Since 1 January 2021, dropshippers are liable for VAT. How to pay import VAT when dropshipping? However, as an intermediary in the sale, the dropshipper is not liable for customs duties. Nevertheless, reforms have been undertaken on the subject to make transactions fairer. Here's everything you need to know about paying import VAT in dropshipping.
Dropshipping and importing: VAT and customs duties
Even though the concept of dropshipping is currently in vogue, it can still be difficult to understand what it really means, but especially how it works. Moreover, the issue of dropshipping and VAT remains particularly tricky. Before determining how to pay VAT in dropshipping, it is only fair to go over the details of VAT and customs duties in e-commerce.
Imports of goods are essentially subject to VAT. This tax is levied when the product passes through customs for any commercial activity applicable in metropolitan France and in the overseas departments, except temporarily in the departments of Guyana and Mayotte. Import VAT is applied to a product as soon as it enters France, whether or not it comes from a member state of the European Union. VAT also applies when the product is released for consumption.
But, what are the import duties in dropshipping? You need to know everything about import duties dropshipping before you start and choose the status of your dropshipping business. The question of taxation is indeed important. As with all legal taxable activities, VAT in dropshipping is also part of the consumption tax.
Who pays VAT in dropshipping?
The increasing growth of drophipping is no longer a subject to be questioned, and this can be explained by the accessibility of this activity. To get started, all you need to do is open an online store. Various e-commerce solutions make this easier than ever. After that, it's simply a matter of reselling goods from major marketplaces such as Amazon. However, when it comes to VAT on imports for dropshipping, the subject is not always easy to master. How do you correctly charge VAT as a dropshipping product importer?
If you are an importer of dropshipped products, do not hesitate to refer to the new VAT regulations for dropshipping from January 2021. They are clearer and help to shed light on controversies.
Dropshipping is a fully legal activity if and only if you comply with the requirements of the authorities. As a trader, you must therefore be registered with the Trade and Companies Registry. As a dropshipper, you are liable to pay value added tax on all imported goods as you have a website that displays products for sale. You will therefore have to pay certain taxes on behalf of your end customers.
Procedures for paying VAT in dropshipping
Changes to the import VAT rules for dropshipping have meant that your dropshipping shop is now obliged to pay import VAT , even for products under €150. This also applies to products sold in Europe, but coming from a foreign supplier. The dropshipping product importer will have to pay the taxes while the customs fees will be reserved for the final customer or buyer for packages over 150 euros.
How do I pay VAT when importing dropshipping? Import dropshipping experts benefit from an import exemption with the establishment of an IOSS (Import One Stop Shop). To access this scheme, you need to take an identification number relating to this scheme.
- Paying import VAT when dropshipping according to your status
To answer the biggest question of how to declare dropshipping, it all depends on a few criteria, notably the status chosen to carry out the dropshipping activity. The choice of this status is made at the very beginning of the creation of your business. Each status has its own advantages, particularly in terms of VAT payments. If you choose the status of autoentrepreneur, you will only pay the VAT applied to goods exceeding the threshold imposed by the State.
- Paying import VAT when dropshipping according to location
The dropshipper is always obliged to pay VAT to the government. VAT on dropshipping imports can also vary depending on the geographical location of the dropshipper (EU or non-EU).
Who to give the dropshipping import tax to? Generally, dropshipping import tax must be paid to the tax department that manages the taxpayers' file. It is also possible to go through customs and tax clearance platforms such as SOPRANO-EORI. The latter essentially issues EORI numbers that you can use to clear goods through customs. A way to pay your tax in a completely dematerialised way.
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