New reforms concerning VAT and e-commerce

by Elliot Infelta on Jul 08, 2021

Since July 1, 2021, new regulations introduced by the European Union concerning VAT and e-commerce come into force. This is mainly intended to combat the fraudulent behavior of certain b2c sellers, b2c marketplaces, sites practicing “drop shipping” mainly located in certain Asian countries.

Because marketplaces such as Aliexpress, Amazon and Wish which have until today always benefited from a VAT exemption on a large part of their products. Ultimately, the European Union hopes to be able to redistribute the cards fairly and get consumers to make their purchases on European merchant sites.

As professionals, you are of course affected by these new terms, which is why we advise you to familiarize yourself with this subject in order to be up to date in terms of tax and customs while benefiting from expert advice.

Why new reforms concerning VAT and e-commerce?

According to a report published in 2019, 98% of sellers on marketplaces are not registered in France and do not charge VAT in e-commerce. In other words, this represents a colossal loss of 7 billion euros of uncollected VAT from the European Union coffers each year. Furthermore, this same document indicated that only 538 out of 24,459 sellers had paid VAT in the event of a tax audit.

In short, this explains why commercial sites such as , Aliexpress, Amazon and Wish have a competitive advantage with prices 20% cheaper compared to the same companies which fulfill their VAT collections in e-commerce in particular.

It is in this context that the European Union has decided to implement new reforms concerning VAT rates and b2c sellers on their e-commerce platforms. It therefore remains for customs to verify compliance with these new rules which are now current and applied, according to the General Directorate of Customs and Indirect Duties more than 450 million packages must be declared and taxed in France.

Clearly, what will really change for you is the way you declare your goods when declaring VAT to the state. Indeed, from now on it will be simpler to declare your VAT using a single platform which is the IOSS window. So you no longer have to get lost with numerous bundles of documents that can easily be lost or falsified.

A system has therefore been designed for you b2c professionals called “IOSS-OSS Window”, if you do not yet know it or have not yet understood how to use it, we will explain to you below…

What are the main VAT rules on E-commerce to know from July 1, 2021?

To help you, here are some of the main rules to know about VAT in b2b and b2c e-commerce from July 2021:

  • The threshold for triggering distance sales is set at €10,000 in all EU member states, which means that from the moment you exceed the sales threshold of €10,000 in EU countries, EU you must make a specific VAT declaration via the IOSS-OSS one-stop shop. This declaration requires you to carefully monitor sales by country using your accounting and your b2b or b2c e-commerce site to be able to pay VAT by country and according to the country rate. Below this threshold, French VAT is applied as for usual French sales.
  • Distance sales of imported products not exceeding €150 become liable to VAT and no more import exemption of €22, any import becomes taxable for sellers within the EU via a website.

Do not hesitate to contact your accountant for more details on this subject.

How should I make my VAT declaration with my e-commerce activity?

As an e- retailer , you can now declare VAT on your products for your customers located in the European Union (excluding France) through the one-stop shop, in other words the IOSS window. The idea is to facilitate this VAT declaration, which is all too often criticized for its complexity, because you must declare your goods to each tax administration in the destination countries. However, if you wish to keep this operating method, you can always declare your goods this way .

If you wish to register for the one-stop shop, you must first submit a membership request before each start of the quarter in which you wish to start using this system for your e-commerce VAT declaration.

person typing on a computer

Here is the procedure to follow today:

  • 1) Online membership at the IOSS counter will be done on immobilier.gouv
  • 2) You must specify your start date of activity so that you can declare your goods over a period established by you.
  • 3) Remember that step 2 must be repeated every quarter.

The steps for registering at the IOSS counter to declare your VAT during your e-commerce activities

When registering on the platform dedicated to the IOSS counter, here are the steps to follow:

  • 1) Log in with your professional account on tax.gov
  • 2 ) Click on the “ I join ” tab
  • 3) Click on the “ Procedures ” tab
  • 4) Choose the section " EU VAT counter
  • 5) Enter your intra-community number or ROF ( Tax Obligation Reference )
  • 6) For this step, you will only need to provide all the following information:
  • individual VAT identification number
  • legal name of the company
  • postal and telephone contact details
  • email address and website
  • name of contact person
  • bank details
  • start date of application of the regime
  • nature of operations provided
  • VAT identifier and postal details of permanent establishments or storage locations available to the company in other Member States
  • list of VAT registration numbers in other Member States
  • list of identifying numbers allocated in other Member States in the event of old or current registrations, at the MOSS or at the VAT one-stop shop.

If you encounter difficulties during your VAT declaration procedures, organizations such as tax.gov Or customs.gov can accompany you.