Spontaneous regularisation of French VAT on distance sales by foreign operators

The VAT regime applicable to distance sales has been amended as of 1 July 2021.

Until 30 June 2021, the regime applicable to distance sales was based on the principle of taxation of VAT in the country of destination of the goods when annual sales exceed­ed a threshold set by each EU Member State (threshold between EUR 35,000 and 100,000).

Since 1 July 2021, the threshold for distance sales has been harmonised and lowered to EUR 10,000 per year for all distance sales made in all member states of the European Union.

This reform allowed French Tax Authorities to note that some distance selling operators had, for the period prior to 1 July 2021, wrongly submitted all their sales in the country of departure of the goods, even though the amount of the sales exceeded the thresh­old set by the Member State of destination.

The operators concerned may be subject to a tax audit over a period of 10 years and, with that, significant penalties.

To avoid such consequences, the French tax authorities encourage foreign operators to regularise their situation spontaneously before 30 September 2022, with the follow­ing conditions:

Foreign operators must file a request for the regularisation before the tax department of foreign companies before 30 September 2022.

They must pay French VAT and late payment interest at the legal rate for the regular­ised period for which they can obtain a refund of VAT wrongly paid in the country of departure of the goods.

The period for regularisation is in principle from 2019 to 30 June 2021, unless the foreign trader can obtain a refund for the VAT wrongly paid in the Member State of departure for a longer period.

Finally, the French tax authorities will systematically inform foreign authorities of the Member State of departure of the regularisation request filed by the foreign operator and will ask them to inform of any subsequent request for VAT refund filed by the foreign operator.

Read the WTS Global VAT Newsletter here.