Selling worldwide from France? The VAT rules that can make or break your margins

Q: What if my B2B customer's VAT number fails VIES?

No reverse charge: the sale is treated as B2C and you owe the VAT. Apply the destination country's rate (or the French rate if you are below the threshold), and keep the VIES check result in your records. The burden of proof is on you.

You open your dashboard on Monday morning: an order from Berlin, one from Milan, another from London. Great news, until the obvious question hits: which VAT should you have charged on each of them?

Get it wrong, and the consequences are very real: tax assessments with penalties, parcels refused at delivery because of surprise fees, or margins quietly eaten by VAT you should have collected. Get it right, and selling internationally is far simpler than it looks. Here are the rules that actually matter for a French e-commerce business shipping worldwide.

The golden rule: VAT follows your customer, not you

VAT is a consumption tax. For cross-border sales, it is generally due in the country where your customer is, not in France. Since July 2021, the EU has applied this “destination principle” to almost all business-to-consumer (B2C) online sales. Everything below is just an application of this one principle.

Selling to consumers in the EU: the €10,000 threshold and the OSS

Below €10,000 per year in cross-border B2C sales (all EU countries combined), you can keep it simple: charge French VAT as usual.

Above €10,000, you must charge the VAT of each destination country, and rates vary a lot: 19% in Germany, 21% in Spain, 22% in Italy, up to 27% in Hungary (Luxembourg is the lowest at 17%).

That sounds like a registration nightmare. It isn't, thanks to the OSS (One-Stop Shop): you register once, in France, and file a single quarterly return covering all your EU consumer sales. The French tax office redistributes the VAT to each country. One registration, one return, one payment.

Example: you sell €40,000 of goods to German customers this year. You charge 19% German VAT at checkout, declare everything in your quarterly OSS return, and never touch a German tax form.

Watch out: the OSS does not cover:

Your French domestic sales (they stay on your regular French VAT return)
B2B sales (see the reverse charge below)
Stock stored in another EU country. If you use Amazon FBA in Germany or a warehouse in Poland, that country still requires a local VAT registration. This is the most common, and most expensive, misunderstanding.
Goods imported from outside the EU (see IOSS below)

And if you sell through a marketplace: in many cases (non-EU sellers, imported goods under €150), the marketplace is the “deemed supplier” and collects the VAT itself. But you must track precisely which sales it handled, since mixing the two flows in your accounting is a classic audit finding.

Selling to businesses in the EU: the reverse charge

B2B is the good news of European VAT. If your customer is a VAT-registered business, you invoice without VAT and the buyer accounts for the VAT in its own country. This is the reverse charge, known as autoliquidation in French.

Three obligations, none of them optional:

Verify the customer's EU VAT number in VIES, the free European Commission validation tool. No valid number, no reverse charge: the sale becomes B2C and you owe the VAT.
Invoice correctly: 0% VAT, both VAT numbers, and a reverse-charge mention (“Reverse charge, Article 196 VAT Directive” / “autoliquidation”).
Report the sale: in France, intra-EU B2B sales of goods also go on the DEB/EMEBI (filed via the Customs portal), on top of your VAT return. Skipping it triggers penalties even when your invoices were perfect.

Example: you sell €5,000 of stock to a Belgian retailer with a valid VAT number. Your invoice shows €5,000 net, no VAT. The retailer self-accounts for Belgian VAT. You keep the VIES validation and the transport proof in your records.

Beyond the EU: exports are VAT-free… if you can prove it

Goods leaving the EU are exempt from French VAT (Article 262-I of the French Tax Code). The catch: the exemption only holds if you can prove the goods actually left the EU: customs export declaration, transport documents. No proof, and a tax audit can retroactively charge you the VAT.

Then comes the customer experience question: who pays the destination country's import taxes?

DDP (Delivered Duty Paid): you pay duties and taxes upfront. Smooth delivery, happy customer.
DAP/DDU: your customer discovers the fees when the parcel arrives, the #1 cause of refused parcels and one-star reviews in cross-border e-commerce.

The UK special case: the £135 rule

Since Brexit, the UK plays by its own rules:

Consignments worth £135 or less: you must charge UK VAT at checkout and register with HMRC (no UK entity required).
Above £135: import VAT and duties are collected at the border, as before.
Selling via a marketplace? It generally collects the UK VAT for you.

Importing to sell: IOSS for parcels under €150

If you ship goods from outside the EU straight to EU consumers (dropshipping from Asia, for example), the IOSS (Import One-Stop Shop) is your friend. For consignments of €150 or less, you collect VAT at checkout and declare it in one monthly return; parcels clear customs fast, with no surprise fees on delivery. Above €150, standard import VAT and customs duties apply at the border, and in France, that import VAT is reverse-charged on your French VAT return.

The mistakes that cost real money

Charging French VAT on every EU sale, well past the €10,000 threshold
Trusting a customer's VAT number without checking VIES
Forgetting the DEB/EMEBI for B2B sales
Letting customers discover duties at delivery (choose DDP where it matters)
Assuming “Amazon handles the VAT” for stock you store in their foreign warehouses
Treating exports as automatically tax-free without keeping customs proof

What's coming: ViDA and French e-invoicing

The EU's VAT in the Digital Age (ViDA) package, adopted in March 2025, will keep simplifying things: from July 2028, the OSS expands toward a true single VAT registration (covering, for example, transfers of your own stock between EU countries), and from 2030 cross-border B2B sales move to real-time digital reporting via e-invoicing. In France, all businesses must already be able to receive electronic invoices from September 2026, with issuance obligations phasing in through 2027. If your invoicing stack is still a PDF generator, now is the time to plan.

Frequently asked questions

How does my checkout know which VAT rate to apply?

It starts from the customer's country. For B2C, the rate depends on the destination: French VAT while you are below the €10,000 threshold, the destination country's rate above it (via the OSS), and UK VAT for consignments of £135 or less to the UK. For B2B with a valid EU VAT number: 0% and reverse charge. That's why your checkout (and your payment platform) must be configured per country — not “one rate for everything”.

Does the €10,000 threshold include my French sales?

No. Only B2C sales made from France to customers in other EU countries count towards the €10,000. Your domestic sales stay subject to French VAT and do not count.

I crossed the €10,000 threshold mid-year. What do I do now?

The threshold is assessed per calendar year. Once you exceed €10,000, you must charge the destination country's VAT on subsequent cross-border B2C sales and register for the OSS — you cannot wait for the following year. If you charged French VAT in the meantime, your accountant can regularize the previous returns.

Do I need a company or a warehouse abroad to sell in other EU countries?

No. The OSS lets you sell to consumers across the EU from France with a single registration. The exception that catches everyone: if you store stock in another EU country (Amazon FBA in Germany, a warehouse in Poland), that country requires a local VAT registration — and the French OSS does not cover those sales.

What's the difference between the OSS and the IOSS?

They are complementary tools covering different flows. The OSS: intra-EU B2C sales where the goods ship from within the EU. The IOSS: imported goods of €150 or less shipped directly from outside the EU to EU consumers. A store that holds EU stock and also dropships can need both.

What if my B2B customer's VAT number fails VIES?

No reverse charge: the sale is treated as B2C and you owe the VAT. Apply the destination country's rate (or the French rate if you are below the threshold), and keep the VIES check result in your records. The burden of proof is on you.

What penalties do I face if I get it wrong?

The VAT you should have collected, plus late-payment interest and penalties. In France, a missing DEB/EMEBI filing is penalized on its own, even when the invoices were correct. And beyond the tax office, there is the customer-side cost: refused parcels and one-star reviews. The good news: it is all avoidable with a setup done properly upfront.

Do I need a UK entity to sell in the UK?

No. You can register with HMRC for distance selling from abroad without any UK establishment, then charge UK VAT at checkout on consignments of £135 or less.

I'm launching: which registrations should I set up from day one?

Start with your French status: below the VAT exemption threshold (franchise en base de TVA) you do not charge VAT; above it, you must register. Then, depending on your plans: the OSS as soon as you expect to pass €10,000 in EU B2C; an HMRC registration if you sell to the UK; the IOSS if you ship directly from outside the EU; and a local number if you use FBA or a warehouse in another EU country.

Your 5-point VAT checklist

Track your EU-wide B2C turnover against the €10,000 threshold
Register for the OSS before your next peak season
VIES-check every B2B customer, and keep the proof
Archive export documentation for every non-EU shipment
Decide DDP vs DAP deliberately, per market

The bottom line

International VAT is not a monster; it's a system. Once your checkout applies the right rate per country and your registrations match your logistics footprint, it fades into the background where it belongs. At Saphes IT-Systems, we help e-commerce businesses build exactly that: checkout, invoicing and integration setups that stay compliant while you scale. If your next market feels like a tax puzzle, let's talk.

This article is for information only and is not tax advice. VAT rates and rules change, so always confirm your situation with your accountant or tax advisor.