VAT, Quotations and Contracts with a DMC in France

A quotation from a DMC is a set of assumptions expressed in figures. Before looking at the total, read the assumptions: the number of participants, the dates, the season, the venues, the length of each service and the level of staffing. If one of them changes, the price changes with it, which is why a serious quotation states its validity period and the headcount on which it is built.

The structure should be easy to follow. Expect separate lines for accommodation, meals and beverages, venue hire, transport, activities and guides, technical equipment, on-site staff and agency fees. Each line should indicate whether the amount is per person or for the group, and whether it is shown excluding or including VAT. Mixing the two presentations within one document is the most common source of misunderstanding when two proposals are compared.

Pay equal attention to the exclusions. In France, several costs are routinely billed separately or left to the client: the city tax collected by hotels, music licence fees for amplified music, overtime when an event finishes later than planned, and the cloakroom or security personnel that some sites impose. None of these is unusual; what matters is that they are written down. A quotation that lists no exclusions is not necessarily complete, it is simply silent.

French value-added tax is not a single charge applied uniformly to a programme. The standard rate applies to many services, while reduced rates exist for some of them; accommodation, on-site catering, passenger transport and cultural admissions have each been subject to specific treatment, and the rates and conditions can change. As a general rule, therefore, ask your DMC to show VAT line by line rather than as a single percentage on the total.

Two practical points follow. First, compare proposals on the same basis: excluding VAT for all, or including VAT for all. Second, find out early whether French VAT is recoverable for your company. Businesses established outside France can, depending on their country and activity, claim a refund of French VAT through a dedicated procedure with its own deadlines and supporting documents; businesses established elsewhere in the European Union generally use an electronic procedure through their own tax authority. Whether a given cost is deductible, for instance hospitality or leisure activities, depends on the rules of the claimant's tax system and on the nature of the expense.

Agencies that sell packaged travel to end customers may be subject to a special margin scheme in which VAT is not shown separately on the invoice. This is a technical point and it does not apply identically to every business-to-business situation. We do not give tax advice: your finance department or tax adviser should confirm the treatment of your programme, and a good DMC will provide the invoices and VAT identification details they need to do so.

The financial risk of a programme is carried by three mechanisms, and each should be negotiated rather than accepted by default.

The deposit schedule links your payments to the dates on which suppliers require theirs. A first deposit at signature, further instalments as hotel and venue deadlines approach, and a balance shortly before arrival is a common pattern. Ask the agency to show which supplier deadline justifies each instalment.

The cancellation scale defines what you owe if you withdraw, usually as a percentage of the total that rises as the event approaches. It should distinguish between cancellation of the whole programme and reduction of the number of participants, and it should say whether amounts already paid to third parties are recoverable.

Attrition applies mainly to hotel room blocks. A hotel releases rooms for your group on the understanding that you will use a certain share of them; the contract sets how many rooms may be released without penalty, and until when. Negotiating a realistic attrition allowance, and a date after which the rooming list is final, protects you more than a small reduction in the room rate. The same logic applies to food and beverage: ask for the date by which the guaranteed number of covers must be confirmed, and how late additions are handled.

Ask the agency to describe, in the contract, what happens when the programme cannot be delivered as planned. Three situations deserve a clause.

The first is force majeure: events beyond anyone's control that make performance impossible. The definition, the notice period and the consequences for amounts already paid should be explicit, and you should check how it interacts with your own insurance. The second is supplier failure: if a venue closes or a caterer withdraws, the agency should commit to proposing an equivalent alternative and to explaining any difference in cost. The third is disruption that does not prevent the event but changes it, such as a transport strike or severe weather. Our article on public holidays and strikes explains how these are anticipated in practice.

Before signing, check the following points against the draft:

• The quotation states the headcount, dates and validity period, and every amount is clearly marked as excluding or including VAT.
• Exclusions are listed: city tax, music licence fees, overtime, security and cloakroom staff, and any site-imposed supplier.
• The deposit schedule matches identifiable supplier deadlines.
• The cancellation scale distinguishes full cancellation from a reduction in participants.
• Attrition terms for hotel blocks and the final date for guaranteed covers are written down.
• Force majeure, supplier failure and disruption are covered by clauses you have read.
• The invoicing entity, VAT identification details and bank details match the agency's registration documents.