The French authorities have recently announced that from 1 January 2016 the distance-selling threshold for goods into France will be reduced from €100,000 to €35,000.
Distance selling occurs when a VAT registered business sells and arranges delivery of goods to a customer elsewhere in the EU, and that customer is not VAT registered. There are a number of reasons why a customer may not be VAT registered, for example they may be a private individual, a charity or a public body.
In these circumstances, the sale of goods will be chargeable to UK VAT. However, the business must be aware of the annual distance selling threshold in each EU country because once the sales exceed that country’s threshold, UK VAT is no longer chargeable and the business must instead VAT register in the country in question.
The significant reduction of the threshold in France could therefore have a big impact on UK businesses due to an increased risk of being required to VAT register in France. Consideration must therefore be had to lessen this impact in ensuring compliance with the French authorities whilst mitigating the inevitable administrative burden of an overseas VAT registration on the business.
If you believe that you may be affected by this change or have any doubt as to the correct VAT treatment of your overseas sales then please get in touch with one of the Inspire team.
Ellen Benjamin, ATT, LLB (Hons), Personal Tax Senior.