17/09/2020
What are the consequences of cross-border sellers nor paying French VAT?
Some Chinese cross-border e-commerce companies think about just getting the tax number and not paying tax when they register their French VAT number. Is this okay? Will there be any serious consequences?
In recent years, French tax policy has increased the legal means to investigate tax fraud and increased the penalties. For cross-border sellers selling in France, it is important to pay attention to the following information when you want to avoid paying taxes in France:
1. Will the French tax authorities have obtained my sale data?
If you are a seller with sales in France, the French tax authorities have several technical and legal means of obtaining information about your sales. First of all, the French tax authorities have a sophisticated data analysis system what allows them to obtain all cross-border trade data from customs. There is EUROFISC system to combat tax fraud within the EU to enhance the exchange of data between EU countries. At the same time, the tax authorities can also ask your business partners in France such as Amazon, suppliers, customers, logistics providers, etc. to submit all commercial documents including invoices, accounting documents, company information, etc. in order to exercise their tax monitoring powers. From 2015, all refusals to submit this information to the tax authorities will be punishable by a penalty of €5,000.
2. What punishments will your company face if it does not pay VAT?
The consequences of failing to comply with French VAT laws are severe, and the following punishments mainly exist in France:
1) If you make a VAT taxable sale in France without registering a VAT number, the French tax authorities are entitled to recover all tax payable value of sales made in the last 10 years and to impose a penalty of 80% plus a late payment fee.
2) Late declaring and non-declaration of the VAT may result in a 10% penalty for you. Even if the amount of sale is zero each time, you may be fined €150.
3) If you do not pay VAT by automatic debit, you may be subject to a penalty of 0.2%, or a minimum of €60 per payment.
4) If you are late in paying your VAT, you may be subject to a 5% penalty and a late payment fee may be added.
3. How long will you be pursued by the French tax authorities for your violations?
1) The retroactive period for the recovery of VAT tax by the French tax authorities extends to the first three years of the current tax year, and to five years in cases where international investigative assistance is requested from other countries.
2) In specific cases, the retroactive period for recovery may be extended to 10 years.
For example, if your online store does not have a VAT number, the French tax authorities can start calculating from 2020 and ask you to make up taxes and penalties owed for the 10 years between 2010 and 2020.
For all of the sellers, compliance with French VAT laws is of great importance for their stores operating compliantly. If you need professional tax representation services, please feel free to contact us.
