Tax authorities provide VAT obligations for dropshippers not using IOSS
- France has clarified VAT liability for dropshipping when sellers do not use the Import One Stop Shop (IOSS).
- The VAT treatment depends on where goods enter the EU and the parcel value (€150 threshold).
- In certain cases, dropshippers themselves become liable for both import VAT and domestic VAT in France, requiring VAT registration.
Dropshipping, where goods are sold online but shipped directly from a supplier in a third country to the consumer, has become a major e-commerce model in Europe. France alone saw the sector exceed €10 billion in 2024.
However, the French tax authorities have now issued a detailed ruling clarifying how VAT should be declared when a trader does not use the Import One Stop Shop (IOSS) scheme.
The guidance focuses on distance sales of imported goods (VAD-BI) and confirms that the VAT treatment depends primarily on where goods enter the EU and their value.
See more in our French VAT guide.
Goods entering the EU via France but delivered to another EU country
Where goods are imported into the EU through France but shipped onwards to customers in another Member State, the place of supply remains the country of destination, not France.
For parcels below €150, and where the seller has not opted for IOSS, customs clearance must occur in the final destination Member State. If the goods physically arrive in France first, they must be placed into external transit and cleared in the country of delivery.
In this situation, the seller is not liable for French VAT.
For parcels above €150, however, the seller becomes liable for import VAT in France when the goods enter the EU there. The VAT paid may be deductible if the subsequent distance sale is taxed in another Member State.
Goods imported into France and delivered to French customers
Different rules apply where the goods are both imported and delivered within France.
The liability for import VAT may fall either on the customer or the seller.
The customer is liable where specific conditions are met, including:
- the goods arrive in France directly to the buyer
- the sale is not facilitated by an electronic interface
- the seller has not opted for IOSS
- the import tax base equals the domestic VAT base.
However, if the import tax base differs from the taxable value of the distance sale, the seller becomes liable for import VAT and the domestic French VAT on the sale.
This means the trader must register for French VAT and report the supply in its VAT return.
Practical implications for dropshipping businesses
The ruling reinforces France’s efforts to tighten compliance in a rapidly expanding sector.
Dropshippers shipping goods into the EU should review:
- where imports are cleared and where VAT is triggered
- whether they should use the IOSS scheme for low-value imports
- whether their logistics arrangements shift import VAT liability to the seller.
For non-EU sellers required to register in France, the appointment of a French tax representative may also be necessary.
As EU authorities continue to scrutinise cross-border e-commerce models, the decision highlights the growing complexity of VAT compliance for dropshipping structures operating outside IOSS.
