Imagine that you have a VAT audit from the French tax authorities on your e-commerce sales? Here is what could happen if you had not paid French VAT in accordance with the regulations. The regularisation of operations carried out in France can become a real headache. Supporting companies is a matter of pedagogy.
VAT regularisation in France: Administrative assistance works very well!
Context: we are before the 1st of July 2021 and the reform of the VAT E-commerce One-Stop Shop.
Fiscalead is contacted via its website by a Danish company. Specialising in e-commerce, this company is at a loss when faced with a situation it does not understand. It needed assistance because it urgently needed to regularise its VAT situation in France . Faced with this situation, one of our specialists calls them back within 12 hours. For the sake of the client, you should never waste time on a VAT regularisation. The risk is to accumulate interest for late payment.
So we arrange a telephone conference. During this exchange, we understand that the Danish company has received a notification of a tax audit from the Danish authorities. This concerned its sales to France. The company needs to clarify the situation, especially as it is rigorous in its declarations in Denmark, it believes.
Following our handling of the case, we understand that this inspection was carried out at the request of the French authorities. They approached the Danish authorities. They requested administrative assistance for our client. Hence the call for help from our company as VAT agent in France.
When it comes to e-commerce VAT, your good faith is not enough
The company had applied Danish VAT to all its B2C online sales without distinction. It had done so even for those destined for private customers residing in France. This was its unknowing mistake. Fiscalead informed the company of its VAT obligations in France: above a certain turnover threshold for French private customers, the company should have invoiced French VAT and not Danish(editor's note: pre-OSS rules).
The company entrusted us with the keys to its file so that it could concentrate on its business. So, taking over the file, the Fiscalead specialist carried out the formalities for registering for French VAT. At the same time, Fiscalead also registered her with the One-Stop Shop in Denmark. The aim was to stop the haemorrhaging of its VAT non-compliance.
We have studied in depth the French tax authorities' proposed accounting adjustment. To do so, we carried out a thorough review of the company's sales reports. We also had to request access to its information system.
This double analysis allowed the tax base to be reduced:
- returns of goods
- B2B sales for which the customer had provided his French VAT number.
- A significant decrease in the amount of the tax adjustment
- The guarantee that this will not happen again, thanks to the educational aspect of our intervention
- Its registration in the OSS in a reactive manner
- A huge relief for our client
Whether you are a Danish e-commerce company, or from another European Member State, be careful! You can pay VAT in good faith but it must be the VAT of the correct Member State. This is what our client learned from the business case we have just shared with you.
For us, helping our clients to understand European VAT is essential. We would like to share our best practices with them, especially in terms of IT. Moreover, we believe that the transmission of knowledge is virtuous, and we were delighted on this occasion to learn a little more about our client's business sector.
Although the E-commerce VAT reform and the One-Stop Shop are now in force, you can still have a VAT tax audit in France over the last 4 calendar years. If you have any doubts, don't wait. The longer you wait, the higher the amount of your adjustment will be.
Authors : The FISCALEAD editorial team