The tax tunnel effect: your sales outside the EU risk being expensive if you neglect VAT
- Noham Layani
- Oct 6
- 5 min read
Updated: Oct 20
Imagine, you are a French business and launching your online store in Canada, or signing your first SaaS contracts with American clients. You're thinking big: growth, opportunities, geographic diversification...
But in the shadow of this ambition, a “tax tunnel” is closing, and you only see the wall coming when the balance sheet is drawn up: uncollected VAT, fines, delays, audits and even adjustments.
This tunnel is the failure to anticipate non-EU VAT. Many French companies first think about customs formalities, local VAT, exchange rates, etc., but ignore the starting point: how a sale outside the EU, invoiced “excluding VAT,” must be considered from the invoicing stage right through to customs at the destination.
The most common mistake? Believing that “non-EU = VAT-free.” However, this opens the door to massive risks of non-compliance.
Today, we take you through the twists and turns of this tax tunnel, with concrete examples, recent figures, and above all a turnkey tool with our Non-EU VAT Guide .
The new EU VAT landscape (and the impact for non-EU sellers)
In July 2025, the European Union adopted a directive simplifying the collection of VAT on imports: from now on, platforms and operators outside the EU become responsible for collecting VAT upon sale, and no longer the final consumer.
In other words, if you sell from a non-EU area to the EU, you can no longer simply declare an “exemption” on the French side. You must register through the IOSS to collect VAT at the time of purchase, not at the time of import.
This change reinforces the necessary vigilance on VAT flows: if intra-EU rules become more complex, sales to the United States or Canada are even more so.
VAT and local taxes outside the EU: the principles French businesses need to know
Export of goods
Exports of goods outside the EU are exempt from French VAT (article 262-I-2° of the CGI).
But this does not mean “tax-free”: upon receipt, the customer will have to pay the local VAT (GST/HST in Canada, Sales Tax in the USA).
Services
For services to a client outside the EU, no French VAT is charged (note: “VAT not applicable – art. 259-1 of the CGI”).
The foreign customer self-liquidates the local tax according to its own rules (Sales Tax, provincial VAT, etc.).
United States: Beware of the “fiscal nexus”
In the United States, there is no national VAT but state sales taxes (0% to 9% depending on the jurisdiction).
If you have a tax nexus (premises, warehouse, employees, servers), you may be required to collect and remit these taxes.
💡 Zoom – What is a “tax nexus”?
A tax nexus is the legal connection between a foreign business and a state or province that makes the business liable for local taxes. It can be physical (warehouse, employees, servers, or offices) or economic (sales volume or number of transactions).
For example, in many U.S. states, exceeding $100,000 in sales or 200 transactions per year is enough to create an economic nexus — meaning you must collect and remit the local Sales Tax.
Even without a local entity, your company can become taxable in a U.S. state as soon as its activity there is considered “significant.”
Canada: GST and HST by province
In Canada, exports are often zero-rated, but if you sell to resident customers, GST/HST applies depending on the province.
An activity partially carried out in Canada may also trigger partial taxation.
The most common mistakes
Billing “exempt” without checking actual territoriality
Neglecting the nexus (local tax presence)
Forgetting the export proof required for exemption
Underestimating provincial or state reporting obligations
Incorrectly configuring your invoicing tools or e-commerce modules
The tax tunnel in action: two concrete scenarios
Scenario A: B2C eCommerce in Canada
You sell from France to Canadian customers.
The customer pays GST/HST and import duties, but if your volumes increase, you create a logistics nexus (warehouse, depot) that makes you liable for local taxes.
The result : your margins erode, your customers incur unexpected costs, and your sales plummet.
Scenario B: SaaS sold in the United States
You charge an annual subscription to a US company.
If your servers or employees are located in a state, you create a tax nexus and must collect local Sales Tax .
All this without having planned for it in your pricing model... hence a risk of adjustment or tax refund.
Your survival plan: 5 steps to secure your non-EU sales
These steps are detailed in our Non-EU VAT Guide for e-commerce — download it here: 👉 Non-EU VAT Guide for e-commerce
How Blendy supports you on your international journey
Blendy 's strength: we are already present in the United States (Miami, Florida) and Canada — not just in consulting, but in operational presence.
Here is what we do concretely:
International tax audit : modeling your sales to the Americas, identifying the nexus and calculating your tax obligations (Sales Tax, GST/HST, withholding taxes).
Local structuring : creation of entities or permanent establishments (in the USA and Canada) to secure your presence.
VAT/local tax management : automated calculations, filing of state returns, GST/HST compliance.
Combined France/Americas optimization : integration of French “exit” VAT with American or Canadian taxation.
Operational support : integration with your e-commerce, ERP or SaaS tools to automate compliance.
Ongoing support : tax monitoring, control, audit, assistance in the event of recovery.
And most importantly, you don't need to change teams or languages. Thanks to our Blendy teams based in France and connected to our correspondents on the ground, you manage your foreign finances as if they were local , while remaining supported by the same contacts, in French, and with the same level of rigor.
Blendy manages local accounting, declarations and international taxation for you, from France, with expert contacts in the USA and Canada.
A complete guide at your disposal
The tax tunnel effect is not a myth: it is what many French SMEs experience when they internationalize without anticipating VAT outside the EU.
By expanding your business to the United States or Canada without understanding your tax obligations, you expose yourself to costly risks: audits, adjustments, loss of customer confidence.
But this tunnel can be avoided, provided you have the right tools, the right strategy, and the right support. This is precisely what Blendy offers: an expert, operational, and local approach in the Americas, managed from France.
👉 Download your non-EU VAT Guide for e-commerce now:
You will find checklists , case studies and a complete roadmap to avoid the tax tunnel and accelerate your international expansion, with complete peace of mind.
With Blendy , as an international CPA, take advantage of digital accounting to accelerate your financial process and develop your business.
Pennylane, Dext, QuickBooks and Stripe certified, we support digital, e-Commerce, ESN, SaaS companies in France and internationally.
