France Plans Online VAT Changes

By Global Tax Weekly

The French authorities have been busy, unveiling plans on September 23 to ensure the payment of value-added tax on items bought by French residents from online marketplaces, as part of a package of measures included in the 2020 Finance Law.

Under the proposals, announced by Minister of Public Accounts Gerald Darmanin during a visit to an Amazon delivery facility near Paris, online marketplaces facilitating sales between third-party sellers and buyers in France will be liable for VAT on these purchases from 2021.

The reforms will also see the creation of a blacklist of online platforms that fail to comply with certain tax and reporting requirements.

In an additional measure, logistics warehouses will be required to keep a record of the origin and destination of packages, and the amount of VAT due, for a period of 10 years.

The measures will also be accompanied by simplification measures to ensure widespread compliance with the changes, Darmanin explained, seeking to reassure the industry.

Other measures included in the Draft Finance Law, presented to the National Assembly on September 26 by Minister of Finance Bruno Le Maire and M. Darmanin were that:

  • The rate of corporate tax for companies with profit above EUR500,000 (USD547,000) will be reduced to 31 percent in 2020, to 27.5 percent in 2021, and to 25 percent from 2022. This amends the changes included in the 2018 Finance Act, whereby corporate tax was due to fall to 28 percent in 2020, to 26.5 percent in 2021, and to 25 percent from 2022;
  • The housing tax (taxe d’habitation) will be eliminated for 80 percent of households by 2020 and phased out for the remaining 20 percent in the period to 2023;
  • 18 taxes which generate low levels of revenue and which are costly to administer will be abolished as part of a wider simplification of the tax system. This follows the scrapping of 26 such taxes in the 2019 Finance Act; and
  • The lowest personal income tax bracket will be reduced from 14 to 11 percent (although households subject to the 41 and 45 percent tax rates will not benefit from this tax cut).

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