Distance selling, and the annual threshold

As long as distance sales stay under 10 000 € excluding tax a year, a French shop charges French VAT to its European customers. From the first euro above, every order switches to the tax of the country of delivery, and the rate changes with the border.

Three conditions, and a buyer who is not liable

The regime does not depend on the sales channel: an order placed by telephone follows the same rules as one placed online. It depends on three elements, and the third is the one most often forgotten by sellers.

• The sale covers tangible movable goods, to the exclusion of any service
• The goods are physically dispatched or transported by the seller, or on the seller's behalf, to the buyer
• The buyer is not liable for the tax: a private individual, or a business under a derogating regime
• The destination lies in a Member State other than the one from which the goods are dispatched

The indifference to the channel deserves emphasis, because it widens the field far beyond electronic commerce. A sale concluded at a trade fair, paid on the spot and later shipped to a Belgian customer by carrier, falls under the same regime as an order placed on an online shop.

That extension changes the nature of the check. Asking a customer whether they are a business is not enough: what matters is whether they are liable, which only a valid tax number in their State can establish with certainty.

One single threshold, aggregating more than expected

The country of taxation depends on an annual amount excluding tax. Below the threshold, the tax due is that of the State where the seller is established: a French business therefore charges the French rate and pays in France, on its usual return.

Above it, the sale falls under the tax of the country where the customer is. The seller must then register, by requesting a number through the messaging of the professional account, or use the arrangement described in the next module.

Computing the threshold holds a surprise. It does not only add up sales of goods: certain services also enter it, notably electronic services rendered to non-taxable persons in other Member States.

The assessment is made on the current calendar year, but the official page recalls that it covers all cross-border transactions taken together, every Member State included. There is therefore no threshold per country of destination, but one single global threshold.

The goods this regime does not cover

Two categories fall outside the regime, and their exclusion is of a different nature. New means of transport always follow the tax of the country of destination, whatever the amount. A vehicle under six months old or under 6000 kilometres counts as new.

Goods delivered after assembly or installation are not distance sales either. The supply no longer amounts to transport alone: it includes work carried out on site, and it is that work which moves the reasoning elsewhere.

A taxable seller also remains bound, liable or not, by the customs formalities attached to any dispatch to a Member State: the periodic recapitulative statement, and in some cases an answer to the statistical survey on trade in goods.