European VAT rules for Amazon sellers
If you are an Amazon seller, your VAT obligations in Europe are driven by the following rules:
- OSS schemes for ecommerce sales in the EU
- Role of marketplaces on ecommerce supplies in the EU
- Obligations arisen from the stock held in other EU countries when using the Amazon FBA program.
The first two regulations are explained in the articles linked above. We are providing explanations below of the FBA impact on VAT rules for Amazon sellers.
Marosa automates your VAT obligations and identifies the VAT treatment of each of your transactions in Europe. Contact us to know more about how we can help you staying on top of your VAT compliance obligations in Europe.
What is Amazon FBA?
FBA stands for Fulfilment By Amazon. The Amazon FBA program offers sellers the possibility of a quick and hassle free delivery to all customers around the world. To make this happen, an Amazon seller will place his or her products in the nearest Amazon warehouse. Amazon will then distribute the goods across warehouses in other countries so that they are closer to the final customer and can fall in the category of "Amazon prime" (shorter delivery times).
There are clear opportunities and economic benefits of this scheme, but you should also be aware of additional obligations in the field of VAT.
VAT rules for Amazon sellers who are not in the pan-European FBA program
If you do not outsource the logistics of your sales to Amazon and you only use this platform to advertise your products, you will fall in the general rules of VAT under the OSS regime in 2021.
You can read this manual considering the general rules and you do not have to worry about the exceptions explained immediately below. That is, you can still submit a single OSS return where all sales across Europe are reported and you will not require additional VAT registrations.
VAT rules for Amazon sellers who are part of the pan-European FBA program
If you benefit from the Amazon FBA program and your products are stored in Amazon warehouses abroad, you will need to register for VAT purposes in each of the countries where your products are stored.
In practice, this means that you cannot benefit from the full simplification of OSS for online sale of goods, but the good news is that part of your sales would still fall within this simplified regime.
Here are some rules that you should consider:
- You will need to submit two types of VAT returns: 1) A single OSS return for all intra-Community distance sales of goods; and 2) regular VAT returns in each country of registration for “movements of stock” and “local sales in that country”. You will also submit a regular VAT return in your home country.
- Intra-Community distance sales from any Amazon warehouse to a customer abroad (outside the country where the warehouse is located). Those sales will be included in your OSS return as explained above.
- Your movements of stock (FC_Transfers) need to be reported in each country where the movement takes place. So, for example, if Amazon moves stock from a German Amazon warehouse to a French Amazon warehouse, such movement must be reported as an intra-Community dispatch in your German VAT return and as intra-Community arrival in your French VAT return.
- Your local sales are those sales made from an Amazon warehouse to a customer located in the same country where the warehouse is located. For example, a sale from your French Amazon warehouse to a French customer would fall in this category.
- You should also consider any supply where Amazon is considered the deemed supplier, as this will deviate the VAT treatment of your sales.
You can find all the information about the type of sale you are making in the Amazon VAT transactions report. More information about this report is available on Amazon's website.
The good news is that Marosa has an automated and cost efficient software that will help you submitting all VAT returns automatically with an easy-to-use wizard that will guide you in each filing.
Example of VAT obligations for Amazon sellers in the FBA pan-European program
Company C is an Italian business that ships its products to Amazon Italian warehouses so that they are distributed across the EU as part of the FBA program.
Company C holds stock in all Amazon marketplaces in Europe, so it must be registered for VAT in all these 7 countries (UK, Spain, France, Germany, Poland, Czech Republic and The Netherlands).
In April 2021, Company C downloaded the Amazon VAT transactions report for March and took note of the following activity carried out during March (to keep it simple, we included 0 sales in most countries, but we are sure your business does better than that!):
|Amazon warehouse||Domestic sales||B2C Sales to Spain*||B2C Sales to Belgium*||FC transfers – Dispatches to FR||FC transfers – Arrivals from DE|
|France||€ 9,000||€ 33,000||€ 20,000||0||€8,000|
*We only included two sample columns (Spain and Belgium) but you will get multiple columns, one of each country.
If we only take into account the above sales, the following returns will be submitted by company C:
|Italian OSS return Q1|
|€ 35,000||€ 7,350|
|€ 45,000||€ 9,450|
Individual country by country returns:
|Germany - March 2021|
|Domestic sales||€ 2,000||€ 380|
|FC dispatches||€ 8,000|
|Total payable||€ 380|
|France - March 2021|
|Domestic sales||€ 9,000||€ 1,800|
|FC arrivals||€ 8,000|
|Total payable||€ 1,800|
In this example, Company C will make three separate payments. The OSS payment to the Italian tax authorities for an amount of € 16,800, the German VAT return payment for € 380 and French VAT return payment for € 1,800.
Company C will also file nil VAT returns in Spain, UK, Poland, Czech Republic and The Netherlands. Also, a regular VAT return will be submitted in Italy in addition to the OSS Italian return. And if that was not enough, an ECSL return must be submitted in Germany and DEB return in France (if thresholds are exceeded).
In all these scenarios we took the standard VAT rate as an example, but remember that different VAT rates apply depending on the product sold in each country.
Remark on VAT rules on B2B sales by Amazon sellers
Amazon is expanding sales to business customers. This is an opportunity to increase sales and profits, but also VAT rules should be regarded as the VAT treatment on these sales and will deviate from the standard rules on OSS regime and distance sellers.
When you sell your products to business customers using your Amazon seller account, the VAT treatment will depend on whether you use Amazon FBA or not. None of the sales described below would be reported in the OSS return.
- If you do not use Amazon FBA on your B2B sales:
- Sales to customers abroad: You will treat them as intra-Community supplies from your home country. VAT will not be charged if the exemption conditions are met.
- Sales to local customers: You will treat as domestic sales. VAT will normally be charged at your home country's VAT rate.
- If you use Amazon FBA on your B2B sales:
- Sales to customers abroad (includes any sale from an Amazon warehouse to a business customer located in a country different from the country of the warehouse of dispatch): You will treat them as intra-Community supplies from your home country. VAT will not be charged if the exemption conditions are met. These sales go in your standard VAT return of the country of dispatch (not your OSS return).
- Sales to local customers (includes sales from an Amazon warehouse to a business customer located in the same country of the warehouse of dispatch). There are two options: a) You charge VAT at the local rate of the domestic country; or b) You do not charge VAT because domestic reverse charge applies.
All the above is complex, but Marosa's tool will automate the reporting of all your sales in Europe with a hassle-free solution. We also will integrate with your Amazon seller account so you do not have to worry about providing the information.
Get help from Marosa
Amazon provides a great infrastructure to grow your business and to put you in contact with an unlimited number of sales opportunities. However, VAT rules get complex among all possible scenarios and administrative rules. Multiple VAT returns and registrations make it difficult to focus on your strategy and business growth.
Thankfully, Marosa has a dedicated team and fully automated tax technology solution that will take care of all your VAT obligations. You will simply receive a notification with the amount to be paid each period to the relevant tax authority. Everything else, including VAT registrations, data collection, VAT returns, ECSL returns, Intrastat, and archiving of all your documents will be handled by your dedicated Marosa manager.
We rely on technology, but we are not technology. We are VAT experts who analyze your transactions carefully and provide an individual service to you personally.
Contact us to know more about how we can help you and request a free demo of our tools and processes.