France: Online marketplaces’ VAT responsibilities might be different in France than the rest of the EU

September 13, 2021

With the EU VAT reform, which was rolled out on July 1, 2021, online marketplaces, such as Amazon, Wish, Cdiscount and eBay, became the deemed supplier in the EU for a big part of the sales transactions they facilitate. 

France, however, plans to extend this new set of responsibilities to all online marketplace transactions, regardless of the value of the goods ordered.

Let’s look into the details.

What are marketplaces responsible for in the EU as a whole?

The EU VAT reform from July 1, 2021 made facilitating online marketplaces responsible for invoicing, collecting and remitting VAT on some sales to EU customers. They’re responsible for VAT on the behalf of individual sellers in the following 2 cases: 

  • Goods imported into the EU and sold by both EU and non-EU sellers, if their value is less than €150
  • All goods sold by sellers established outside the EU, regardless of the goods’ value

For those transactions, marketplaces need to issue an invoice, collect VAT at checkout, and remit it to the relevant tax office. If they use the OSS/IOSS system, their VAT declarations will be somewhat simplified, and handled with fewer VAT returns, depending on the storage locations of their inventories. 

The purpose of holding marketplaces accountable for VAT was to: 

  • Facilitate tax collection in the EU
  • Give tax administrations better visibility into sales transactions
  • Make audits simpler for the tax offices.

Additionally, marketplaces can allocate more resources to VAT compliance than individual sellers, which would account for fewer mistakes and a smaller VAT gap.

What are France’s plans regarding marketplaces’ liability for VAT?

France, however, plans to make online marketplaces responsible for the collection and remittance of VAT on all sales transactions, regardless of the goods’ value and the seller’s country of establishment. 

This places an additional administrative burden on marketplaces, and it aims to make VAT collection easier for the French state. 

The reason behind this difference is that the European Commission leaves it up to each member state to decide who is liable for VAT on imported goods: the customer, the seller, or the online marketplace. France is considering lifting the €150 threshold for imported goods, and simply making marketplaces responsible for the collection of VAT on all imports.