France Clarifies VAT Rules for Dropshipping Without IOSS

On March 4, the French Tax Authority issued guidance clarifying VAT rules for distance sales of imported goods to consumers in France and across the EU, specifically for sellers who do not use the Import One Stop Shop (IOSS) system. Overall, the guidance clarifies the reporting and payment obligations for the dropshipping model, providing a structured framework to ensure compliance with cross-border VAT requirements.

Key VAT Rules for Cross-Border Distance Sales

As stated by the Tax Authority, the rules for declaring and paying VAT on distance sales of imported goods depend on how the goods enter the EU. When goods are imported into the EU by France before being shipped to customers in another EU country, the place of taxation is the EU country where the customer resides. 

While sellers are generally not liable for VAT in France, under the rules for distance selling of imported goods, the applicable VAT rules depend on the intrinsic value of the packages in the second transactions, that is, the sales from the seller to the final customers. For packages under EUR 150, customs clearance occurs in the EU country of arrival, and import VAT is not payable in France. For packages over EUR 150, the seller is liable for import VAT in France, which can later be deducted if the sale is taxed in another EU country.

The Tax Authority noted that, for goods imported into France and delivered to French consumers, the liability for import VAT can fall either on the end customer or the seller. If certain conditions are met, such as the sale not being facilitated through an electronic interface and the seller not using IOSS, the end customer is liable, and the seller does not owe VAT. 

However, if the taxable base for imports differs from that for the sale, the seller becomes liable for both import VAT and VAT on the sale. Notably, non-EU sellers liable for VAT in France must appoint a tax representative unless they have a mutual assistance agreement with their country of origin. 

Conclusion

Following guidance from the French Tax Authority, the conclusion is that VAT obligations for dropshipping operations without IOSS depend on the shipment value, the country of import, and whether the seller or the consumer is designated as liable. Non-EU sellers must not ignore rules for calculating shipments or representation requirements, as the French authorities will not hesitate to impose payment and other requirements. 

Source: French Official Bulletin of Public Finance - Taxes