In mainland France the standard VAT rate increses from 19 . 6 % to 20 % , the reduced rate from 7 % to 10 %. The reduction of the VAT reduced rate from 5.5 % to 5 % which was adopted in 2012, will not take place. In Corsica, the specific rate of 8% ruled by Article 297.I.5 of the CGI is increased to 10 %.

Some products are subject to specific measures. As an example fertilizers used in ecological farming remain subject to 10% while the others are now subject to 20 %. The scope of the 5.5 % VAT rate is expanded to admissions in cinemas , to certain transfers of property rights on cinematographic works, to insulation works of dwellings completed for more than two years, to the construction and renovation of social housing, to the provision of accommodation and food in the sheltered dwellings referred to in Article L 633-1 of the Code of Construction and accommodation and facilities provided for b 5 ° and 8 ° and 10 ° of I of Article L. 312-1 of the Code of Social Action and Families, as well as to imports and certain inte-community acquisitions of art objects.

The new VAT rates apply to transactions for which the tax point ( the transfer of ownership for goods and the performance for services) occurs after January, 1st, 2014. However VAT payable in 2013 on supplies performed in 2014 will remains calculated at the rates of 2013. For example, a service supplier who is liable for the VAT on a cash basis had to pay tax at the rate of 19.6 % on instalments received in 2013; these payments will remain subject to the 2013 VAT rate while the balance of the price that will be paid in 2014 will be subject to 20%, regardless the fact that the service will be carried out in 2014.

Rate cuts are applied when the tax becomes due after 1 January 2014, except for transactions involving works of art.

Transitional measures have been adopted for a number of operations such as some kind of sales of buildings and building construction contracts that are still subject to 19.6% if the contracts were signed before December, 29th, 2012. Similarly, renovation works on dwellings completed for more than two years referred to in Article 279-0 bis of the CGI, ordered before January, 1st, 2014, are still subject to the reduced rate of 7% provided that 30% of the total price has been paid in 2013 and the balance is invoiced before 1 March 2014 and collected before 15 March 2014. Transitional measures concerning the social housing and the supplies of goods placed under tax and customs warehouses were also adopted.

Given these rules, the first impact of rate changes should affect the VAT return of January 2014 filed in February 2014. Invoices issued in contravention of the here above summarized rules shall be subject to regularizations.