What is Import VAT Deferment?
When goods are imported in 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 fulfilment centres who 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.