France is encouraging its e-retail marketplace facilitators like Amazon, eBay, Alibaba, etc. to collect and remit VAT on sales by non-EU third-party merchants directly to the tax authorities. It will be the first member of the European Union (EU) to do so and is looking to implement this change effective January 1st, 2020. This is also done in lieu of France’s anti-VAT fraud measures since tax authorities are concerned about the lack of tax compliance by online sellers in Europe. This has been imposed a year ahead of the EU reforms to help recognize online marketplaces as the legal seller for tax purposes.
Although, the UK has already introduced this joint liability of online platforms in 2018, the authorities may require the sellers to appoint a fiscal representative in the country in order to get a UK VAT number and similarly Germany will require its online platforms to hold a valid tax certificate in order to sell their goods in the country.
What does this mean for you?
These anticipatory changes in France and the EU will garner a huge shift. The marketplace VAT collection obligation will apply to all the goods sold through the marketplace when the seller uses the fulfillment centres located in France (same will apply to all the countries in the EU progressively). As of January 2020, some marketplaces operating in France will be responsible for collecting the VAT due on sales made through their platforms in the case where:
- The seller is based outside of the EU; and
- The sale is to consumers within the EU.
In case the goods aren’t stored in the fulfillment centers located within the EU (in this case, France), the marketplaces will be responsible for collecting the VAT only on goods with a value no more than €150.