VAT on Personal Services: What Rate Applies Under the Agency or Direct Service Provider Model?

Nov 3, 2026 · @GUENEAU, Jean-Paul, Avocat

Do you run a personal-services business or advise these organizations? This article explains how the service delivery model — agency or direct service provider — determines VAT treatment and the points to check to secure the applicable rate.

The reduced VAT rate of 10% does not depend on the advertised activity (housekeeping, childcare), but on who actually provides the service. In a decision dated October 9, 2026 (No. 505701, noted in the tables of the Lebon Reports), the Conseil d’État denied the reduced rate to a franchisee in the Shiva network that placed workers with private individuals who remained their employers. The same service, provided by a company that employs its own workers, remains eligible for the 10% rate.

The French Labour Code allows personal services to be provided under two models (Labour Code, Article L. 7232-6). The choice of model determines the VAT rate.

The Agency Model: 20% VAT on the Commission

Examples: Shiva network, Petits-fils.

  • Who employs the worker? The private individual. They sign the employment contract and remain the sole employer.
  • What does the company do? It selects and introduces the employee, registers the individual as an employer, and prepares payroll and Urssaf declarations under an agency agreement (Labour Code, Article L. 7232-6, 1°).
  • What does it invoice? Management fees. The employee’s wages are paid on the individual’s behalf.
  • What VAT rate applies? The standard rate of 20%, on the commission alone. The company acts as a disclosed agent: placement and administrative management are not included in the list of eligible activities (General Tax Code, Annex III, Article 86, II).

The individual nevertheless retains the tax credit for employing a worker in their home in respect of the wages they pay.

The Direct Service Provider Model: 10% VAT on the Total Price

Examples: O2, Kinougarde, Complétude.

  • Who employs the worker? The company. It recruits, employs and supervises the worker under its own responsibility as employer.
  • What does the company do? It provides the service itself in the client’s home, in its own name (Labour Code, Article L. 7232-6, 3°).
  • What does it invoice? The overall price of the service: housekeeping, childcare or tutoring.
  • What VAT rate applies? The reduced rate of 10% (General Tax Code, Article 279, i), on the full price, provided the activity is listed in Article 86, II of Annex III and the company has filed the required declaration.

The 5.5% rate is reserved for approved or authorized organizations that assist dependent elderly people or people with disabilities with essential activities of daily living (General Tax Code, Article 278-0 bis, D). Ordinary housekeeping in these individuals’ homes remains subject to the 10% rate (BOI-RES-TVA-000226).

Comparison

 Agency ModelDirect Service Provider Model
Worker’s employerThe private individualThe company
Contract with the clientManagement mandateService provision contract
Company’s roleIntermediary acting in the client’s name and on their behalfService supplier acting in its own name
Labour Code basisArticle L. 7232-6, 1°Article L. 7232-6, 3°
Amount subject to VATManagement fees onlyTotal price of the service
VAT rate20%10% (5.5% for assistance to dependent people)
ExamplesShiva, Petits-filsO2, Kinougarde, Complétude

What the Case Law Says

All the cases decided concern Shiva franchisees, and all were lost. Yet the criterion they establish is favourable to the direct service provider model.

  • Conseil d’État, October 9, 2026, No. 505701, Paris Ménage et Services. Worker placement and administrative management do not constitute “household upkeep.” The single or ancillary supply theory is rejected because the housekeeping is performed by the individual’s employees, who are not taxable persons for VAT purposes. Conversely, when the service is performed by employees of a company that is a taxable person, this obstacle disappears.
  • Versailles Administrative Court of Appeal, December 15, 2023, No. 22VE02060, Nickel. The reduced rate applies when the company that has filed the required declaration acts in its own name, not when it acts as an intermediary in the name and on behalf of another person.
  • Douai Administrative Court of Appeal, June 19, 2025, No. 24DA01068, Aidatou. The reduced rate is denied because the principal service is performed by an employee of an individual, rather than by the company that has filed the required declaration.

In both appeal judgments, the companies argued in the alternative that their own staff also performed housekeeping. They lost for lack of evidence, not on principle.

The tax administration expressly accepts the reduced rate for the direct service provider model (BOI-RES-TVA-000128). Taxpayers may rely on this guidance against the administration under Article L. 80 A of the Tax Procedures Code.

Conditions for Securing the 10% Rate

  1. A genuine employment relationship: an employment contract with the company, a relationship of subordination, and payroll and social contributions borne by the company.
  2. A contract and invoices in the company’s name, covering the overall price of the service, without a management mandate.
  3. An activity on the list in Article 86, II of Annex III. Minor gardening work is not included and is subject to the 20% rate.
  4. A personal services (SAP) declaration covering the activity, and compliance with the exclusive-activity requirement.
  5. Classification as a service provision arrangement rather than the supply of personnel. Article L. 7232-6 treats the supply of personnel (2°) as non-profit only for associations. For a commercial company, a contract drafted as a staff-lending arrangement risks being reclassified as unlawful labour lending (Labour Code, Article L. 8241-1).

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