Learn about the distance selling thresholds in France
If you are an overseas company that would like to do business selling goods in France, you need to think about the VAT distance selling threshold. The distance selling threshold allows you to sell to private customers without actually having to register for the value added tax in the country of consumption. What happens is that your company charges the VAT in the country where is based, which means that you will only be reporting to local tax authorities. However, it is necessary to be aware of the fact that if your total sales exceed the France VAT thresholds, you will end up paying fines. If your company is based in an European country and you are selling assets overseas, you need to keep in mind the following.
Your e-commerce businesses should become VAT registered
The fact it that your company is not required to register for value added tax in France, but you do have to register in the country your company is based and charge VAT. What happens is that the sale of goods is chargeable to the value added tax in the country in question and not in France. However, if you expect to reach the registration threshold, you should seriously think about registering in the country of consumption. Otherwise, you will more than likely be fined by the French Tax Administration. The threshold is not applicable to the current calendar year, but to the previous one. You will charge value added tax on your invoices and you will have to use the rate of the country where you do business.
Changes in the VAT Distance Selling Threshold
As of 2016, France decreased the distance selling threshold. More precisely, the entrance was reduced from €100,000 to €35,000. What does this mean for businesses? This practically means that you as a business owner will have to very careful so as not to exceed this standard and be liable for value added tax liabilities. Taking into consideration the reduced standard it is not that difficult to exceed it and risk being required to report to local tax bodies. Yet, it is important to stress that this measure was taken solely with the purpose to be compatible with EU’s distance selling VAT thresholds.
Making sure your sales don’t reach €35,000
The only way you can measure your sales is to use performing accounting applications. It is very important to keep records of your sales if you do not want to exceed the distance selling limits. Although it may be tempting to continue to charge value added tax as before, you should know that the tax authorities in France will discover this and you will be punished. If you cannot manage to do the accounting on your own, it is best to get a trained professional to help you. This way, you will have peace of mind. On the other hand, if your business is indeed profitable, you have no option but to make the transition and comply with the rules.