France Steps Up the Fight Against International VAT Fraud
The French tax authorities are ramping up their efforts to tackle VAT fraud as schemes grow increasingly international and complex. In 2024, the Directorate-General for Public Finance (DGFiP) intensified its cross-border activities and recorded major successes, particularly in the fast-growing e-commerce sector. This follows a 2023 VAT fraud review.
2024 major success with new policies and tactics
The DGFiP reported €303 million in VAT recovered through audits last year, a significant increase compared to previous years. Much of this success comes from the online commerce space, where international VAT fraud has proliferated with the rise of digital platforms, cross-border sellers, and opaque supply chains.
Recent legislation has equipped the DGFiP with stronger mechanisms to prevent fraud and ensure VAT collection. Among the most notable:
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Suspension of intra-Community VAT numbers for sellers engaged in fraudulent practices.
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Platform liability rules, enabling online marketplaces to delist sellers who fail to remit VAT.
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Precautionary measures against “phoenix” operators—short-lived, insolvent entities that vanish before paying their tax bills.
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Judicial escalation of serious fraud cases to ensure penalties and recovery.
These measures target the structural weaknesses in cross-border VAT enforcement, especially where sellers operate outside French jurisdiction but access French consumers.
Focus on Chinese Dropshipping
One particular area of concern is dropshipping, a booming business model where sellers market products online but outsource fulfilment directly to suppliers—often overseas. While efficient for entrepreneurs, dropshipping complicates VAT collection and raises risks of counterfeit or non-compliant goods entering France, particularly from Asia.
To counter this, France has introduced new obligations:
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Dropshippers will now be designated as liable for import VAT, ensuring their role in establishing customs value is formally recognized.
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Their identities must be declared to customs, improving traceability.
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Data sharing between customs and the DGFiP will be expanded to close gaps in monitoring.
More info and data sharing with EU member states
A major driver of France’s improved results is closer collaboration with other tax authorities. International standards on data exchange have expanded, allowing for broader access to information on assets, income, and cross-border flows.
Since 2025, the DGFiP has also gained access to cross-border payments data, a powerful new tool in detecting undeclared sales and programming VAT audits in the e-commerce sector.
