VAT News

Simplify Global Selling-A new pilot scheme from Amazon

As the digital economy continues to develop at a rapid pace, businesses are no longer restricted to trading within limited geographical areas, and can now trade with customers located in many countries. For example, many UK based traders selling on Amazon sell their products throughout Europe, using local Amazon platforms.

Currently, such cross border sales can provide sellers with multiple VAT registration obligations, as they may breach the distance selling thresholds for goods dispatched from the UK to non-business customers, or they may move goods in their ownership to Amazon warehouses located in other EU countries to fulfil local orders. The exact VAT compliance obligations of a company will depend on the Amazon service they use, and the exact transactions which take place. Many sellers can therefore have widespread VAT compliance obligations.

Amazon have recently announced a pilot scheme with the aim of simplifying obligations for sellers. Under the pilot scheme, UK based sellers will make sales to customers located in the UK and across Europe. The domestic UK sales will be treated as they are currently, but sales to non-UK customers will see the sale made to Amazon UK, who will then make the sale to the end customer in their own name. The result of this is that sales will be classed as domestic sales within the UK, and will be reported solely on the UK VAT return, removing overseas obligations.

Note that this is currently at the pilot stage, and participants are invited to join by Amazon. Use of the scheme should be carefully considered, as there may be benefits to operating in the current structure, particularly if non-UK VAT is incurred, or a local presence is beneficial.

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