VAT in France: Understanding SIRET and SIREN for e-commerce success
18.11.2025
Dropshipping VAT: A Guide for Businesses in EU
18.11.2025
OUR GOAL
To provide an A-to-Z e-commerce logistics solution that would complete Amazon fulfillment network in the European Union.
The European Union, with its 450 million consumers, represents one of the most lucrative e-commerce markets in the world. For sellers in the UK, US, or Asia, tapping into this market is a powerful growth strategy. But this opportunity comes with a significant hurdle: a complex web of import regulations, taxes, and duties that can create shipment delays, frustrated customers, and shrinking profit margins.
Two terms cause the most confusion for e-commerce managers: import VAT and customs duty.
Many sellers incorrectly use these terms interchangeably. This mistake is costly. Understanding the fundamental difference between them is the first step to creating a seamless, compliant, and customer-friendly shipping strategy for the EU.
This guide is designed for those who need to move beyond the confusion and build a scalable logistics framework. We'll break down what these charges are, when they apply, how they are calculated, and the strategic models you can use to manage them—from DDP to IOSS and intelligent fulfillment.
Why EU customs compliance is a customer experience issue, not just a tax problem
Before we dive into the definitions, let's establish why this matters. As an e-commerce manager, your primary goal is conversion and customer retention. A poor customs strategy directly undermines both.
- Cart abandonment: If you can't provide a clear, all-inclusive "landed cost" at checkout, savvy shoppers will hesitate. Uncertainty kills conversion.
- Customer anger & refusals: The worst possible customer experience is the "surprise fee." When a courier demands an extra €20 from your customer at their doorstep for VAT and "admin fees," you haven't just lost a sale—you've lost a customer for life. This leads to high rates of returned parcels, with you paying for the return shipping.
- Shipment delays: Incorrect paperwork, missing HS codes, or improper VAT declarations will cause your parcels to be held by customs authorities for days or even weeks. In the age of 2-day shipping, this is unacceptable.
- Legal & financial penalties: Non-compliance isn't a long-term option. EU tax authorities are cracking down, and penalties for evading VAT or misdeclaring goods can be severe.
Your import strategy is your customer experience strategy. Getting it right is a powerful competitive advantage.
Import VAT vs. customs duty explained
Let's clear this up for good. While both are collected at the border, they are two completely different charges with different purposes and different rules.
What is import VAT? (the "internal" tax)
Import VAT (Value Added Tax) is a consumption tax applied to goods and services.
Think of it this way: if a customer in France buys a product from a French shop, they pay 20% VAT. If that same customer buys the same product from your store in the UK or US, the EU logic is that the same 20% VAT must be paid. It ensures a level playing field for domestic and international sellers.
Key facts about import VAT:
- It's (almost) always due: Following the July 2021 e-commerce VAT package, the €22 VAT exemption (de minimis) was abolished. Today, VAT is due on every single import, regardless of its value, even a €1 item (there are limited exemptions e.g., returned goods, some charity shipments, gifts between individuals).
- The rate varies: The VAT rate is not a single EU rate. It's charged at the rate of the destination country where your customer lives. For example:
- Germany: 19%
- France: 20%
- Poland: 23%
- Hungary: 27%
- It's based on customs value: Import VAT is calculated on the customs value of the goods (typically the transaction price), plus any customs duty and transport costs to the first point of entry in the EU.
What is customs duty? (The "border" tariff)
Customs duty (or "tariff") is a trade tax designed to protect the EU's domestic industries from foreign competition.
This is not a consumption tax; it's a border control tool. The duty rate is not based on the customer's country, but on the product's type and origin.
Key facts about customs duty:
- It is NOT always due: This is the most critical difference. Customs duty applies only when the intrinsic value of the goods exceeds €150. This value includes the product price but excludes shipping and insurance costs. Certain goods such as alcohol and tobacco are not eligible for this exemption.
- The €150 threshold: This is your magic number. For the vast majority of e-commerce parcels, which are low-value, you will not have to worry about customs duty.
- It's based on HS code & origin: The rate of duty depends on two things:
- HS code (harmonized system): This 6-10 digit code classifies your product. A leather handbag (HS code 4202.21) has a different duty rate than a cotton t-shirt (HS code 6109.10).
- Country of origin: Where was the product made (not just shipped from)? A t-shirt made in China might have a 12% duty, while one made in the UK might be 0% thanks to the EU-UK Trade Agreement (if it meets origin rules).
At-a-Glance: VAT vs. Duty
Import VAT | Customs Duty | |
What is it? | A consumption tax | A trade tariff |
When does it apply? | On ALL goods (from €0.01) | Only on goods valued over €150 (most types) |
Rate Based On? | Destination country (e.g., FR @ 20%) | Product type (HS code) & origin |
Calculated On? | Customs value + Duty + Transport costs | Intrinsic value (CIF basis for duty assessment) |
How to calculate landed cost: a practical example
Let's see how this works. Imagine you are shipping a pair of sneakers (made in China) from your US warehouse to a customer in France.
- Product price: €120
- Shipping & insurance: €20
- Total consignment value: €140
Calculation:
- Check customs duty threshold: The value is €140, which is below the €150 threshold. Customs duty = €0
- Check VAT threshold: VAT is always due.
- Calculate VAT: The VAT rate in France is 20%.
VAT Base = €140
Import VAT = 20% of €140 = €28
Total for customer to pay = €28
Now, let's change one thing: the customer adds a matching jacket.
- Product price: €180 (sneakers + jacket)
- Shipping & insurance: €25
- Total consignment value: €205
- HS code for sneakers/jacket (example): 10% Duty Rate
- Destination: France (20% VAT)
Calculation:
- Check customs duty threshold: The value is €205, which is above the €150 threshold. Duty is due.
Customs duty = 10% of €205 = €20.50 - Check VAT threshold: VAT is always due.
- Calculate VAT: VAT is calculated on the full value, including the duty.
VAT Base = €205 (Value) + €20.50 (Duty) = €225.50
Import VAT = 20% of €225.50 = €45.10
Total for customer to pay = €20.50 (Duty) + €45.10 (VAT) = €65.60
This €65.60 is the "surprise fee" that will get your package rejected if you don't manage it correctly.
Your strategic options: how to manage EU imports like a pro
You understand the charges. Now, how do you handle them? You have three main strategic models.
Option 1: DDU (Delivery Duty Unpaid) - The "bad" way
This is the default, "do-nothing" option. You ship the parcel, and the courier (DHL, FedEx, etc.) or local post handles customs. They pay the fees on the customer's behalf and then present them with a bill upon delivery, which includes the VAT, any duty, and a hefty "admin fee" for their service.
- Pros: Easiest for you (the seller).
- Cons: Disaster for customer experience. High refusal rates, angry customers, and hidden fees that damage your brand. Avoid this model.
Option 2: DDP (Delivery Duty Paid) - The "better" way
With DDP, you (the seller) take responsibility for all charges. You use your courier or a customs broker to pre-pay all VAT and duties. The price your customer sees at checkout is the final price they pay.
- Pros: Excellent, transparent customer experience. No surprises.
- Cons: Complicated to manage. You need a customs broker, accurate HS codes for all products, and a system to calculate and pay these fees, which can be expensive and slow down dispatch.
Option 3: IOSS (Import One-Stop Shop) - The "best" way (for <€150)
The IOSS system was created by the EU specifically for e-commerce. It is by far the best solution for shipments under the €150 duty-free threshold.
How it works:
- Register: You register for an IOSS number in a single EU member state (e.g., France). If you're based outside the EU, you must appoint an IOSS intermediary to manage this for you.
- Charge VAT at checkout: Your e-commerce store (e.g., Shopify, Magento) is configured to charge the customer's local VAT rate at the point of sale. A German customer pays 19%, a French customer 20%.
- Ship with IOSS number: You electronically transmit your IOSS number with the shipping data.
- Fast-track customs: The customs authorities see the IOSS number and know VAT has already been collected. The package is fast-tracked through a "green channel" without stopping for assessment.
- Report & pay: Once a month, your IOSS intermediary files a single return and pays the collected VAT to the EU tax authorities.
- Pros: The holy grail for B2C shipping. No fees on delivery, transparent checkout, and much faster customs clearance.
- Cons: Only applies to shipments under €150. Requires appointing an intermediary.
The ultimate solution: stop shipping cross-border for every order
IOSS and DDP are great, but they still mean you are shipping every individual order from the US, UK, or China. This is slow and expensive.
The most advanced e-commerce managers adopt a different model: bulk import and EU fulfillment.
Instead of shipping B2C cross-border, you ship B2B in-bulk.
- Bulk shipment: You ship a pallet or container of your best-selling products (B2B) to a single EU entry point, like our fulfillment center in France.
- One-time clearance: You pay import VAT and Customs Duty (if applicable) once on this bulk shipment. This is far more efficient and cheaper than paying it on 1,000 individual parcels.
- Warehousing: Your goods are now "in free circulation" within the EU. We store them in our secure, automated warehouse.
- Fulfillment: When a customer in Germany, Italy, or Spain places an order, we pick, pack, and ship it from our French warehouse.
- Domestic Shipping: This is now an intra-EU shipment. There is no customs, no import VAT, and no duty for the customer. They get their parcel in 24-48 hours, just as if they ordered from a local shop.
This model transforms your business from a slow cross-border shipper into a fast, local European competitor.
Remeber! When storing goods in an EU fulfilment centre, you become the importer of record and must be VAT-registered in the country where your stock is held. Once goods are in “free circulation,” subsequent B2C sales within the EU are treated as domestic transactions for VAT purposes.
How Flex Logistique solves your EU import puzzle
This complexity is our specialty. You shouldn't be worrying about HS codes and VAT rates; you should be worrying about marketing and growth.
Partnering with a 3PL and logistics expert like Flex Logistique removes the entire burden.
- EU fulfillment hub: Use our state-of-the-art warehouses in France as your European distribution center.
- Customs brokerage: Our in-house experts will handle the customs clearance for your bulk B2B imports, ensuring full compliance and correct duty/VAT payment.
Turn EU compliance from a hurdle into an advantage
Import VAT and customs duty are not obstacles; they are simply the cost of doing business in the EU. The difference between amateurs and professionals is how they manage them.
Stop surprising your customers with hidden fees. Stop letting your parcels get stuck in customs.
By understanding the €150 duty threshold, leveraging the IOSS system, and, for ultimate scale, moving to an EU-based fulfillment model, you can turn compliance from a liability into a powerful competitive advantage.
