You run a group from London, New York, Dubai or Singapore, and your French subsidiary sends you a worried message every month end. The parent company invoices management fees, IT support, brand royalties or seconded-staff costs to the French SAS or SARL, the French accountant books everything under reverse charge with no French VAT paid, and for two years nobody asks questions. Then the audit letter arrives from the DGFIP, the French tax administration, and the auditor says the reverse charge was wrong from the start, that VAT is due with an 80 percent increase for concealed activity, and that the subsidiary cannot even deduct the VAT shown on other intra-group invoices because those invoices lack the mandatory mentions. Two court rulings, one from the Conseil d’Etat in June 2023 and one from the Lyon administrative court of appeal in April 2026, show that these are not theoretical risks: a Luxembourg parent lost on both the reverse charge and the 80 percent increase, and a French holding company lost a 150,000 euro VAT credit because its subsidiary’s invoices were too vague to support any deduction.

This guide is written for the foreign founder, group finance director or holding company that invoices a French entity from abroad. It answers two questions in order: when your foreign company may invoice its French subsidiary without charging French VAT, and how to repair invoices the tax office has already rejected. Every French acronym is explained along the way: TVA is the French VAT, HT means excluding tax and TTC means including tax, the DGFIP is the tax administration, the SIE is the local corporate tax office, the Kbis is the company identity extract issued by the greffe, the commercial court registry, the CA3 is the monthly or quarterly VAT return, and the CAA is the administrative court of appeal. Our starting point is the company-formation pillar of this series, our guide to setting up a company in France as a foreign founder, covering the bank account, the Kbis, VAT and the first hire, and the companion piece on management fees charged by a foreign parent and how to contest the reassessment, which handles the corporate-income-tax side of the same invoices.

I. Can my foreign company invoice my French subsidiary without charging French VAT?

A. When the French subsidiary self-assesses the VAT under reverse charge (autoliquidation)

French VAT applies to services supplied for consideration by a taxable person acting as such. Article 256 of the French Tax Code states: “Sont soumises à la taxe sur la valeur ajoutée les livraisons de biens et les prestations de services effectuées à titre onéreux par un assujetti agissant en tant que tel.” A taxable person, called an assujetti, is any business acting independently, including a foreign company and including a business that is not liable for VAT, such as a micro-entrepreneur under the basic exemption. Your French subsidiary, whether a SAS, the flexible joint-stock company most foreign founders choose, or a SARL, the limited liability company with stricter statutory rules, is an assujetti from registration.

For business-to-business services, the place of taxation follows the customer, not the supplier. Article 259 of the French Tax Code provides: “Le lieu des prestations de services est situé en France : 1° Lorsque le preneur est un assujetti agissant en tant que tel et qu’il a en France : a) Le siège de son activité économique, sauf lorsqu’il dispose d’un établissement stable non situé en France auquel les services sont fournis ; b) Ou un établissement stable auquel les services sont fournis ; c) Ou, à défaut du a ou du b, son domicile ou sa résidence habituelle”. The preneur is the customer receiving the services. When your French subsidiary receives management, IT, finance, legal or marketing services for the needs of its own French business, the place of supply is therefore France.

Because the place is France but the supplier is abroad, French law moves the VAT liability onto the customer. Article 283 of the French Tax Code states the general principle: “1. La taxe sur la valeur ajoutée doit être acquittée par les personnes qui réalisent les opérations imposables, sous réserve des cas visés aux articles 275 à 277 A où le versement de la taxe peut être suspendu.” The reverse-charge exception for services is restated by the Conseil d’Etat in the following terms: “2. Lorsque les prestations mentionnées au 1° de l’article 259 sont fournies par un assujetti qui n’est pas établi en France, la taxe doit être acquittée par le preneur”. This is the reverse charge, called autoliquidation in French: the French subsidiary collects French VAT on the purchase on behalf of the Treasury and simultaneously deducts it on the same return where it has a full right of deduction, so the operation is often cash-neutral but never paper-neutral.

The impots.gouv.fr doctrine page for purchases of services by a French business customer confirms the mechanism in plain terms: the person liable for the tax, called the redevable, is the customer receiving the service. The foreign supplier then invoices without French VAT. The same page explains that the supplier issues an invoice with no VAT, bearing the reverse-charge mention where the customer is a taxable person established in the EU, and the article 259-1 reference where the customer is established outside the EU. Mirror this on the purchase side: your French subsidiary declares the taxable base excluding tax on the reverse-charge purchase lines of the CA3 return, currently line A3 under the normal real regime or line AC on the annual CA12 return under the simplified regime, reports the corresponding French VAT on the output lines 08, 09 or 9B according to the applicable rate, and claims the same amount as deductible VAT, currently line 20 for goods and services or line 23 for fixed assets. The English-language service-public page for businesses describes the same logic: where the service is subject to French VAT, it is not collected by the seller but self-assessed by the client company, the invoice must carry the “reverse charge” mention, and the buyer collects French VAT on behalf of the tax authorities and reverses it, deducting the self-assessed amount on the VAT return where a right of deduction exists, as explained on the service-public page on VAT rules for services within the EU.

Four conditions must all hold for this comfortable treatment. First, the French customer must be a taxable person with a French intra-Community VAT number, which the administration assigns automatically to any French company under a real VAT regime and which can be checked on the European VIES system, the VAT Information Exchange System. Second, the foreign supplier must not be established in France for VAT purposes, which is the trap examined in the next section. Third, the service must fall under the general business-to-business rule; connected services follow special place rules, for example services connected with immovable property, passenger transport, catering, or access to cultural and sporting events, and each of those families has its own article. Fourth, the paperwork must be exact: a VAT number missing on either side, a wrong mention, or a CA3 return that omits the reverse-charge lines turns a cash-neutral operation into an assessment. Where any condition fails, the invoice must be corrected before the auditor reads it, using the method in Part II.

B. When your company counts as established in France and must charge French VAT itself

The reverse charge is only available where the supplier is not established in France. A foreign parent that keeps people, premises or equipment in France can be treated as having a fixed establishment there, called an établissement stable for VAT purposes, even while its registered seat stays in London, Delaware or Dubai. The European test, recalled by the Conseil d’Etat in the same decision, looks at substance: only a place with a sufficient degree of permanence and its own appropriate human and technical resources, allowing it to supply the services in question, counts as a fixed establishment. A desk, a seconded team, or directors who actually work from the French subsidiary’s offices can therefore requalify the parent as the party liable for French VAT.

The leading illustration is the Conseil d’Etat decision of 15 June 2023, Worldwide Euro Protection, appeal number 465719, published at Conseil d’Etat, 8th and 3rd chambers sitting together, 15 June 2023, No. 465719. A Luxembourg company supplied administrative, financial, tax, legal and IT services to two French subsidiaries, SAS Sacla and SAS Europrotection, and both sides applied the reverse charge in France as intra-Community exchanges from Luxembourg. After auditing the French customer through a vérification de comptabilité, the accounting audit, the administration treated the Luxembourg parent as the taxable person liable for the VAT and assessed additional VAT for 2012 to 2014 with an 80 percent increase for concealed activity. The court upheld the assessment. Its rule is now the reference: “Il résulte de ces dispositions que lorsque le lieu des prestations de services se trouve en France parce qu’elles sont fournies à des assujettis remplissant les conditions définies à l’article 259 du code général des impôts, le redevable de la taxe sur la valeur ajoutée afférente est le prestataire qui les fournit s’il est lui-même établi en France.” And: “Doit être regardé comme tel le prestataire qui a en France un établissement stable depuis lequel les prestations sont fournies et qui présente un degré suffisant de permanence et une structure apte, du point de vue de l’équipement humain et technique, à rendre possibles, de manière autonome, les prestations de services considérées.” The court added that once the services can be attached to such an establishment, there is no need to ask whether attaching them to the supplier’s head office would be more rational: “Dès lors que celles-ci peuvent être rattachées à un tel établissement, il n’y a pas lieu de rechercher si ce rattachement est fiscalement plus rationnel qu’un rattachement au siège de l’activité économique du prestataire.”

The facts behind that rule deserve attention because they resemble many real groups. The Luxembourg office measured 12.5 square metres and could not accommodate the staff performing the services, six employees were declared in France where they lived, four of them were also employees of the French subsidiary Sacla, and the disputed services had actually been performed from France by two managers who were the finance director and the sales director of Sacla. The court treated the services as supplied through the French establishment, meaning through the resources of Sacla used by the parent, and rejected the pourvoi, the cassation appeal. Three lessons follow for a foreign group. First, job titles and payroll records matter more than the letterhead: managers who run the French subsidiary while formally employed by the parent create the establishment. Second, dual employment and shared offices are red flags the auditor is trained to find. Third, subcontracts that say work is performed as a priority by other subsidiaries do not displace the finding where the people who did the work sat in France.

The penalty side of the same decision is equally severe. Because the parent had filed no French returns and had registered its activity with neither the former centre de formalités des entreprises, the former business formalities centre, nor the greffe of the commercial court, the court treated the activity as concealed and validated the 80 percent increase. The judgment states that “l’application délibérément erronée du régime de l’autoliquidation ne pouvait tenir lieu de déclaration”. A wrongly applied reverse charge is not a declaration at all. The registration duty itself sits in article 286 of the French Tax Code: “Toute personne assujettie à la taxe sur la valeur ajoutée doit : 1° Dans les quinze jours du commencement de ses opérations, souscrire au bureau désigné par un arrêté une déclaration conforme au modèle fourni par l’administration. Une déclaration est également obligatoire en cas de cessation d’entreprise ;”. And the scale of late-filing increases sits in article 1728: “Le défaut de production dans les délais prescrits d’une déclaration ou d’un acte comportant l’indication d’éléments à retenir pour l’assiette ou la liquidation de l’impôt entraîne l’application, sur le montant des droits mis à la charge du contribuable ou résultant de la déclaration ou de l’acte déposé tardivement, d’une majoration de : (…) c. 80 % en cas de découverte d’une activité occulte”. Ten percent applies where no formal demand, called a mise en demeure, was sent or the return is filed within thirty days of it, forty percent beyond that, and eighty percent where concealed activity is found. Before issuing another intra-group invoice, map where the humans who perform the services actually sit, who employs them, and from which premises and systems they work; where the answer points to France, register the foreign company for French VAT, charge French VAT on the invoices, and file the CA3 returns, instead of defending a reverse charge the auditor will dismantle with your own payroll records.

II. How do we fix intercompany invoices the tax office has already rejected?

A. What makes an intercompany invoice deductible: mandatory mentions and proof of payment

On the French subsidiary’s side, VAT is only deductible where the invoice is regular and the expense genuinely relates to its taxed operations. Article 271 of the French Tax Code opens the right: “I. – 1. La taxe sur la valeur ajoutée qui a grevé les éléments du prix d’une opération imposable est déductible de la taxe sur la valeur ajoutée applicable à cette opération.” The same article conditions the deduction on proper invoices: “Dans la mesure où les biens et les services sont utilisés pour les besoins de leurs opérations imposables, et à la condition que ces opérations ouvrent droit à déduction, la taxe dont les redevables peuvent opérer la déduction est, selon le cas : a) Celle qui figure sur les factures établies conformément aux dispositions de l’article 289 et si la taxe pouvait légalement figurer sur lesdites factures”. Article 289 then refers to a decree for the compulsory mentions: “Un décret en Conseil d’Etat fixe les mentions obligatoires qui doivent figurer sur les factures. Ce décret détermine notamment les éléments d’identification des parties, les données concernant les biens livrés ou les services rendus et celles relatives à la détermination de la taxe sur la valeur ajoutée”. The decree, article 242 nonies A of Annex II to the Tax Code, requires in particular a unique number following a continuous chronological sequence and, for each service, the quantity, the precise description, the unit price excluding tax and the legally applicable VAT rate or the exemption relied upon.

The Lyon administrative court of appeal applied these rules strictly to intra-group invoices on 16 April 2026, SAS Satel Finances, case number 24LY03381, published at CAA Lyon, 2nd chamber, 16 April 2026, No. 24LY03381. The parent company of a tax-integrated group, called an intégration fiscale, claimed a refund of a 150,000 euro VAT credit carried on its June 2019 return. The administration rejected the claim because the two supporting invoices, issued by its subsidiary on 31 December 2015 for 1,920,441.12 euros including tax and on 31 December 2016 for 1,190,541.31 euros including tax, bore no identification number and gave no precise description of the services, their quantity or their calculation method. The court recalled the governing principle: “Il résulte de ces dispositions que l’identification certaine du bénéficiaire d’une opération taxable est essentielle à l’exercice de son droit à déduction.” A missing or wrong customer name and address is not automatically fatal, but only on one condition, again in the court’s words: “Si la mention du nom complet et de l’adresse du client assujetti à la taxe sur la valeur ajoutée sur la facture établie par le fournisseur ou le prestataire permet de présumer que les biens ou les services lui ont été livrés ou rendus et de vérifier qu’ils l’ont été pour les besoins de ses opérations taxées, l’absence de mention de ces informations ou leur caractère erroné sur la facture qui lui est remise peut ne pas faire obstacle à ce que la taxe soit déductible de celle à laquelle il est soumis en raison de ses propres affaires dans le cas seulement où il apporte la preuve par tout moyen du règlement effectif par lui-même de cette facture pour les besoins de ses propres opérations imposables.” The parent produced corrective invoices dated 31 December 2019 with the vague wording “Refacturation des prestations dans le cadre du contrat CAF”, undated accounting tables, and entries without certain dates or references to the relevant year. The court held that “Ces factures rectificatives, établies pour les besoins de la cause, ne permettent pas de mettre en évidence une correspondance avec le montant de taxe sur la valeur ajoutée de 249 552 euros porté sur la déclaration CA3”. It added that no document proved the alleged subcontracting by the subsidiary, while the underlying customer contract forbade subcontracting without the client’s prior express consent, and it rejected the limitation and VAT-neutrality arguments because the company had not even justified the amount of the credit. The refund claim failed in full.

Defective invoicing also carries its own fines under article 1737 of the French Tax Code, linked at article 1737 of the French Tax Code on invoicing fines. The text states: “Entraîne l’application d’une amende égale à 50 % du montant”. The 50 percent applies in particular to “De la facture, le fait de délivrer une facture ne correspondant pas à une livraison ou à une prestation de service réelle”, and to “De la transaction, le fait de ne pas délivrer une facture ou la note prévue à l’article 290 quinquies et de ne pas comptabiliser la transaction.” Two mitigations matter for groups that cooperate: “Toutefois, lorsque la transaction a été comptabilisée, l’amende est réduite à 5 % et ne peut excéder 37 500 € par exercice”. And for simple omissions or inaccuracies: “Toute omission ou inexactitude constatée dans les factures ou documents en tenant lieu mentionnés aux articles 289 et 290 quinquies donne lieu à l’application d’une amende de 15 €.” Finally, first-time offenders who repair spontaneously or within thirty days of the administration’s first request escape the fines for missing invoices and for omissions: “Les amendes mentionnées au 3 du I et aux II, III et IV du présent article ne sont pas applicables en cas de première infraction commise au cours de l’année civile en cours et des trois années précédentes lorsque l’infraction a été réparée spontanément ou dans les trente jours suivant une première demande de l’administration.” The operational checklist for every intra-group invoice is therefore short: a unique sequential number, the full names, addresses and VAT numbers of both companies, the precise nature, quantity and unit price excluding tax of each service with the applicable rate or exemption, the date of supply, the correct reverse-charge or VAT-applicable mention, booking on both sides, actual payment from the subsidiary’s own account, and the underlying contract with timesheets or deliverables kept with the invoice. Electronic invoicing, mandatory in France from 1 September 2026 as described in our guide to French e-invoicing from 1 September 2026 for foreign companies selling in France, standardises transmission but does not cure a vague description or a missing number.

B. How to correct the VAT return, answer the reassessment and challenge it from abroad

Correction starts with the deduction mechanics. Where invoices or documents are rectified, article 271 requires mirror corrections: “Lorsque ces factures ou ces documents font l’objet d’une rectification, les redevables doivent apporter les rectifications correspondantes dans leurs déductions et les mentionner sur la déclaration qu’ils souscrivent au titre du mois au cours duquel ils ont eu connaissance de cette rectification.” In practice, the foreign parent issues a proper corrective invoice or credit note, called an avoir, the French subsidiary adjusts its deduction on the CA3 return for the month it learns of the correction, and both companies book the adjustment the same month. A corrective invoice manufactured years later, inconsistent with the return and the bank statements, will be treated as prepared for the needs of the case, exactly as in the Lyon ruling, so corrections must reconcile to the euro with the CA3 line and the wire transfers. Spontaneous repair also unlocks the leniency of article 1737 for a first infringement, which is why groups should correct within thirty days of the administration’s first request rather than waiting for the formal reassessment.

Where the audit has already produced a reassessment proposal, called a proposition de rectification, the reply period stated in the notice, usually thirty days, is the most important deadline in the file. Answer point by point, in French, with exhibits: the contracts, the corrected invoices, the CA3 returns showing the reverse-charge lines or the corrected deductions, the bank statements proving payment by the subsidiary for its own taxed operations, and the organisational evidence on where the services were actually performed. Request the hierarchical review, the recours hiérarchique, with the auditor’s line manager where the establishment question is arguable, because the Worldwide Euro Protection test turns on facts that a second look can reassess. If the administration maintains the assessment, file the formal claim, the réclamation contentieuse, then appeal to the administrative tribunal, the tribunal administratif, and if needed to the administrative court of appeal. For a subsidiary based in Paris or the inner suburbs, the competent offices are the Paris directions of the DGFIP, the tribunal administratif de Paris for the first appeal, and the cour administrative d’appel de Paris on further appeal, with strict statutory deadlines at each stage that run even while the directors are abroad. A Paris or Île-de-France footprint therefore has a procedural consequence worth mapping early: gather the Paris payroll records, the office access logs, and the secondment letters before the auditor does.

Going forward, put the French subsidiary on a monthly discipline. Article 287 of the French Tax Code requires: “Tout redevable de la taxe sur la valeur ajoutée identifié conformément aux dispositions combinées des articles 286 ter et 286 ter A est tenu de remettre au service des impôts dont il dépend et dans le délai fixé par arrêté une déclaration conforme au modèle prescrit par l’administration.” Companies under the normal real regime file every month: “Les redevables soumis au régime réel normal d’imposition déposent mensuellement la déclaration visée au 1 indiquant, d’une part, le montant total des opérations réalisées, d’autre part, le détail des opérations taxables.” Each month, reconcile the intra-group invoices received, the reverse-charge lines, the deductible VAT and the payments; each quarter, confirm that no manager working from France has quietly created the establishment that moves the VAT liability back to the parent. The late-filing scale of article 1728, ten percent without a formal demand, forty percent beyond thirty days, eighty percent for concealed activity, applies to every missed return, so a missed CA3 during a group reorganisation costs more than the accountant’s fee for filing it. The BOFIP, the tax administration’s official bulletin, gives the line-by-line filing instructions that change faster than the statute, so have the accountant confirm the current CA3 line numbers every year.

Conclusion

Intercompany invoices between a foreign parent and a French subsidiary follow a simple decision tree, and every dispute in this area comes from skipping one of its branches. First, where the French subsidiary is a taxable person and the foreign supplier has no French establishment, the subsidiary self-assesses French VAT under the reverse charge, the supplier invoices without French VAT with the exact mention, and both sides declare the operation on the correct CA3 lines. Second, where the parent’s people, premises or systems in France reach the level of a fixed establishment, the parent itself becomes liable for French VAT, must register within fifteen days of starting operations, and must charge and return the tax, as the Conseil d’Etat confirmed in June 2023. Third, on the deduction side, only a complete invoice supports the VAT credit: a unique number, full identification of both companies, a precise description with quantities and unit prices, the right rate or exemption, and proof of actual payment for the subsidiary’s own taxed operations, as the Lyon court recalled in April 2026 when it refused a 150,000 euro refund. Fourth, corrections must reconcile the corrective invoice, the CA3 return and the bank transfer to the euro, preferably spontaneously and within thirty days, before the reassessment proposal hardens into increases of ten, forty or eighty percent. Apply this tree before the next invoice run, keep the contracts and timesheets with the invoices, and have the current Kbis, the bylaws and the secondment letters reviewed before the auditor asks for them.

Need a quick opinion on your case

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The discussion is built on your documents: the invoices and corrective invoices, the CA3 returns with the reverse-charge lines, the bank statements proving payment, and any reassessment proposal or formal demand already received.

Call Maître Reda Kohen on +33 6 46 60 58 22 (06 46 60 58 22 in France) or use the firm’s contact form.

The firm advises companies in Paris and Île-de-France, including before the Paris tax offices, the tribunal administratif de Paris and the cour administrative d’appel de Paris.