'Établissement stable' and VAT: the two notions never to confuse when running a company from abroad

'I run my French company from Berlin — can I forget about French VAT?' 'My German company sells in France: I need an establishment there, don't I?' The two questions look alike, and the two common answers are both wrong. The confusion stems from a single French term, établissement stable, which in reality covers two distinct notions that must never be blurred together.

The starting point: it is the company that is a taxable person, not the director

Let us start by dismantling the most widespread idea. The VAT of a French company does not depend on where its director lives. Being a taxable person turns on the carrying out of an economic activity (CGI, art. 256 A), and the territorial connection on the seat of that activity (CGI, art. 259). Neither of these two provisions lays down any condition as to the director's residence. Better still: article 256 A states that the status of taxable person is assessed independently of the person's situation 'with regard to other taxes'.

Direct consequence: a company established in France invoices, declares and pays VAT there under the ordinary rules, whether its manager lives in Tours, Lisbon or London. His or her expatriation does not move the company's VAT.

The real risk of distance does exist, but it lies elsewhere: it plays out on the profits-tax side, if the company is in reality run from abroad. That is a separate question, which we deal with below and in our article on running a French company from abroad. Do not mix it up with VAT: they are two different worlds.

Keep in mind three terms that do not overlap, and that the rest of this article will carefully keep apart. You are a taxable person when you carry out an economic activity. You are liable when the law places on you the payment of the tax on a given transaction. You are VAT-registered when you hold a VAT number. The three can go together — or not.

When do you become liable? The small-business VAT exemption and the VAT number in 2026

A taxable company does not necessarily charge VAT. Below certain turnover thresholds, it falls under the franchise en base — the VAT-exemption scheme for small businesses (CGI, art. 293 B): it does not charge VAT, does not deduct it, and puts on its invoices the statement 'TVA non applicable, article 293 B du CGI'.

A word of news, because the topic has been much stirred up: the single exemption threshold of 25 000 € has been definitively dropped (loi n° 2025-1044 du 3 novembre 2025). The sector-specific thresholds are kept. If you read elsewhere that a single threshold of 25 000 € applies, the page has not been updated.

Beware a stubborn belief: 'under the exemption, I have no VAT number and nothing to do.' This needs qualifying. No intra-Community VAT number is allocated automatically, but you must apply for one, free of charge, as soon as you supply a service to a business in another Union State, or your acquisitions or distance sales within the Union exceed 10 000 € a year. The application is made to your tax office, via the online professional account.

A point for the reader running a foreign company: the small-business exemption of article 293 B presupposes a taxable person established in France. A foreign company that is not established there is not entitled to it — from the first euro of French VAT due, it is liable.

Territoriality: where is the transaction taxable?

Here is the question most often confused with fixed establishment, although it is entirely separate. Territoriality answers: where is the VAT on this transaction due? — not: where am I established?

For supplies of services, two opposite principles depending on the customer:

• Between businesses (B2B): the tax is due at the place of the taxable customer (CGI, art. 259, 1°). A French supplier invoicing a German business charges no French VAT: it is the German customer who applies the reverse charge at home.
• To a private individual (B2C): the tax is in principle due at the place of the supplier (CGI, art. 259, 2°), subject to exceptions — notably services connected with immovable property situated in France (art. 259 A, 2°) and electronic services, which follow their own rules.

For sales of goods to private individuals in other Union States — distance selling — the rule often surprises. Above a single, overall threshold of 10 000 € excluding VAT across the entire Union (and not country by country), the VAT is due in the consumer's State. You can then declare all of that European VAT from a single country, via the OSS one-stop shop, without registering in each State.

Remember the consequence, because it is counter-intuitive: a foreign company can owe French VAT without having the slightest establishment in France. Territoriality and establishment are two separate questions. Let us turn to the second.

The fixed establishment for VAT purposes

Here begins the heart of the article. For VAT, the fixed establishment is defined by Union law — the règlement d'exécution (UE) n° 282/2011, article 11. It requires two things together: a sufficient degree of permanence, and a structure made up of human AND technical resources, enabling it to receive and use, or to supply, services.

The same text lays down two safeguards that are systematically forgotten. First, merely holding a VAT number is not enough to constitute a fixed establishment (art. 11, § 3). Second, an establishment is treated as liable for a transaction only if its resources actually take part in it; mere administrative support — accounting, invoicing — does not amount to participation (art. 53).

The Court of Justice of the Union has drawn from these principles very concrete consequences, which sweep away two arrangements believed to be risky:

• A property let out in France, without any of the owner's own staff on site, is not a fixed establishment for VAT (judgment Titanium, C-931/19).
• A French subsidiary supplying services to its foreign parent company, even exclusively, does not give the parent a fixed establishment for VAT: the same resources cannot at once be those of the subsidiary and those of the parent (judgment Berlin Chemie, C-333/20).

The permanent establishment for profits-tax purposes: a different notion

Change the tax, and everything changes. For corporation tax, France taxes only the profits of businesses carried on in France (CGI, art. 209, I) and those that tax treaties allocate to it. The notion of permanent establishment here answers to different criteria.

Under domestic law, the doctrine recognises three situations: a materially autonomous establishment; a representative without independent professional personality; or a complete commercial cycle carried out in France. This last criterion has no equivalent in VAT. For the purposes of tax treaties, modelled on the OECD model, the permanent establishment is a fixed place of business or a dependent agent that binds the enterprise.

Hence the central message of this article, and it holds on both sides: one and the same presence may constitute an establishment for one of the two taxes and not for the other. The texts, the criteria and the purposes differ. The tax authority writes it itself: the definition of the fixed establishment for VAT purposes 'must be distinguished' from the one used for the other taxes (BOFiP, BOI-TVA-CHAMP-20-50-10). Never reason 'I have an establishment, therefore for both.'

It is also here, and not on the VAT side, that the real risk for the expatriate director lies: if the effective management of the company is exercised from abroad, the country of residence may claim to tax the profits. Dual residence is then settled by the applicable treaty. On cross-border remote working — a director who manages from his foreign home — the matter is not settled by the texts; we will therefore not settle it.

Person liable and tax representative: the EU / non-EU axis, not the establishment

When a supplier not established in France provides a service to a customer VAT-registered in France, it is the customer who applies the reverse charge on the tax (CGI, art. 283) — unless the supplier has in France a fixed establishment that takes part in the transaction, in which case it becomes liable again and charges French VAT. We meet the earlier notion again, but this time to decide who pays.

There remains the question of the tax representative, and here again the criterion is not the fixed establishment: it is the Union / non-Union axis.

• A taxable person established in the European Union designates no tax representative. It registers directly, and may use a mere agent to file its returns — one who is neither responsible for payment nor jointly liable.
• A taxable person established outside the Union must have accredited a tax representative established in France (CGI, art. 289 A, I), who pays the tax on behalf of the principal. An exception is made for third countries that have concluded with France an agreement on assistance with recovery, the list of which is set by order (the exemption appears at I, 1° of the article — certainly not at II, which is repealed).

A very concrete case, because it is the most frequent post-Brexit misconception: no, a British company does not need a tax representative in France. The United Kingdom was added to the list of exempted third countries by an arrêté du 16 février 2021. A British company therefore registers directly, like a Union company.

The returns, in practice

Depending on the scheme, the rhythm changes.

• Réel normal (the standard actual scheme): monthly CA3 return (a quarterly option is possible if the annual VAT due does not exceed 4 000 €).
• Réel simplifié (the simplified actual scheme): one annual CA12 return and two instalments (55% in July, 40% in December), with no instalments if the VAT due for the previous year is below 1 000 €.

The simplified scheme applies in 2026 up to 945 000 € of turnover for sales of goods and accommodation (raised to 1 040 000 €) and 286 000 € for other services (raised to 323 000 €), under a ceiling of VAT due of 15 000 €. Here too, beware of old figures: the values of 840 000 € and 254 000 €, still everywhere online, are out of date.

For trade in goods within the Union, the old 'DEB' no longer exists as such since 2022: it has been split into a statistical survey (EMEBI, on a sample basis) and a VAT recapitulative statement for tax purposes (CGI, art. 289 B). Two procedures, two logics — do not confuse them. And do not forget that, since the 2020 'quick fixes', an intra-Community supply is exempt only on two substantive conditions: the customer's valid VAT number in another State, and a compliant recapitulative statement.

A word on the timetable: the CGI, then the CIBS

All the references in this article point to the code général des impôts, and they are accurate at the time of writing. Be aware, however, that the VAT rules are going to leave the CGI to move into the Code des impositions sur les biens et services (CIBS), with the law essentially unchanged.

The switch was first scheduled for 1^st September 2026. It has been postponed to 1^st January 2027 by the ordonnance n° 2026-671 du 27 juillet 2026, so as not to coincide with the compulsory move to electronic invoicing. Good news for peace of mind: the old references to the CGI will remain usable until 30 June 2028. The invoice statement 'article 293 B du CGI' therefore remains the right one today.

What a registered-office address settles — and what it does not

Let us say it plainly, because this is the kind of subject on which a business-address company has every interest in being precise. A registered-office address sets the registered office and the place of registration, nothing more.

It does not create, and does not avoid, an establishment — neither the fixed establishment for VAT, where the permanent human and technical resources are missing and the VAT number is not enough, nor the permanent establishment for profits tax. This is not an opinion: it follows from the definitions we have just set out. Conversely, an address protects against nothing: if genuine human and technical resources are present in France, it is the reality of the activity that decides, not the letterbox.

Nor does it settle being a taxable person, the choice of scheme, obtaining the VAT number — which is requested free of charge from the tax authority — or the appointment of a tax representative when one is required. And it files no return: CA3, CA12, recapitulative statement, that is the business of a filing agent or a chartered accountant. What the address gives you is a compliant registered office; the rest is another profession.

What to remember

• The VAT of a French company turns on its seat of activity, never on its director's home: expatriation does not move the VAT.
• 'Établissement stable' denotes two autonomous notions — the fixed establishment for VAT (permanent human and technical resources, règlement UE 282/2011) and the permanent establishment for profits tax (business carried on in France, treaties). A presence may be one without the other.
• Territoriality (where the VAT is due) is distinct from establishment: a foreign company may owe French VAT without being established there.
• A VAT number does not amount to a fixed establishment; nor does a subsidiary.
• The tax representative is governed by the EU / non-EU axis, not by establishment. A British company is exempt from it.
• 2026 thresholds: exemption at 85 000 / 37 500 € (the single 25 000 € threshold has been dropped); EU distance selling above 10 000 € overall, via the OSS.
• A registered-office address neither creates nor avoids an establishment, and files no return on your behalf.

Sources verified as at 27 August 2026: code général des impôts, art. 256 A, 259, 259 A, 259 C, 259 D, 209 (I), 283, 289 A (I), 289 B, 293 B; règlement d'exécution (UE) n° 282/2011, art. 11 et 53; BOFiP, BOI-TVA-CHAMP-20-50-10, BOI-IS-CHAMP-60-10-30, BOI-INT-DG-20-20-10; CJUE, Titanium C-931/19 (3 juin 2021) et Berlin Chemie A. Menarini C-333/20 (7 avril 2022); loi n° 2025-1044 du 3 novembre 2025 (abandonment of the single exemption threshold); arrêté du 16 février 2021 (exemption of the United Kingdom from a tax representative); ordonnance n° 2026-671 du 27 juillet 2026 (postponement of the VAT recodification into the CIBS to 1 January 2027, old references to the CGI usable until 30 June 2028). The CJUE judgments are cited according to their established operative parts; bilateral tax treaties and the OECD model are not reproduced and are to be assessed case by case. Domisiège does not carry out VAT returns or personalised tax advice, and a registered-office address does not by itself create any establishment. This article does not replace an examination of your situation.