Background: Deliveries to other businesses within the EU are generally subject to a VAT exemption (so-called intra-Community supply).
For deliveries with corresponding transport of goods to private customers (end consumers) resident in other EU countries, the VAT exemption does not apply.
The place of supply is generally where the transport of the goods begins. Accordingly, when goods are shipped from Germany to another EU country, the place of supply is Germany. As a result, German VAT must generally be charged and paid for such deliveries to end consumers — unless the delivery threshold applicable to the respective EU country is exceeded. In that case, the place of supply shifts to the foreign country, meaning that foreign VAT must be charged and paid.
The place of supply is generally the place of dispatch of the goods, so that when goods are shipped within the EU — for example, from Germany — German VAT is owed and included in the (gross) prices. The situation is different only if the place of supply shifts to another EU country. This is the case when a certain delivery threshold is exceeded in the respective EU country.
The delivery threshold for distance sales and transport deliveries from other EU Member States to private customers in France was reduced with effect from 1 January 2016 from the previous EUR 100,000 to EUR 35,000 (net).
This means that a supplier from Germany, for example, must register in France for VAT purposes as soon as the delivery threshold of EUR 35,000 net is exceeded, and must invoice its deliveries with French VAT (currently 20%). Preliminary VAT returns must then be filed in France accordingly, declaring and paying the turnover with French VAT. In addition, annual VAT returns must be submitted in France.
Note / Handling by our firm:
We have cooperation partners in many countries, including France. This means that, as a client, you can conveniently handle everything through our firm and have only one point of contact within our office. You do not need to worry about anything — we are glad to take care of it for you: from monitoring the delivery thresholds and handling the VAT registrations through to filing the required ongoing tax returns.
This also applies to companies that prepare their bookkeeping in-house: please get in touch with us. We are happy to assist you with all related matters, as we focused on the area of "online retail / mail order business" some time ago.
Frequently asked questions
Frequently asked questions
When does German VAT apply to shipments to private customers in the EU?
For deliveries to private individuals (end consumers) in other EU countries, the place of supply is generally the point of departure of the goods. Therefore, if goods are shipped from Germany, German VAT must be charged and remitted. This applies as long as the relevant delivery threshold of the destination country is not exceeded.
What is the distance selling threshold for mail order to France?
The distance selling threshold for dispatch and transport supplies from other EU Member States to private customers in France was reduced from EUR 100,000 to EUR 35,000 net as of 1 January 2016. If this threshold is exceeded, the place of supply shifts to France.
What are the consequences of exceeding the French delivery threshold?
Once the delivery threshold of EUR 35,000 net is exceeded, the supplier must register for VAT in France. Deliveries must then be invoiced with French VAT (currently 20%). In addition, ongoing VAT advance returns and an annual VAT return must be filed in France.
Why does the VAT exemption not apply to private customers in other EU countries?
The exemption for intra-Community supplies applies only to deliveries to businesses with a valid VAT identification number. For supplies to private individuals, this exemption does not apply, meaning the transactions must be taxed either in the country of dispatch or – once the delivery threshold is exceeded – in the country of destination.
Where does the place of supply shift to when the delivery threshold is exceeded?
Once the delivery threshold applicable in the destination country is exceeded, the place of supply is no longer the country of dispatch but the destination country. From that point on, the sender owes VAT in the destination country and must register and file tax returns there.