The French Anti Tax Fraud Law coming into force in January 2020 will help prevent tax fraud and combat lack of online cross-border VAT compliance. The European Union countries have all fought tax fraud in the past decade. Overall, one major inconvenience is that the lack of online cross-border VAT compliance undoubtedly affects the tax revenues of many countries of the European Union. Therefore, especially the powerhouses of the EU combat tax fraud. They do so not only by the legal changes in the UK and in Germany, but by raising awareness. Therefore, it shouldn’t surprise that now France as the third major economy of the EU also modified its legislation.
The hard facts are below in the bullet list
- After the deadline on January 31st, 2020, France will bring this law in action. France will enforce its most recent law change of the so-called Anti-fraud Act (original French text).
This law is no. 2018-898, published on October 24th, 2018. - The core for online sellers is that it includes new reporting requirements for collaborative economy platforms (such as Amazon, eBay, wish, Rakuten etc.).
- Indeed, the law also foresees hefty fines of up to €50,000 fixed fines and also a further percentage of unreported tax
For the cross-border online seller this means
- For any cross-border e-commerce seller is this: Amazon.fr will not allow that this legal responsibility will burn a big hole in their pocket
- Amazon cross-border seller accounts caught without a French VAT number run the risk of account suspension.
The background of these seemingly draconian measures: It is an unmistakable measure to prevent tax fraud, especially taking into account cross-border online transactions. So far, so good. By passing on some of the reporting responsibility onto the internet platforms, the French government has put online marketplaces under pressure. And this again has the effect that the respective platform e.g. Amazon.fr or any other in question will make its requirements tougher and more bureaucratic for everyone. Especially for those who sell their products online and use the French extension of that internet platform.
The bearing that this legal change will have:
Basically in the case of non-compliance, the online seller is risking his seller account to be suspended.
We at J&P Accountants advise all our clients to check their VAT documents for compliance. We advise every cross-border online seller to find out whether they are VAT compliant in France. If this is not the case, please contact us at J&P Accountants. Make sure you apply sooner rather than later for a French tax number in case you need one. If unsure, also contact us. And if it concerns you and your company, prepare yourself.
The waiting times for the French VAT registration are an estimated 1 month for non-EU and up to 2 months for EU client applications. However, these times will not remain like this. As a matter of fact, the closer we get to the cut-off date, the longer the wait. Thousands of VAT applications will snow under the French tax authorities. Online cross-border VAT compliance takes time and planning!
Help is at hand
A lot of cross-border sellers will not know about this new chapter in online cross-border VAT compliance. Therefore, please do not hesitate to get in touch with us. We offer specialised cross-border VAT compliance services, including VAT registration and European tax compliance. We will be able to advise you on how to register for VAT in France. Please give us a call today on 0191 3780 287, or send an e-mail to vatdurham@jpaccountant.com, and we will be very happy to advise you.
