French Tax System
Small businesses are targeting clients directly, circumventing traditional revenue streams. Digital ‘real estate’ is in demand and getting more expensive every year.
Online shopping platforms are constantly evolving to maximise sales. The importance of e-commerce is old news, the rapid pace of market growth comes as no surprise. So what does this all mean for e-commerce entrepreneurs in France?
Whether you are in the B2B business taking advantage of the internet’s global reach, or an influencer selling directly to followers on Instagram, all forms of e-commerce are thriving on French soil. But these ‘unconventional’ methods of business are not exempt from regulation. From taxes to Intellectual Property, e-commerce regulations/obligations are easy to handle as long as the entrepreneur is aware of the following:
Entrepreneurs must be aware that VAT rules and rates differ depending on three key things: The type of goods involved, the nature of the business activity, and the country of arrival.
The standard VAT rate in France is 20%. However, reduced rates apply to certain goods or services: Pharmaceuticals, transport, hotels, accommodation and restaurants enjoy a reduced VAT rate of 10%. For medical, basic foodstuffs, and books, it’s 5.5%.
If a foreign entrepreneur is selling an electronic service to a French client, they are subject to French VAT. But this can be avoided by registering for the MOSS system (Mini One-Stop Shop) under certain criteria. You may only register for MOSS in one EU member state. VAT rules are entirely different if the nature of the business activity is supplying goods; the threshold for distance selling is 35,000€ as of February 2017. If you are earning more than 35,000€ from goods sales in France, you must pay VAT.
Selling online has never been easier, but each EU country has its own VAT regime. The above information is applicable in France, but entrepreneurs should also be aware of the differing rates of every country in which they operate.
What is the process of registering for VAT in France? Collect all the supporting documents of your business and its key figures and submit them to the SIEE (Foreign business tax service). If you are based in the EU, you can register yourself, however if your company is not registered in the EU, you must appoint a legal representative in France (to act as a guarantor and further payment). Once registered, you will have a local VAT number and can begin commercial activity.
Location of your e-business
When Amazon opened its first bookstore in Seattle in 2015, it drew attention to the fact that the location of an online business in the ‘real world’ can be just as valuable an investment as its digital presence. On this front, France has a lot to offer. The local infrastructure is dependable and technologically advanced. The desire to cultivate a French startup ecosystem means that skilled workers are welcome in France, with the “French Tech Visa” fast tracking overseas developers and start up founders on the visa programme. France’s global reputation for all things cultural and economic can also benefit your online business. A location in France inspires trust and desirability in a company, and e-commerce is no exception.
IP and legal protection:
France is a strong defender of intellectual property rights. In recent years new anti-counterfeiting legislation imposes harsh penalties, and the statute of limitations for a civil law suit has been extended from 3 to 10 years. Industries such as luxury goods or pharmaceuticals would greatly benefit from the protection against counterfeiting that the French law offers. The EU’s Direct Single Market (DSM) strategy for e-commerce requires providers to abide by the laws of the country in which they are established. Online businesses must provide contact details online, as they will be held accountable if they do not respect consumer protection rules.
As of 2016, France was 2nd in Europe and 5th in the world for online consumption. This market represents a good opportunity for entrepreneurs and is additionally well situated to access the rest of Europe. If you have any questions regarding e-commerce in France, do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]. Our team of experts will happily assist you with any queries you might have.