French refurbished electronics marketplace Back Market has formally urged Cdiscount, a leading French e-commerce platform, to enforce stricter VAT compliance checks on its third-party sellers. According to several French news outlets, Back Market claims that certain vendors on Cdiscount are selling refurbished smartphones under suspicious conditions, alleging these devices are linked to VAT fraud. The company contends that this oversight fosters “unfair competition” within the marketplace, emphasizing that the issue extends beyond minor VAT violations. Read on to learn more about the unfolding details.
Concerns over VAT evasion on Cdiscount marketplace
Back Market’s concerns center around Cdiscount’s, owned by troubled French retailer Casino, recent pivot from direct sales to a marketplace model, which now hosts approximately 15,000 third-party vendors. These vendors operate their own stores on the platform, with those based in Europe expected to handle VAT collection independently. Cdiscount is only required to collect VAT for non-European vendors. However, Back Market alleges that some vendors misrepresent their location to avoid VAT obligations, leading to competitive price disparities and lost revenue for fully compliant sellers.
Back Market’s proof
The company has cited specific instances in which certain third-party sellers offer abnormally low prices for refurbished smartphones, such as an iPhone 12 sold by a Cypriot vendor for € 279. Back Market’s own listing for a similar device, meeting the same condition standards, is priced at € 339. Back Market argues that the price difference may stem from VAT avoidance by sellers who list invalid EU VAT numbers. To address this issue, Back Market sent a formal complaint to France's tax authority, the DGFIP, and warned that legal action could follow if compliance issues persist.
Cdiscount responds and calls for regulatory change
In response, Cdiscount has defended its VAT policies, stating they are fully compliant with French and EU tax regulations. The platform claims to request VAT compliance evidence from vendors suspected of fraud, and in cases of non-compliance, it deducts VAT from their sales directly. Additionally, Cdiscount has expressed support for regulatory reform, suggesting that marketplace operators like itself should be required to collect VAT for all vendors, not only those outside the EU. Such a change, according to Cdiscount, would simplify compliance and create a more level playing field within its marketplace.
Implications for the secondary market
This dispute between Back Market and Cdiscount highlights a broader challenge within the refurbished electronics market: maintaining tax compliance among third-party sellers on online marketplaces. Back Market’s formal complaint underscores the need for tighter oversight to prevent tax evasion that can distort market prices and disadvantage compliant vendors. Simultaneously, tax authorities across the EU should implement stricter enforcement of VAT compliance within marginal VAT schemes. Industry sources report that a significant number of merchants exploit these schemes for devices that do not meet the criteria. This issue frequently arises on major marketplaces as well, making more robust checks essential to curtailing non-compliance and ensuring fairer market conditions.
Via: Sudouest.fr and lefigaro.fr
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