In order to eradicate VAT fraud relating to e-commerce, new place of taxation rules, simplified compliance, but also a new VAT payer status impacting online marketplaces will come into force from next July 1st. At the same time, other measures, designed to systematize the reporting of information on sellers and their transactions to the benefit of the tax authorities, are multiplying, and at all levels. Here is a brief survey of these measures.
Article 242 bis 3° of the French Tax Code requires online marketplace operators to communicate to the tax Administration a detailed recapitulative statement of all the annual sales of taxable goods and services located in France which they have been aware of (only certain sales of goods between individuals or services involving shared costs may be waived from this requirement, provided that specific thresholds are not reached).
Article 298 sexdecies J of the French Tax Code requires operators of warehouses or logistics storage platforms to make available to the tax Administration information on the origin, nature, quantity and owner of goods imported and then stored, when they are intended to be sold through a web trading platform.
Regarding the communication between Member States
On 19 February, the EU Council adopted a proposal to amend the Administrative Cooperation Directive (2011/16/EU), in view of extending the EU’s tax transparency rules to digital platforms (DAC 7). The new rules, which are scheduled to come into force on January 1, 2023, organize an automatic exchange of information on income generated by sellers using digital platforms.
Regarding the cross-border payments
Finally, the Standing Committed on Administrative Cooperation (SCAC) held its 100th meeting on April 21, 2021, during which the Central Electronic System of Payment Information (CESOP), as well as the VAT regime for small businesses and the one-stop shop for imports were discussed. In particular, CESOP will enable payment service providers to automatically forward information on cross-border payments from Member States and on the creditors relating to these payments. This transmission should begin on January 1, 2024.
As a result, the noose is gradually tightening through an all-round tracking of transactions concluded on the web, resulting in VAT payment obligations and penalties, not only financial, but also reputational, hitting sellers as well as online marketplaces that are not diligent enough. Vigilance is therefore required at a time when it is becoming increasingly easy for tax authorities to obtain and cross-check information on potential VAT fraud.