From 1 July 2021, online marketplaces, including Amazon and eBay, will, under certain conditions, be responsible for charging and reporting VAT on goods sold through their platform to customers in the EU. Similar regulations are already in place in the UK.
So does that mean that if you sell through Amazon you can forget about VAT? Not quite. There are still many instances in which the obligation to charge VAT remains with the seller.
In addition, if you take advantage of services such as FBA, you will face VAT obligations connected to the warehousing of your goods. Moreover, those obligations will apply even in cases where Amazon manages the VAT on the sale of your goods.
When the digital platform bears the burden of VAT
Under the new EU e-commerce regulations, digital platforms like Amazon will, under certain conditions, be considered the deemed supplier. They will thus be responsible for collecting and reporting the applicable VAT.
There are two conditions in which the online marketplace is considered the deemed supplier. The first is if the seller is not established in the EU and sells to customers in the EU via the online marketplace.
And second, any case in which items worth less than €150 are imported into the EU for direct sale to an EU customer.
Note that in both such cases, the seller is required to provide accurate and up-to-date information to the online marketplace.
Where the above two conditions do not hold, responsibility for managing VAT remains with the seller.
Fulfilled by Amazon
Amazon is more than a website that facilitates e-commerce sales. Services such as FBA provide warehousing and logistics to sellers. However, these additional services come with additional, potentially complex, VAT obligations. Read more about selling through FBA here.
For example, part of the reason FBA is so efficient is that Amazon stores your goods in strategically located fulfillment centres, in various countries. That’s great from a logistics point of view. However, by storing goods in Amazon’s warehouses for the purpose of distance selling, you are automatically incurring an obligation to register for VAT in multiple countries.
And that means that even in cases where Amazon bears the responsibility for charging VAT on the sale of your goods, you will still be faced with obligations to register for VAT if you use FBA or a similar service.
Do the right thing
In cases where Amazon manages the VAT on your sales, you may still be required to file VAT returns when using FBA. If that sounds confusing … welcome to global VAT regulations.
Fortunately, Vatglobal’s expert team is available to provide the clarity and assistance you need to optimise your e-commerce compliance, and to always know precisely where your VAT responsibilities lie.