VAT Customs and Digital Sales: Tax Compliance in the French Market

The French market represents a strategic opportunity for businesses worldwide particularly in the fields of e-commerce and digital services However succeeding in France requires a solid understanding of local tax obligations including VAT customs procedures and regulations specific to digital activity Knowing these rules is essential not only to avoid penalties but also to ensure compliant and sustainable growth in the French market

VAT Registration Requirements in France

Businesses seeking to sell goods or services in France may be required to register for French VAT This applies in several key scenarios When a company has a fixed establishment in France it must obtain a French VAT number and charge VAT on all domestic transactions When a business sells remotely to French consumers from another EU country and exceeds the EU-wide distance sales threshold of ten thousand euros annually it must either register locally for VAT or use the OSS One Stop Shop scheme In addition any business providing digital services to individual consumers in France must charge French VAT whether or not it is based in the European Union

France applies a standard VAT rate of twenty percent along with reduced rates of ten percent five point five percent and two point one percent depending on the goods or services involved such as books food products or pharmaceutical items

The One Stop Shop OSS System

The OSS system introduced as part of the EU’s e-commerce reforms is designed to simplify VAT reporting for cross-border B2C sales within the EU This mechanism allows businesses to declare all their intra-EU B2C sales through a single Member State which eliminates the need to register for VAT in every country where they have customers

There are two OSS regimes The Union OSS applies to businesses established in the EU while the Non-Union OSS is available to businesses outside the EU that supply digital services to EU-based consumers In France companies register through the tax administration and file quarterly returns online using the DGFiP portal

OSS is especially valuable for digital and e-commerce businesses with customers across multiple EU countries as it streamlines administrative obligations while ensuring full compliance with local VAT rules

Customs Procedures for Non-EU Sellers

Businesses based outside the European Union that import goods into France must follow the customs regulations applicable to all imports into the EU This includes the payment of import VAT and customs duties depending on the nature value and origin of the goods

Import VAT is calculated on the total value of the goods including transportation and insurance costs It is usually paid at the point of customs clearance although certain businesses may opt for a deferred payment system through VAT self-assessment

For shipments valued at less than one hundred fifty euros the IOSS Import One Stop Shop regime enables sellers to collect VAT at the point of sale This simplifies the customs process prevents extra fees for the end customer and speeds up delivery

Additionally any economic operator importing goods into the EU must obtain an EORI number which is mandatory for submitting customs declarations in France or any other EU country

The French Digital Services Tax DST

France introduced its digital services tax in twenty nineteen to address revenue generated by major digital platforms operating in the country This tax applies to three main categories of services targeted online advertising the resale of user data and intermediary platforms that facilitate interactions between users

The rate is three percent of revenue derived from these services in France The DST only affects companies whose global annual turnover exceeds seven hundred fifty million euros and whose French revenues from digital services exceed twenty five million euros As a result the tax mostly targets large multinational digital corporations

The DST is entirely separate from VAT meaning that a company may be subject to both taxes simultaneously and must meet both sets of obligations The DST must be declared annually before April thirtieth for the previous calendar year

Reporting and Invoicing Requirements

Businesses must comply with specific deadlines and invoicing formats VAT returns are filed monthly or quarterly depending on the company’s revenue level OSS declarations are submitted quarterly while import VAT is declared at the time of customs clearance unless the business uses deferred accounting

Invoices must include all required details such as the business’s VAT number the applicable rate and amount of VAT and references to OSS or IOSS where applicable Non-compliance with these rules can result in financial penalties interest charges or customs delays for imported goods

Selling in the French market offers significant opportunities for global e-commerce and digital businesses but it also requires careful attention to tax and customs obligations Understanding the nuances of VAT registration import procedures OSS and IOSS regimes and the digital services tax is key to ensuring smooth and compliant operations

By anticipating VAT thresholds following invoicing rules and aligning with the appropriate tax schemes companies can avoid legal and financial risks while establishing a strong and lasting commercial presence in France