For most services and sales of goods, normal rate is 20% (Article 278 of the General Tax Code – CGI).
It’s there rate reduced to 5.5% for certain works to improve the energy quality of housingsuch as condensing or micro-cogeneration boilers.
Finally, the 10% rate applies to work that does not benefit from this 5.5% reduction.. This is the case for works on transformation, development and maintenance, with the exception of the part corresponding to the procurement of household appliances and furniture or certain large equipment (Art. 279-0 bis CGI).
Responsibility of the hired craftsman
It is not always easy for a craftsman to distinguish the work for which the right price is paid!
Additional limitation: for all works in residential areas, it is the seller (or owner) who must fill out the Cerfa (n°13948*05/1301-SD) which he then gives to the contractor who reports the correct VAT rate.
Then we could think that the owner is responsible for the applied VAT rate. It’s not like that!
On the contrary, the craftsman must be especially careful. In fact, if the business owner makes a mistake in the exchange rate (the estimate and the invoice must match with Cerfina), he cannot ask the client for a surcharge.
The Court of Cassation ruled
In any case, this is the opinion of the Court of Cassation, which ruled in the judgment of July 6 (Cass. Civ 3, 6.7.2023, P 22-13.141), that a craftsman who writes the wrong VAT rate on the invoice cannot apply a higher rate than the invoiced rate to his customer. However, judges maintain two exceptions to this principle:
- The first in the case false information provided by the client on the tax form (right to reduce VAT).
- Second, if the contractor is also the client clearly state in the contract documents that any price error will be the buyer’s responsibility.
A tradesman who carries out work at reduced VAT rates can therefore take precautions and indicate on the estimate and the invoice whichprice error will be the buyer’s responsibility. A precautionary principle to remember!
Can you benefit from the VAT exemption?
Working without charging VAT makes the craftsman more competitive compared to the competition. This attractive system can be applied regardless of the legal structure, provided that the maximum amount of turnover is respected:
- For the provision of services, the threshold is €36,800 with tolerance up to €39,100.
- He is from €91,900 with tolerance up to €101,000 for delivery of goods, sale for on-site consumption and accommodation services.
In practice, if your traffic is within the thresholds, simply enter the words “VAT does not apply, Article 293B CGI” on your invoices. In return, the purchase of a craftsman is no longer VAT-free, he is liable just like a traditional consumer.
>> Goals: reduce your tax liabilities and be more competitive, think about it!