VAT on Dropshipping: What the French Tax Administration Specifies

The French tax administration has recently clarified the VAT rules applicable to dropshipping.

These clarifications concern sales made by a supplier through its own website to individuals (B2C) located in France or in another European Union country, when the products are shipped directly from a non-EU country, without intermediate storage in France.

In this respect, the French tax authorities have examined the following:

  • the rules and procedures for declaring and paying VAT applicable to distance sales of imported goods;
  • and the rules on VAT liability applicable to importation.

particularly when the seller has not joined the One-Stop Shop (IOSS) regime and when an electronic interface acting as a deemed supplier (e.g. Amazon) is not used.

According to the French tax administration, the following cases must be distinguished:

Goods Imported via France and Then Shipped to Another EU Member State

Parcels with an Intrinsic Value Below €150

Customs clearance must therefore be carried out in the final Member State of destination. If the goods physically arrive in France before being shipped to another EU country, they must be placed under external transit and cleared in the country of delivery.

⚠️ Note
The seller is not liable for VAT in France but in the final country of destination of the goods.

Parcels with an Intrinsic Value Above €150

In the event that the goods are cleared in France, no person other than the one making the sale to the final consumer can be liable for import VAT in France.

⚠️ Note
The VAT paid on the importation of goods into France can only be deductible if the subsequent distance sale is subject to VAT in the final Member State of destination.
Outside IOSS and Marketplaces

Goods Imported into France Before Being Delivered to Customers Located in France

When the Importer of the Goods Is the Final Customer

When the following conditions provided for in point c of 2° of 2 of Article 293 A of the CGI are met, the final customer is liable for import VAT:

  1. 🚚 Direct delivery to the end customer without intermediate storage in France
  2. 🖥️ Sale not facilitated by an electronic interface (marketplace)
  3. 🚫 Non-registration for the IOSS one-stop shop
  4. 📊 VAT taxable amount aligned with distance sales located in France

Under these conditions, the seller is not liable for import VAT in France. Furthermore, the sale made to the end customer is considered to be outside the territorial scope of VAT; the seller is therefore not liable for VAT in France in respect of this sale.

When the Importer of the Goods Is the Seller

⚠️ If the 4th condition mentioned above is not met
If the taxable amount at importation differs from the taxable value of the distance sale (customs undervaluation or incorrect use of the invoice*), then:
– The seller becomes liable for import VAT.
– The seller is also liable for French VAT on the sale.

The merchant must then:
– Register for VAT in France.
– Report the delivery in their VAT return.

❗ In the event of an audit, penalties and late payment interest may apply.

*These measures follow the entry into force of Articles 112, I. A, G and H of the 2024 Finance Act aimed at combating VAT fraud in e-commerce. Indeed, it sometimes happens that the VAT collected on importation is based on the sales invoice between the seller and the supplier and not on the sales invoice between the seller and the final customer, which distorts the amount of taxes applicable on importation by not taking the margin into account.

Outside IOSS and Marketplaces

Dropshipping to the EU: VAT obligations and key considerations

This decision is part of the French strategy aimed at improving tax compliance in the rapidly changing international e-commerce sector.

The French tax administration reminds dropshipping operators shipping goods to the European Union that they must analyse several essential cumulative elements of their operational chain, each of which can lead to distinct VAT consequences, in particular:

  • 📦 Intrinsic value of parcels shipped to the European Union
  • 🛃 EU point of entry: determines where and when import VAT becomes due
  • 🚀 IOSS scheme: an opportunity to evaluate for low-value consignments
  • 🧾 Compliant invoicing: essential for establishing the taxable amount and facilitating customs clearance

Dropshipping outside the EU: do you need a tax representative in France?

For sellers based outside the European Union who are required to register for VAT in France, it may be necessary to appoint a tax representative in France who is approved by the tax authorities.

However, this requirement does not apply to businesses located in certain non-EU countries that have signed a mutual assistance agreement with France regarding the recovery of tax debts. In such cases, appointing a simple tax agent may suffice.

In this context, ASD Group supports businesses with their VAT registration procedures, acts as their tax representative in France and helps them ensure their VAT compliance.

Source : bofip.impots.gouv.fr

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Noémie Almot
Community Manager & Copywriter

Noémie is a specialised content writer at ASD Group. She creates and manages blog articles as well as news updates on our websites, with a focus on VAT, international taxes, customs operations, social regulations, and international trade. With her clear and educational writing style, she makes complex and technical topics easily understandable and relevant for businesses.