New French Tax requirements for Internet platforms
26 mars 2020
Irrespective of where you are established, if you operate an Internet platform that connects customers with sellers who use your site for sales located in France from a VAT standpoint, you have new tax requirements.
The French Finance Act for 2020 clarified the obligations of digital platform operators with respect to both sellers using their site, as well as the French Tax Administration.
Internet platform operators’ obligations towards sellers using their site
For each transaction, subject to a global fixed fine capped at € 50 000, the operator must inform the seller as to its reporting and payment obligations before the French Tax Administration and French Social Security, including providing links to these Administrations' websites.
Before 31 January of each year (N+1), subject to a fine of 5% of the undeclared amounts, the platform operators must also send an annual summary document to sellers having used their site, which must include certain information related to the transactions carried out via the platform during the previous year. For transactions in 2019 (N), this document had to be provided prior to 31 January 2020.
For transactions carried out as from of 1 January 2020 (i.e. annual summary document to be provided no later than January 31, 2021), the amount of transactions subject to VAT in France has been added as required information to provide.
Internet platform operators’ obligations before the French Tax Administration
Prior to 31 January of each year, internet platform operators are also required to download on their professional access on the French Tax Administration’s website a file summarizing the transactions carried out by each seller via the platform during the previous year. For transactions carried out in 2019, this document had to be submitted before 31 January 2020.
Failure or delay in the transmission of this summary document, as well as omissions or inaccuracies relating to sums to be declared, are subject to a fine of 5% of the unreported sums.
Omissions or inaccuracies in the summary document related to data other than amounts (i.e. address or identity of the beneficiary) are subject to a fine of € 15 per omission or inaccuracy.
Finally, as from 1 January 2020, platforms may be held jointly and severally liable for the payment of VAT due by sellers who carry out certain transactions in France via the platform and who have not fulfilled their tax obligations in France (either sales of goods or services that are VAT-taxable in France made by VAT-taxable persons to non-VAT-taxable persons, or imports of goods into France).
« Name and shame »
In addition to the monetary penalties that platform operators may incur, the French Finance Act for 2020 includes a measure to impact the reputation of non-cooperative online platforms by public disclosure (i.e. “name and shame”).
Accordingly, as of January 1, 2021 and after the second notification procedure over a period of 12 months for failure by a platform operator to comply with its information, reporting or payment obligations, its identity may be revealed on the French Tax Administration's website.
Our firm can assist you concerning these new subjects by:
Analyzing your activity to determine whether you fall within the scope of the new obligations for online platforms, the consequences flowing therefrom, and the recommended actions (i.e. regularizations, if necessary).
Drafting the annual summary document for professional and non-professional sellers.
Preparing and filing your annual summary document before the French Tax Administration.