This article covers regulations that concern businesses established in France that sell goods remotely or provide services electronically to end consumers – physical persons (B2C). These rules do not apply to B2B transactions. based outside of France but within European Union (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden).

Please note that if you see via an online platform (Etsy, Amazon) you are likely not concerned by the below. Most platforms operate in such a way, that from legal point of view your customer is not the buyer, but the platform itself. Such operations fall under B2B category. If you are not sure, get more information from your platform providor. Also pay extra attention if you are using a fulfillment center outside of France.

Some definitions

Selling goods via e-commerce (ventes à distance) – selling physical goods without physically meeting the customer. The order is placed via means of communication (phone, email, webshop, social network), and the goods are delivered using a shipping company.

The provision of services by electronic means/selling digital goods/digital services (prestations de services fournies par voie électronique) is a sales that fulfilles the following 4 cumulative criteria:

• services are provided over internet or another electronic network
• their nature means that the service is largely automated
• human intervention is minimal
• they cannot be provided in the absence of technologies.

Downloadable applications for computers or mobile phones, online subscriptions, cloud or web-based applications and products, online games, website hosting, data storage are all examples.

Virtual events – live events that are hosted purely online for cultural, artistic, sports, scientific, educational, entertainment, and similar activities. These are assimilated to digital services from 01/01/2025 in European Union, but not elsewhere in the world yet. I have a separate article that covers this topic in more detail.

If you provide other services that involve digital component, depending on your situation different rules will apply – these are not covered in this article.

European Union – Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden

Main principle

For the above, the VAT is due in customer’s country of residence, at that country’s rate. This means that if

• your customer lives in France you apply French VAT rate. If you are under the VAT threshold, you do not apply VAT. Monaco is assimilated to France for VAT reasons
• your customer lives in EU there is a 10 000€ threshold (per calendar year).
  • If your overall sales of all products, digital services, virtual events in a calendar year to all B2C customers in all of Europe is below 10 000€, you apply same rules as for French customers
  • If you cross the threshold, you must start charging VAT at the rate of the country of each customer, and pay that VAT to the tax authorities of each of the countries. You can either register in each country separately, or use One Stop Shop facility of the French Tax office website to make all of your declarations. If you’re still under the VAT threshold, this rule still applies to you (you do not charge VAT to your French customers though – until your total sales reach the French VAT threshold). Once you register, this is permanent, you do not restart from 0 next year.
• Your customer lives outside EU (including DOM) – French VAT is not applicable. But attention! You are subject to laws and regulations of the destination country.
  • For classical goods, local VAT/Sales Tax/ GST and import duties may be applicable. For selling to UK, you can refer to this article.
  • For digital goods/services you need to pay close attention to the regulations, as this area is constantly evolving. In most cases, local taxation applies. Some countries, like UK, have 0 tolerance, meaning that you must register for VAT in UK and collect it from your customers from the first sale. Others have more or less generous thresholds. I have found this rather comprehensive list, but be sure to do your own due diligence.

Exceptions

• The rules do not apply to second-hand items, including vehicles, art and collectibles, if the taxation on the margin is applied – French VAT is to be applied in this case.

Application in practice

If you sell directly B2C to European Customers

If you sell directly you customers, and are over the 10 000€ threshold you must apply to each sale the VAT rate of the destination country. You must also declare and pay the VAT in that country. This can be done in two ways:

• either you register in each individual country that you sell to
• or you use the One Stop Shop website (OSS) to declare and pay all VAT due to all the European Countries every three months. To do that, login to your professional space on impots.gouv.fr. On the first page you see, choose “Gerer mes services” in “Mon Espace” section. In the page that opens, choose “Adherer aux services en ligne” in the “Services en ligne” section. Fill in your SIREN number. A pop-up window will appear. You need to scroll down to the section “Les services aux quelles vous pouvez adherer”, tick the box “Guichet de la TVA UE” and click “Valider”.

If you sell via a market place platform

I have read that the platform should be considered to purchase the product or service from the seller at the date when the sale to the end customer is made, and would therefore be responsible for collecting and passing on the VAT to the country of the buyer.

In practice, at the moment I am writing this article (3rd of July, 2021) this only seem to apply to vendors located outside of EU. Amazon states directly, and Etsy vaguely that EU based vendors are responsible for dealing with European cross-border VAT by themselves. It seems that the platform will apply the correct rate for you, but you are still responsible for declarations as described above for direct sales.

Franchise de base

If you are not registered for VAT in France, because your turnover is below the threshold and you benefit from “franchise de base” regime

• If your total annual sales to other EU countries is less than 10 000€, you do not apply VAT, as usual.
• If your European turnover goes above 10 000€ in theory you may still remain below the French franchise de base threshold. You must however start applying the European VAT as described above. Seemingly, you only need to do just that – with no obligation to collect or declare the VAT in France. However, this information also remains to be verified. If you find yourself in such situation, at this moment I would advise you to contact your local tax office (SIE) for more information.

If you would like a personalised advice on your situation, especially if your case falls under one of the exceptions mentioned above, please do not hesitate to contact me.

Important: Every situation is different and may need professional advice. The information on the Compte Plus website is general and should not replace legal, accounting, or tax counsel. If in doubt, contact a specialist for tailored advice.