The possibility of recovering VAT through dropshipping is available to all companies that are subject to VAT. This includes companies with the status of SAS, SASU, EURL, SARL, etc. The subject does not therefore concern self-employed entrepreneurs. These are in particular those who are obliged to import their goods, whether in EU countries or outside the EU.
Reclaiming VAT on products supplied within the EU
The question of dropshipping and VAT is still quite delicate even though this e-commerce activity is gaining more and more ground. Because the dropshipper does not take care of the storage or delivery of the products he sells on his e-commerce site, it is not clear whether he is liable to VAT as a dropshipper or not. He does not actually handle the logistics of the sales either. That is everything that can affect the packaging of products, shipping, etc..
However, in order to have products to display on its site without stocking them, it must use suppliers who may be in EU countries or outside. Suppliers within the European Union mainly offer tax-free invoices. In this case, you will not have to reclaim any VAT in dropshipping as you have not paid any tax. This first scenario is particularly simple and easy to understand. It is not the same when the supplier is located outside the EU.
Recovery of VAT from an import into a third country
When a dropshipper sources his goods from a third country, he must be subject to import regulations. They will effectively be ordering products from a country other than those included in the EU.
The registration of its product will be carried out in two stages:
- At the time of purchase,
- When VAT is paid by a commission agent.
The invoice issued by the non-European supplier, e.g. China or Japan, is initially recorded exclusive of tax or HT on the basis of a conversion into euros. Then the VAT will be charged to you directly by the customs. The dropshipping VAT will be calculated on the basis of the invoice you have paid to your supplier.
Once you make the declaration of this dropshipping VAT invoice in France, issued by customs, it will be taken into account which will allow you to recover your import VAT.
What are the steps involved in making a VAT return?
In order to answer the question of how to reclaim VAT dropshipping, you need to file a VAT return. This is not always so easy, especially if you decide to do it yourself as an entrepreneur. It is usually done according to the turnover of your business. In particular, you should know that in order to benefit from a VAT exemption, your turnover for the previous year must not exceed a certain threshold. Various conditions must also be met, including the completion of periodic returns.
But before you can declare your VAT, you must declare your activity. This is the only alternative that allows you to operate under the best conditions. There is no point in reminding you that dropshipping, although it allows you to make money in record time and without spending a lot of time on it, presents significant tax risks. As taxation varies according to the status you have chosen for your business, it is essential to find out about it.
If declaring customs duties and VAT in dropshipping remains the only way to reclaim your import VAT, you have the option of entrusting it to a professional. Indeed, you can hire a chartered accountant to take care of this task for you. This specialist will be able to undertake all the necessary procedures and will also be able to advise you.
The taxation of VAT in dropshipping as a self-employed entrepreneur in France is particularly low. For this reason, it is recommended for starting a business. However, this status is not suitable for businesses with high turnover.
VAT applied in dropshipping
While dropshipping has previously been exempt from some taxes, it is now subject to VAT as soon as the supplier is located in a third country. This VAT is applied at the time of sale for all goods under €150. Reforms have been made to better manage sales and all kinds of dropshipping transactions and e-commerce activities.
If your turnover is less than EUR 10 000 per year, you will be taxed at a rate of 20% and the sale will be considered to be located in France. If your turnover exceeds €10,000 per year, the distance selling will be defined in the state of residence of the end customer. However, the dropshipper will still have the option of requesting that his transactions be subject to VAT in France.
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