The French Tax Authorities (FTA) have published in May 2022 a letter to encourage the regularisation of errors committed by non-established traders in the context of distance sales toward B2C business that should have been taxable in France (1). This letter follows a first ruling which has been published by the FTA in December 2021 about the situation of French traders who had wrongly collected French VAT on distance sales taxable in another EU Member State (2).
- Regularization of errors made by foreign operators – Failure to collect French VAT
Traders not established in France who have wrongly collected VAT on distance sales to France in the Member State of departure of the goods are invited to file a request for regularisation before September 30, 2022, in order to regularize the omitted French VAT.
This regularisation measure concerns operators who :
- Will make spontaneous declarations to the French tax authorities (i.e. operators who are already subject to an inspection by the administration are excluded from the regularisation incentive);
- Have actually paid the VAT relating to the distance selling transactions concerned in the Member State of departure of the goods. In this respect, they must provide the French administration with a certificate proving this payment.
Company who wants to spontaneously regularize their situation in France before 30 September 2022 will not be subject to any penalty other than interest for late payment. However, of course, French VAT will be due, plus interests for late payment (2,4% per year, except of the FTA agrees with a 30% / 50% reduction of interests for late payment).
As a practical rule, particularly in the case of a very large number of transactions, the FTA will authorize operators to provide a table transactions detailing by year and by transaction the amount of distance sales made and the corresponding VAT, on the basis of which the administration will carry out a consistency check.
2. Regularization of errors made by French operators – French VAT wrongly collected
For your perfect information, the FTA had published in 2021 a ruling about the situation of French traders who had wrongly collected French VAT on distance sales taxable in another EU Member State. This ruling applies to French traders who found that they had exceeded the thresholds set by each Member State under the old system but had wrongly subjected all their sales in the EU to VAT in France, whereas this tax should have been collected in the Member State of destination of the goods.
When these traders have spontaneously regularised their situation and paid the VAT due in the Member State of destination of the goods, the FTA confirmed they should not be in a situation of double VAT taxation.
Therefore, French traders can submit claims for refunds of the French VAT wrongly collected to their administration. The VAT refund claim must be accompanied by documentary evidence of the distance selling transactions concerned by the claim and proof of actual payment of the resulting VAT to the French Treasury (BOI-RES-TVA-000100). In practice, Tax authorities also make sure the VAT has been paid in the Member State of consumption through a proper regularization and inform the tax authorities of the EU Member States of the granted VAT refund.
Our knowledge of the E-commerce sector and our support of French and foreign operators have enabled us to develop a sharp and reassuring expertise in the practical implementation of the E-commerce VAT package and regularisation procedures both in France and in other EU Member States. The VAT team is at your disposal to assist you in these procedures.
Contribution by Nathalie Habibou, Partner, VAT and Indirect Taxes – Arsene Taxand
