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VAT and Dropshipping: Clarifications from the Tax Authorities (Ruling of 4 March 2026)

VAT and Dropshipping: Clarifications from the Tax Authorities (Ruling of 4 March 2026)

Published on : 17/03/2026 17 March Mar 03 2026
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In a ruling published on 4 March 2026 (BOI-RES-TVA-000184-20260304), the French tax authorities clarify the VAT regime applicable to dropshipping sales when:
  • the merchant has not opted for the Import One Stop Shop (IOSS);
  • and the sale is not facilitated by an electronic platform.

This ruling concerns situations in which a merchant sells, via his website, goods that are shipped directly from a third country to consumers located in France or in another Member State of the European Union. This is a very common business model from an operational standpoint but one that involves significant VAT complexities.

Several cases must be distinguished depending on the place of importation and the value of the goods.

1. Goods imported into France and then delivered to another Member State

When the goods enter the European Union through France before being shipped to a customer located in another Member State, the distance sale is taxable in the Member State of destination of the goods.
The merchant is therefore not liable for VAT in France in respect of the sale.
However, the treatment of import VAT depends on the intrinsic value of the parcels.

Parcels with a value below €150

When the value is below €150 and the seller does not use the IOSS scheme:
  • customs clearance must take place in the Member State of final destination;
  • the importation is therefore not taxable in France;
  • the goods must be placed under a customs transit procedure when they arrive in France before being transported to another Member State.

Parcels with a value above €150

When the value exceeds €150:
  • the merchant is liable for import VAT in France;
  • this VAT is in principle deductible, provided that it relates to a sale taxed in the Member State of destination.

2. Goods imported into France and delivered to a customer located in France

When goods are imported into France and delivered to a French consumer, the person liable for import VAT depends on the structure of the transaction.

Scenario where the customer is liable for VAT

The final customer is liable for import VAT when the following conditions are met:
  • the goods arrive in France at the time of delivery;
  • the sale is not facilitated by a platform;
  • the seller has not opted for IOSS;
  • the taxable base at import corresponds to that of the sale.

In this case:
  • the merchant is not liable for import VAT;
  • and the sale is not deemed to take place within the European Union, meaning that no VAT has to be collected.

Scenario where the seller is liable for VAT

When the taxable base used at import differs from that of the sale:
  • the seller becomes liable for import VAT;
  • the sale is deemed to take place in France;
  • the seller must declare VAT on the sale and have a VAT number in France.
The VAT paid on import remains in principle deductible under the ordinary rules.
Furthermore, when a seller liable for French VAT is not established in the European Union, they must in principle appoint a fiscal representative in France, unless an exception applies due to the existence of administrative assistance agreements.

Practical implications for dropshipping operators

This ruling illustrates the complexity of the VAT rules applicable to cross-border e-commerce when the seller does not use the IOSS scheme.
These clarifications must be taken into account by e-commerce operators in order to secure their logistics chain and their VAT reporting obligations.
 
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