France guidance on media reduced VAT rates

Sun 11th May 2014

Following the January 2014 increase in French VAT to 20%, the tax office has issued additional guidance on the reduced VAT rates for media content.

The reduced 5.5% rate will apply to the admission charges for: cinema; theatre; live concerts; music and singing recitals. Adult, violent or pornography films and entertainment will be subject to the standard French VAT rate of 20%.

At the time of the standard VAT rise, the old 7% VAT rate (that the above services were subject to) was withdrawn. Most goods on this rate were reclassified to a new 10%. France retained the existing 5.5% reduced rate, although there was a failed attempt to cut the French reduced 5.5% rate to 5%. Goods such house improvements were moved to the French 10% VAT rate.

The EU VAT Directive, which France is obliged to adopt into its local tax code, permits a single standard rate for most goods which must be at least 15%. Contrary to common belief, there is no upper limit. It also allows for two reduced rates for certain basic goods, the lower of which must be at least 5%.  However, a number of EU member states operate more rates.  For example, France has a 2.1% VAT rate for some goods, including newspapers and pharmaceuticals.