THE APPLICATION OF THE VAT REFORM ON E-COMMERCE
The reform of the VAT on distance selling has become necessary because of the exponential growth in the number of online “B to C” transactions which has revolutionized the distance selling market in just a few years.
We have already explained the mechanism of this tax reform in an article entitled "VAT THE REFORM OF DISTANCE SELLING", we will below present the concrete rules of application of this reform in force since July 1st 2021.
I - A few reminders on the territorial rules of VAT on e-commerce
- New intra-community distance selling regime
- Transactions concerned: all sales of goods to a private purchaser or (if professional) a “P.B.R.D.”, with the following exceptions:
- deliveries of new means of transport,
- the goods delivered after assembly or installation,
- the deliveries of second-hand goods.
- Distance sales tax place: taxation in the country of consumption above an overall turnover threshold of € 10,000.
- Distance selling declaration procedures:
- Declaration of transactions in each Member State of consumption,
- Option exercised for the one-stop-shop -OSS.
- Transactions to be declared in the OSS:
- All intra-community distance sales,
- Services provided by community service providers to non-taxable persons, these services being taxable in a Member State in which they are not established.
- Distance selling system for goods imported from third countries
- Deliveries of goods,
- Shipped or transported by the supplier or on his behalf, including when the supplier intervenes indirectly in the transport or shipment of goods,
- From a third country or a third country to the EU,
- To a non-taxable or assimilated purchaser in an EU Member State.
Excluded are deliveries of new means of transport and assembled installed goods.
- Mechanism of the IOSS (Import One Stop Shop): this regime was introduced to facilitate the declaration and payment of VAT on these transactions. The use of this one-stop shop is optional.
- Deliveries of goods falling under the IOSS regime:
- Goods shipped or transported from a territory or third country to the European Union,
- Whose intrinsic value does not exceed 150 euros,
- Transported or dispatched by the supplier or on his behalf,
- And which are not subject to harmonized excise duties (alcohol, tobacco, etc.).
II - The operation of one-stop-shops
- The principles of the one-stop-shop
The one-stop-shop allows operators who are liable for VAT in several Member States to collect these different VATs in a centralized tool, via a single registration. This option is global: when a taxable person opts for one of the one-stop shops, all the transactions concerned by this window must be declared there.
Warning! One-stop shop does not allow deductible VAT that may be incurred locally to be charged. This VAT will therefore have to be the subject of an individual reimbursement request per member state.
- One-stop shop for services provided by third-party providers
This one-stop-shop concerns the provision of services provided by providers not established in the EU to non-taxable customers. It can be used for all the services performed.
In summary, this service concerns all B to C services to contractors located in the EU provided by taxable persons established outside the EU.
- One-stop-shop for intra-community transactions
- All service providers established in the EU, but not in the Member State of consumption, providing services to non-taxable persons,
- Operators carrying out intra-community distance sales of goods,
- Deliveries of goods made in a Member State by electronic interfaces facilitating these deliveries.
Note that this one-stop-shop does not allow deductible VAT to be charged but exempts the operator from issuing an invoice.
- One stop shop for distance sales of imported goods
It concerns imported goods which are the subject of a distance sale when the intrinsic value of the consignments does not exceed 150 €.
The operators interested in this one-stop shop are:
- Taxable persons established in the territory of the EU making distance sales of goods imported from territories or third countries,
- Taxable persons established or not in the territory of the EU making distance sales of goods imported from territories or third countries and being represented by an intermediary established in the territory of the EU. A taxable person cannot appoint more than one intermediary at the same time,
- Taxable persons established in the territory of a third country with which the EU has concluded a mutual assistance agreement and which carries out distance sales of goods imported from that third country.
- Practical operation of the one-stop-shop
- Registration: taxpayers must subscribe to this service by logging into their professional space, then activating the counter using a code received by post.We can of course assist you in carrying out this operation.
- Declaration: in the systems for the provision of services and intra-community distance sales of goods, the declaration must be made quarterly, before the last day of the month following the quarter.
Regarding the one-stop-shop for imports, the declaration must be registered monthly, at the latest on the last day of the following month.
- Payment: it must take place no later than the last day of the month following the period covered by the declaration.
III - Declarations of exchange of goods (D.E.B.)
A circular of May 26th 2021 from the General Directorate of Customs and Indirect Rights (DGDDI), modifies the reporting obligations of operators carrying out intra-community distance sales of goods from July 1st 2021.
- Intracommunity distance sales from France
For companies established only in France which carry out intra-community distance sales for a total amount not exceeding € 10,000, the place of taxation is the Member State of departure of the goods and no DEB on dispatch is required.
In other cases, the fate of the taxable person is settled as follows with regard to the DEB at shipment.
- VAT due in the country of consumption and use of the one-stop-shop: taxable persons having opted for the use of the one-stop-shop EU are exempted from subscribing to a DEB for shipment to France for intra-community distance sales that they carry out from France when they are not established in the EU or when they are established in several EU member states.
On the other hand, a company established only in France remains required, if the threshold of € 460,000 is exceeded, to declare in a DEB on dispatch the intra-Community distance sales that it carries out, even if it has opted for the OSS-EU.
- VAT due in the country of consumption without using the one-stop-shop: in principle, a DEB on shipment is required when the threshold of € 460,000 per year is exceeded for shipments of goods made from France.
- Intracommunity distance sales to France
- VAT due in France and use of the one-stop-shop: when they have opted for the OSS-UE, the DEB is exempted upon introduction in France:
- Businesses not established in the EU;
- Companies established in a single Member State other than France;
- Companies established in several EU member states.
- VAT due in France without using the one-stop-shop: a DEB upon introduction in France remains required in this case as soon as the annual threshold of € 460,000 is exceeded.
If you have any question, you can of course contact us!