VAT and distance selling - Tax ruling - 01/12/2021

Question :

The regime for distance sales applicable until June 30, 2021, under the provisions of the former Article 258 A of the General Tax Code (CGI) and former Article 258 B of the CGI, was based on the principle of taxation in the country of consumption of the goods when annual sales exceeded a certain threshold, ranging from €35,000 to €100,000, the amount of which was set by each Member State of the European Union (EU).

Following the amendment of this regime from July 1, 2021 (CGI, Art. 259 D of the CGI), the threshold for distance sales is harmonized across all EU countries at €10,000, and the single declaration and payment point for value-added tax (VAT) is extended to operators of intra-Community distance sales of goods (Law No. 2019-1479 of December 28, 2019, finance for 2020, Art. 147 and Law No. 2020-1721 of December 29, 2020, finance for 2021, Art. 51).

In this context, some French operators have noted that, under the former system, they exceeded the thresholds set by each Member State but incorrectly submitted the entirety of their sales made in the EU to VAT in France, whereas this tax should have been collected in the Member State of destination of the goods.

Anticipating, if necessary, the rectifications of the tax administrations of the affected Member States, these operators have proceeded or will soon proceed to regularize the VAT due in the Member State of destination of the goods.

In such a scenario, these operators will find themselves in a situation of double taxation. Therefore, they are questioning the formalities to be completed to obtain from the services the refund of the VAT wrongly collected in France.

Answer:

Operators or their representatives can submit requests for the refund of wrongly collected tax to the managing service to which they are subject. These requests must be accompanied by compelling documentary evidence regarding the distance sales operations covered by the request, as well as proof of the effective payment of the resulting VAT to the French Treasury.

Furthermore, since the limitation period may vary from one State to another, a procedure for automatic relief, under the provisions of Article R.* 211-1 of the Book of Tax Procedures (LPF), may be implemented. The refund request may then cover a longer period than that provided for in paragraph b of Article R.* 196-1 of the LPF, provided that the operators or their representatives can demonstrate effective double taxation on the same operations.

Finally, tax administrations of EU Member States will be informed of the relief granted.