Electronic commerce allows French or international companies to easily carry out transactions with customers located all over the world. Certain international transactions may give rise to questions regarding the taxation of profits with regard to the State which has the right to tax the income from this activity. It can be the State of the source of the income or the State of residence of the recipient of the income.
The analysis of your e-commerce project should be subject to a tax analysis by our tax law firm in order to limit the risks associated with this type of business. In principle, the taxation of commercial activities (purchases of goods and services) carried out on the Internet network is carried out by combined application of domestic law and tax treaties which makes it possible to tax in France the commercial activities carried out by a foreign company if that -ci has a permanent establishment in France or operates through a dependent representative acting on its behalf.
The problems linked to electronic commerce result less from an inadequate adaptation of the legislation than from difficulties in applying it in a new technological context. The combination of the internal law of the different States and of the international tax treaties makes it possible mainly to resolve this situation of conflict between a taxation located in the State of the source of the income or the State of residence of the beneficiary thanks to the concept of permanent establishment. .
Our tax law firm helps you to resolve questions relating in particular to the assimilation of a server, a website, a hosting agreement to a permanent establishment or questions related to the classification of payments during electronic transactions. Likewise, electronic commerce poses
difficulties for companies to determine the place of consumption with regard to the VAT regime or the consumption tax. The dematerialization of transactions has indeed changed the link between the territory and the act of consumption. The distinction between the supply of goods and the provision of services poses difficulties for online e-commerce. The delivery of a good by downloading (books, software, etc.) in effect loses its physical form in an operation which should be considered as a delivery of goods.
However, the supply of goods in digital form is in principle considered to be an intangible supply of services subject to the specific regime. This position may seem discriminatory with regard to electronic commerce, insofar as the supply of services is subject to a single VAT rate, while the deliveries of goods are subject to different rates depending on the products delivered.
Electronic commerce is also a problem with regard to the location of operators. In the case of the provision of services, the place of taxation often depends on the place of activity of the service provider. As a reminder, the criterion for the location of the service provider is in principle constituted by the seat of its activity, failing which by a permanent establishment.
Our tax law firm thus assists companies in resolving this difficulty related to the
determination of the State of consumption, in particular by ensuring that the tax qualification of transactions carried out within the framework of electronic commerce complies with the rules in force.