)
- Cross-border services: No VAT registration required for VAT-exempt B2B services to China
You can find the most current VAT thresholds and registration requirements on the European Commission VAT portal.
Proper Invoice Format for Chinese Clients
When billing Chinese companies, your invoices should include:
Required Information
- Your company details and French VAT number (if applicable)
- Chinese client’s business information
- Clear service description
- VAT exemption notation: “VAT not applicable – B2B cross-border service”
- Reference to relevant tax provision (Article 259 A of the French Tax Code)
Best Practices
- Issue invoices in both French and English for clarity
- Maintain detailed service delivery records
- Keep proof of your client’s business status in China
What’s Coming in Part 2
Next week, we’ll dive deeper into:
- Documentation and compliance requirements
- Common mistakes to avoid (and how to fix them)
- China’s VAT perspective and upcoming changes
- Practical step-by-step compliance guide
- When to seek professional advice
- Future regulatory changes affecting Franco-Chinese business
Key Takeaways for Today
✅ B2B services to Chinese companies are typically exempt from French VAT ✅ Proper documentation and invoicing are crucial ✅ Some services performed in France may still be subject to VAT ✅ Always verify your client’s business registration status
This article provides general guidance on French VAT obligations for services to Chinese companies. For specific situations, always consult a tax advisor.
Need help with international tax compliance? Consider exploring our comprehensive business services to ensure your cross-border operations remain fully compliant with French and international tax regulations.
If you have any questions, please contact us.
