Ruling of 24 February 2026, n° 497507
The Conseil d’État ruled on the scope of the VAT reverse charge mechanism applicable to subcontracting in the construction sector under Article 283, 2 nonies of the French Tax Code. The mechanism applies where services are directly linked to a construction, renovation, transformation or demolition project. The case concerned a subcontractor carrying out technical work on the internal systems of buildings already completed and in use (heating networks, water circuits, cleaning and de-sludging operations), with no connection to any ongoing construction or renovation project.
The Tax Authority took the view that these services fell within the reverse charge regime on the basis that they were performed as subcontracting work and related to property. The company argued that they were standalone technical services with no link to any ongoing construction works.
The Conseil d’État sided with the company. It confirmed that the reverse charge is a derogation from the standard VAT rules and applies strictly where works are tied to an ongoing construction or property operation. Technical services carried out after a building has been completed, or with no direct functional link to an ongoing construction or renovation project, fall outside its scope and remain subject to the standard VAT rules.
