What is Import VAT Deferment?
When goods are imported into the European Union (EU), an import tax is charged. Although this import tax (VAT) is potentially recoverable, it creates a huge cash flow burden on the importer, who has to pay up to 25% of the value of the shipment at the time of clearing customs.
Local tax authorities are allowed to introduce a deferment scheme if they desire, whereby the VAT is not payable at the time of import if certain criteria are met. Although this is very rare in the EU, France has announced that a deferment option will be made available from 1st January 2022.
Why is this such Good News for E-Commerce Sellers?
France is a vital distribution hub, especially for e-commerce businesses: it is the closest and simplest route into the EU from the UK and is geographically ideal to supply the rest of Europe as well.
There are also several e-commerce marketplaces and fulfillment centers that have warehouses in France, including Amazon, Rakuten, CDiscount, and many more. This makes France the ideal point of entry into the EU for many e-commerce merchants.
How do I take advantage?
In order for the French import VAT deferment to apply, the business-owning and importing the goods into France must have a specific VAT number and will need to ensure that when clearing customs, their agent includes the relevant details in the import declarations.
If you plan on importing goods into France or wish to change your supply chain to get the benefit of the deferment, you should start the process to register for VAT immediately.
Online sellers are constantly looking for that competitive edge over their challengers, and with the e-commerce industry ever-expanding, this edge is getting more and more difficult to find.
One of the key points of interest in choosing the right entry point into the EU. This can help with your cash flow, your supply chain efficiency and overall contribute to an increase in revenue.
Are you wanting to sell into the EU but struggling to decide on a point of entry? There are a few things that you need to think about – one of them being import VAT deferment – you can read more here.
Vatglobal is an International Tax Compliance and Technology company based in London, UK.
On top of tax compliance, registration, and consulting, Vatglobal’s digital toolkit makes tax compliance faster and simpler, anywhere in the world. Our proprietary vsuite technology automates, manages, and tracks the tax filing process - in over 70 countries.
As a specialist company, our expertise in international indirect tax compliance is unmatched. As a technology-driven company, we ensure that expertise is supported by cutting-edge digital tools to make compliance faster and more efficient and eliminate human error.
The ultimate effect is to render the complexity of global indirect tax compliance simple, allowing our clients to focus on growing the core areas of their business.
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