According to a recent release, more than 2 million merchants sell on Amazon worldwide and more than 2 billion items were sold on Amazon marketplaces in 2014. The number of merchants using Amazon’s FBA program (Fulfilment by Amazon) increased by 65% over the year 2014.
In order to tackle VAT fraud on online marketplaces such as Amazon and eBay, the French parliament enacted recently a new law strengthening the power of the tax office in its fight against tax dodging.
It has been reported that some marketplaces host online retailers who use the platform to sell their products, but fail to comply with French tax law requiring them to be registered for VAT in France.
Strengthening of the right of communication of the French Tax Office
The French Tax Authorities are entitled to exercise their right of communication in order to obtain privileged information from third parties. In practise, the tax agents can request from any third party (private or public company) to provide them with any accounting documents, commercial books, records or listings related to specified or non-specified persons who are connected to its business.
The new law also authorizes the French Tax Administration to obtain privileged information by electronic means in order to speed-up the procedures. Any refusal to disclose the information required by the tax office will result in a fine of EUR 5,000.00 per request.
For instance, it will be easier for the tax office to obtain listing of companies selling their products on French Marketplaces such as Amazon.fr, eBay.fr, Cdiscount, PriceMinister, Fnac.com and so on. Such listings will be crossed with other data available in tax registers in order to detect non-compliant traders and launch a tax investigation.
The tax cooperation agreements existing between EU Member States will help the French VAT Office to lay hands on companies established out of France and identified as VAT fraudsters.
Reminder of VAT obligations applied to foreign e-retailers in France
A VAT summary suitable for both EU and non-EU online retailers is available here: Online retailing in France