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June 13, 2022

French Tax Administration encourages taxable persons to carry out VAT voluntary disclosure with respect to Intra-Community distance sales of goods

The French Tax Administration (FTA), in a press release dated 24 May 2022, are encouraging taxable persons who may have incorrectly applied new e-commerce Value Added Tax (VAT) rules on Intra-Community distance sales of goods to carry out a voluntary disclosure in France to avoid a tax adjustment.

Overview of VAT on Intra-Community distance sales of goods

The European Union (EU) VAT system has been amended by the e-commerce VAT reform. Such VAT reform has amended the EU VAT Directive 2006/112/EC and the Council Implementing Regulation (EU) 282/2011 of 15 March 2011 (cf. Council Directive (EU) 2017/2455 of 5 December 2017 and the Council Directive (EU) 2019/1995 of 21 November 2019).

These regulations came into force on 1 July 2021 in France.

As of this date, the following transactions are subject to a new VAT regime:

  • Intra-Community distance sales of goods

  • Distance sales of goods imported from third territories or third countries

  • Intra-Community distance sales of goods and distance sales of goods imported carried out by deemed suppliers, i.e., electronic interfaces

These new VAT regimes are accompanied with two new VAT declarative systems: the “One Stop Shop” (OSS) and the “Import One Stop Shop” (IOSS) regimes. These regimes permit the taxpayer to declare and pay the VAT due in all EU Member States via a portal which allows the taxpayer to be VAT registered in only one EU Member State. Both VAT declarative systems are optional.

Risk of VAT audit with 10-year statute of limitations and 80% penalties

Since 1 July 2021, the place of supply of intra-Community distance sales of goods is deemed to be the place where the goods are located at the time when dispatch or transport of the goods to the customer ends (except if the amount of Intra-Community distance sales of goods and supply of telecommunications, broadcasting and electronic services to non-taxable person in the EU do not exceed the threshold of €10,000 pursuant Article 59c of the EU VAT Directive 2006/112/CE).

With respect to Intra-Community distance sales of goods, the FTA has determined that a certain number of foreign companies are not in compliance with the aforementioned VAT rules by applying EU departure Member State VAT instead of French VAT to their sales of goods. 

In this context, the FTA has reminded that in the event a taxable person is not in compliance with its VAT payment and declarative obligations in France, the business activity of the taxable person can be viewed as a hidden business activity, which leads to:

  • Application of a 10-year statute of limitations in the event of a VAT audit

  • 80% penalties 

Voluntary disclosure proposed by the FTA

In light of this situation, the FTA is encouraging taxpayers to carry out a voluntary disclosure by 30 September 2022 for taxable persons that:

  • Are not subject to a VAT audit, i.e., the disclosure must be spontaneous.

  • Have already paid VAT related to these transactions in the EU departure Member State.

To perform such VAT regularization, the taxable person should be able to provide all the transaction details, i.e., listing of the transactions.

Also, the period concerned by the voluntary disclosure must be the same period as the one for which the VAT reimbursement of the wrongly VAT paid is claimed in the EU departure Member State.

It should be noted that if the taxable person performs such voluntary disclosure, the FTA will liaise with the local tax administration to cross-check the information provided.

Also, it should be mentioned that late payment interest at the rate of 0.2% per month will be applicable on amounts regularized.

Accordingly, taxpayers should consider carrying out such regularizations by the required date. It is possible that the FTA could seek international foreign tax assistance from local tax administrations. With the new OSS VAT regime, the FTA is able, on the basis of this data, to question a foreign tax administration on the e-commerce business activity relevance of taxable persons.

The FTA makes it clear that if no regularization is carried out, a 10-year statute of limitations and 80% penalty will be applied in the event of a tax adjustment.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Société d'Avocats, Indirect Tax, Paris


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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