Strengthening e-commerce powers to tackle evasion; no new e-invoicing timetable
In this week’s 2024 Finance Bill, there are a number of upgrades of powers and rules for the tax office (DGFIP) to tackle fraud. This follows the plan to combat public finance fraud announced by the Government in May 2023.
However, the promised new French e-invoicing timetable was not included in the Bill.
2024 Bill VAT and Customs fraud measures
The Bill includes the following VAT measures:
- A two-year extension of the authorising tax and customs administrations to detect tax fraud through the collection and use of key data from online platforms.
- New changes on the import VAT rules to eliminate circumvention by criminal online sellers who resort to drop shipping, that is to say a sale on the Internet in which the seller only takes care of the marketing and the sale of the product. The drop shippers will become liable for VAT on imports and sales they make in France when the goods are cleared through customs at a value lower than the selling price
- New measures to tackle fraud by non-EU resident platforms for B2C goods and services. Including creation of a legal obligation for customs representatives, direct or indirect, to transmit to companies all information relating to their imports.
- Introduction of the reverse charge on domestic B2B sales of trading certificates for hydrogen, renewable gas and electricity likely to combat the development of so-called “carousel” fraud.
- Extension of the reduced VAT rate “intermediate rental housing” to new geographical areas as well as to the acquisition-improvement under energy performance conditions
- Transposition, in 2025, of the new European framework governing the “basic exemption” of small and medium-sized enterprises
The March roadmap includes a range of measures targeting VAT and customs fraud, including:
- Mandatory E-invoicing starting in possibly March 2026 which it estimates will raise €3 billion per annum. This will help tackle intra-community VAT evasion, false input VAT refunds and improve the efficiency of future tax audits. In the longer term, it will enable the option for prefiled VAT returns. Long term, this will be coordinated with the EU VAT in the Digital Age reforms.
- Upgrades in blockchain technologies to combat digital fraud
- Import VAT rules will be revised in 2024 to tackle VAT and customs evasion by drop shippers. In particular the practise of undeclaring at import the value of the goods as the cost from the supplier and not the price to the consumer.
- Obligations and cooperation protocols for e-commerce platforms to provide more data on customs information for imported consignments. This is around the 2021 e-commerce package IOSS returnintroduction, and is a measure introduced ahead of 2028 EU customs reforms. Also, more transparency to prevent the sale of prohibited goods.
- New powers for DGFiP (Direction Générale des Finances Publiques, part of the Ministry) to act against marketplaces which do not cooperate on the above measures. This will include powers to require marketplaces to remove suspect sellers from their platforms. There will also be new powers over non-EU resident marketplaces selling to French consumers.
- Customs checks for fulfilment warehouses exploited for rebound sales and fraud .
- More cooperation between DGFiP and the DGDDI with regard to the payment of import duties, particular for the new French import VAT regime
