Do you sell goods to French private individuals, whether or not via your online shop? If so, in 2016 you will need to register with the French tax authorities sooner in order to fulfil your TVA obligations (TVA – Taxe sur la Valeur Ajoutée – is the French VAT). France has announced that it will be lowering the threshold for distance sales from €100,000 to € 35.000.
Main rule In the case of the supply of goods which are transported or dispatched in connection with that supply, VAT must be paid in the country where the goods are situated at the start of the transport or dispatch. Goods dispatched from the Netherlands are therefore subject to Dutch VAT. If the goods are transported or dispatched to a business operator abroad, Dutch VAT is usually charged at the rate of 0% (intra-Community supply or export). However, if the customer is not a business, either the standard rate (21%) or the reduced rate (6%) must be charged, depending on the nature of the goods supplied.
The purpose of VAT is to ensure that the tax is levied on the consumption of the service supplied. The consumption of goods transported or dispatched abroad takes place abroad. Under the VAT system, therefore, it is not Dutch VAT but foreign VAT that should apply to those goods. For this reason, the following applies to goods supplied to non-businesses: exception which is known as the scheme for distance selling.
As goods:
– are supplied to customers in another EU Member State who do not have a VAT registration number AND
– the goods are transported or dispatched in connection with the delivery by, or on behalf of, the supplying trader,
in which case VAT must be paid in the EU Member State where the purchaser of the goods resides or is established.
However, the exemption for distance sales does not apply until the total value of supplies has exceeded a threshold set separately for each EU Member State. These thresholds apply per calendar year. You can find them here. As long as your distance sales do not exceed the thresholds, you will continue to charge and pay Dutch VAT.
A major drawback of the rules on distance sales is, of course, that a trader who is required to pay VAT in another EU Member State faces a significant additional administrative burden. In many cases, after all, it will be necessary to engage a specialist adviser in each Member State. To address this issue, work is underway at EU level to develop a system whereby traders engaged in distance sales can pay the VAT due in other Member States to the tax authorities of the Member State in which they reside or are established. It is not unlikely that the thresholds mentioned above will then be lowered.