Returned Goods

If your customers request a refund and return their goods, this has a VAT impact for 2 reasons:

• You must credit the VAT charged to the customer and you can claim this back as a deduction from the tax office. Theoretically a compliant credit note should be issued

• If the goods are returned cross-border (i.e. sent back by a customer in another EU country), this is deemed to be a movement of goods that is taxable and must be declared in the VAT return and possibly EC sales list.

This is particularly relevant for sellers who use Amazon’s FBA model: very often goods will be returned to the fulfilment centre that is closest to the customer. If you are registered in the country where the goods are returned to, the returns must be reported. However, if you are not registered in that country, having goods sent to that FC might trigger VAT obligations.

It is important that you discuss this with Amazon or your logistics provider and then share that information with your VAT agent so that the VAT compliance implications cab be considered.