Sales, Use and International Tax Activity Update - April 2010

France in Grave Situation over Undertaker Services

In France, two tax rates may apply to undertaker services.

Transportation of a body by vehicle is reduced rated while the remainder of the services supplied by undertakers is standard rated.

The European Commission considers this to be in violation of Community case law which has held that services provided by undertakers for a particular funeral and the goods associated with it form one composite service. As such a single rate of VAT must apply to the overall service.

The Commission noted that France has the option of applying either a reduced rate or the standard rate of VAT to the supply of services by undertakers and cremation services and the supply of goods related thereto but it cannot apply both.

The Commission had sent a reasoned opinion to France back in July 2007. Because France has not amended its national legislation to conform to the opinion within the time frame allowed the Commission has referred the matter to the European Court of Justice.

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