Client Success Stories Case 1: Recovering €48,000 in Overpaid VAT (France)

The Situation
A French e-commerce entrepreneur had been running a Shopify store selling home accessories. The products were shipped directly from suppliers in China to end customers in France.

Believing that French VAT was due on every sale, the entrepreneur had configured Shopify to automatically apply 20% French VAT at checkout. Over the course of 18 months, this led to €48,000 being declared and paid to the French tax authority (DGFiP).

The Problem
In reality, because the goods were shipped directly from China, the place of supply was not France but China. According to Article 32 of Directive 2006/112/EC and the French Code Général des Impôts (CGI, Article 256), VAT in France was not legally due at the time of sale. Instead, VAT should have been collected at import by customs or the courier service.

This meant that the client had been overpaying VAT for nearly two years — while customers were also paying import VAT on top, creating double taxation.

Our Approach

  1. We conducted a full compliance audit of the client’s sales model.

  2. We identified that no OSS/IOSS registration was necessary for these imports.

  3. We prepared a legal memorandum citing EU Directive 2006/112/EC and the CGI, highlighting that VAT was not due in France for these sales.

  4. We filed a VAT refund request with DGFiP, supported by sales data, invoices, and legal references.

The Outcome

  • DGFiP confirmed the overpayment.

  • The client received a refund of €48,000 in overpaid VAT.

  • Shopify settings were updated to prevent future unnecessary VAT charges.

Key Takeaway
Many French dropshippers are unknowingly charging VAT twice — once at checkout, once at import. With the right compliance setup, this can be avoided or corrected retroactively.

Do you suspect you’ve been overpaying VAT? Contact us to see if a refund is possible.

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