Tax measures and recent guidance set forth the tax compliance and reporting obligations of online platforms in France.
According to provisions of French tax law, operators of online platforms must submit a user’s activity report:
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.
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 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)
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:
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 | email@example.com
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