France release draft guidance for Tax on Digital Services
France joined the growing list of countries that obligate foreign sellers to be tax registered to distribute their Digital Services in July 2019. French tax authorities released a draft for additional guidance on 23rd March 2020.
The tax rate applied to Digital Services remains 3% and applies to Digital Service companies that generate revenues of over €25 million in France or over €750 million globally.
Determining the end customer’s location in France
When the end user is deemed to be located in France, VAT must be applied in the sale of Digital Services. The end customers location is classified as being in France when a Digital Service is accessed from a device that is located in France. The location of the device in France is determined by an IP address, or by other means that identify the location of the device being used to purchase the digital service/product is in France.
Digital Services that will be subject to this tax legislation
The list of Digital Service providers is non-exhaustive, however currently the below have been noted as being liable for ensuring they follow the VAT obligations of the French Authorities.
- Online Gaming
- Online streaming
- E-publishing
- Digital Advertising Space
- Digital Software products
Monthly conversion rate to be used
Taxpayers will be obliged to convert foreign currency into euros using the exchange rate published in the Official Gazette of the European Union and known on the first day of the month during which the taxable receipts are collected.
Deferment of payments
For payments of Digital Service Tax due in April and October 2020, the French tax authorities have authorised payment deferrals.
GVC provides a global one stop shop service to digital service providers and ensures businesses are meeting their VAT obligations. Please contact us for further information here
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