The French ‘Inspection Générale des Finances’ (IGF) issued a report on securing the collection of value added tax (VAT). The report contains the following suggestions in order to combat fraud:
– Implementation of VAT Split Payment: collection of VAT by secure operators, in particular financial institutions; and
– Obligation to appoint a tax representative for non-EU established entities to guarantee the recovery of VAT claims. The Fiscal Representative has to declare VAT and would become jointly and severally liable). This obligation is considered binding by some e-commerce platforms, whose marketplaces are increasingly being used by foreign companies.
On split payment, the report concludes that the split payment at this stage would be a disproportionate means of combating the VAT fraud in France, in view of the complexity of its implementation, its costs and reforms already underway. The latter also includes e-invoicing requirements.
On fiscal representation, the report concludes that fiscal representation constitutes a guarantee of collection which must be maintained but adapted in the face of the development of e-commerce, where VAT fraud is a major problem by foreign sellers is massive and leads to major unfair competition.