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France: Tax compliance, reporting obligations of online platforms

France: Tax compliance, reporting obligations

Tax measures and recent guidance set forth the tax compliance and reporting obligations of online platforms in France.

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According to provisions of French tax law, operators of online platforms must submit a user’s activity report:

  • To user themselves (since 2016)
  • To the French tax authorities (since 2019) with data about the users, pursuant to article 242 bis of the EU VAT Directive 2006/112/EC that will enter into force in 2021

The first declaration to the French tax authorities is due before 31 January 2020 (one year before the entry into force of the EU VAT Directive obligations).

After communications made by the French Budget Minister in the context of addressing value added tax (VAT) fraud, a French decree (dated 30 December 2019) introduced new Article 23 L nonies A to Appendix 4 of the French tax law. As anticipated, this new provision expands the compliance obligations of online platforms with regard to information about users' transactions that must be communicated to the French tax authorities—specifically, online platforms are required to distinguish the French VAT taxable turnover relating to transactions conducted by their users.

The French tax authorities also recently published guidelines (described below) concerning these rules.

Information due before 31 January 2020

In general, the scope of the rules concerning the reporting obligations of online platform operators applies to entities established in France or abroad, and applies as soon as the platforms have users making sales or services in France within the meaning of the territoriality rules applicable in terms of VAT.

The information to be communicated to the French tax authorities is provided for in 2° of 242 bis of the French tax law and includes:

  • The company’s details—such as the business name, place of establishment, company SIREN registration number.
  • With regard to the user, there is a distinction as to whether the user is a “professional” (company) or a “non-professional” (individual) and thus the nature of the user must be indicated. All required information is listed in Article 23 L of Appendix IV of the French tax law and can be described as following:
    • For a professional user, all required information is listed in Article 23 L of Appendix IV to the French tax law and includes:
      • The company’s name
      • Trade name or user name as it appears on the online platform (e.g., pseudonym, name of the e-commerce shop)
      • Address of the company
      • Company SIREN registration number (or VAT identification number granted in its place of incorporation or business formation)
      • Website address for locating the internet resource (URL address)
      • E-mail address
      • The total number of transactions conducted by the user during the subject calendar year, listed by document (of which the platform is aware); and the total gross amount of transactions conducted by the user during the calendar year (of which the platform is aware). The amount to be reported is the total gross amount of the transactions including remuneration or payment made to the platform by the seller. Platform operators also may separately report the amount of commissions charged to the seller in respect of the transactions. It will be possible for platforms to distinguish between amounts that fall under not-for-profit and cost-shared service provisions and amounts of transactions that fall under the category of other activities. The amounts must be reported in euros or must be converted to euros if in other currency, based on the rate of currency exchange for the day when the transaction was conducted.
      • Bank details in “IBAN format” with a BIC code
    • For a non-professional user, the report must include:
      • The user’s surname and/or common name (if there is a change during the year, last known surname is to be reported)
      • First name
      • Address
      • Telephone number (preferably mobile phone)
      • E-mail address
      • Date of birth

The declaration by the online platform must be filed in a computerized (electronic) format, the layout of which have been provided by the French tax authorities (i.e., an XML folder). No other document format is acceptable. Paper applications will not be accepted. In particular, submissions made by means of files compiled from standard document editing or office automation software will not constitute a valid filing method. The modalities are specified by the French tax authorities on their website: www.impots.gouv.fr (French)

Expanded scope of data due before 31 January 2021, requiring distinct indication of amounts of French VAT-able transactions

The platform operator must specify the total gross amount of transactions by indicating, in a distinct manner, the amount of transactions that are VAT-able in France within the meaning of Articles 258 to 259 D of the French tax law.

As a result, an online platform’s administrative burden has been considerably increased, since the goal is no longer just dealing with the transmission of a total gross amount of transactions conducted by the user during the calendar year, but rather requires a determination of the VAT rules to be applied to every single transaction in order to provide the French tax authorities with the corresponding distinguished amount.

In this respect, the French tax authorities on 7 January 2020 update the guidelines (BOI-BIC-DECLA-30-70-40-20, § 385) by providing the following information:

  • The related reporting obligation is not mandatory for transactions conducted after 1 January 2019 and reported before 31 January 2020, but becomes mandatory for transactions conducted after 1 January 2020.
  • Such an obligation may concern a user who is a natural person residing in France or abroad, or a legal entity effectively having its head office in France or abroad if it conducts transactions that are taxable for VAT purposes in France (within the meaning of the French tax legislation).
  • As soon as a good is shipped from France, the place of delivery is deemed to be located in France (cf. Article 258 of the French tax law).
  • When the good is "pre-positioned" in a warehouse in France by a user from another EU Member State or a user located outside the European Union, the transaction will be subject to VAT in France.
  • As regards users who are legal entities effectively having their head office in France, the VAT treatment—particularly for those benefiting from the so-called basic exemption system—will be assessed by the French tax authorities. Consequently, platform operators must report the gross amount of transactions conducted by this taxable person.
  • With regard to distance-selling transactions, the threshold provided for by the French tax legislation will be assessed by the French tax authorities as well. Consequently, for these types of transactions, platform operators must report with regard to business users located in another EU Member State, the gross amount of transactions having been the subject of a supply of goods to a user that is not subject to VAT and residing in France.
  • With respect to the services referred to in Article 259 A (2) of the French tax law (i.e., the provision of services relating to real estate located in France), platform operators must report the gross amount of transactions relating to immovable property located in France. The potential exemption of some of these transactions (for instance, rental) and in particular under Article 261 D of the French legislation, will be assessed by the French tax authorities.

KPMG observation

A challenge or concern for online platforms is that they may not be aware that certain thresholds have been exceeded (in particular with regard to distance selling). Also, there are certain practical implementation difficulties that platforms may encounter. The French tax authorities are aware of the difficulties in implementing the reporting obligations and have indicated that they would provide further information.

In conclusion, the new reporting obligations imply that an online platform must communicate data that they will have to determine themselves. In this respect, the platforms will need to take an active role in the determinations of: (1) the VAT treatment to be applied to every transaction; and (2) the turnover that must be reported to the French tax authorities. These tasks, in principle, are part of the mission of the tax authorities to address VAT fraud and have the effect of placing the burden of addressing VAT fraud on the online platforms and this might be controversial given certain guiding principles set forth in judgments of the Court of Justice of the European Union (CJEU). Additional guidance from the French tax authorities is anticipated.

 

For more information, contact a KPMG tax professional in France:

Laurent Chetcuti | + 33 1 55 68 48 87 | laurentchetcuti@kpmgavocats.fr

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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