Transfer contract with a foreign producer and VAT

Yes, it is up to you to pay the VAT but at the rate applicable in France.

Cultural, artistic, educational or recreational services are taxable in France if they are materially performed in France. Producing a show in France therefore incurs VAT in France, wherever the service provider is based or the contract signed.

It is thus French VAT that applies, at the rate stipulated for the transfer of performing rights for a show (mostly 5.5%).

In your case, the rate of VAT specified in the contract should not therefore be the rate applicable in Morocco but the one applicable in France, because the performances will take place in France.

The reverse charging mechanism for VAT has been generally implemented since 1 September 2006, and among other things applies to shows organized in France by providers based abroad: when it is liable for VAT, it is the ‘client’ company based in France that is liable for VAT.

The VAT for this contract must be declared as charged VAT but it is also reclaimable (reverse charging mechanism), subject to the foreign producer drawing up an invoice clearly stating:

• that you are liable for VAT;
• the provisions of the [French] general tax code whereby the tax is not charged by the supplier: article 283-1.

These items must be stated in the invoice but they could also be included in a price, payment and invoicing clause of the transfer contract.

Nb > It is generally accepted that invoices for transactions subject to the reverse charging system do not itemize VAT. it is thus not necessary to state the rate and amount of VAT in the invoice.