Amazon VAT on FBA

Hey forum,

I sincerely hope that you would read my question and spend some time helping me understand how Amazon VAT works. Please keep in mind when explaining it, that I have not been selling on Amazon before, hence I will have trouble understanding an advanced explanation.

I am an employee in a medium/large Danish company. We sell (via local webshops) in quite a few countries in EU+UK. We now wish to also sell through/via Amazon in these countries.

Therefore, we have a few questions regarding VAT.

Before stating those questions, I should mention that we will be selling as an FBA-seller, which I think will have an effect on how the specific VAT is calculated.

My first question is regarding whether or not we will need a VAT number in all the countries that we sell to or if it is enough just to have an e.g. German VAT number. If it is enough to be registered in just one country, what will happen to the VAT, if Amazon e.g. chooses to store our FBA inventory in more countries than a German Amazon warehouse (e.g. Italy, UK, France).

My other question is in regards to, if Amazon collects VAT automatically via the fee that we are going to pay them for selling on their platform or if we have to pay the VAT ourselves (based on the payment that we receive from Amazon) in one country or in each of the countries we sell to.

No matter if we have to or don’t have to pay VAT and be VAT registered in all of the countries, how does Amazon look at each of the countries specific VAT-thresholds? Our webshop in Norway is e.g. over the threshold to be VAT registered (hence we are registered) while our webshop in Poland is below the threshold (hence we are not registered) in Poland. I would not be surprised if Amazon don’t care about the threshold and requires sellers to register in all the countries that they sell to.

Best regards

Someone who hopes to receive some good answers and would be extremely appreciative about someone taking their time to answer me.

 

I'm afraid that nobody on this site is going to be able to help you with this. This is a tax on the sales of most products. Every country has a different VAT system and they all collect and work VAT in different ways. Even chartered accountants find it confusing. You will simply have to learn to navigate it all as you plod along.

 

Okay well, thank you for your answer. I hope someone here will point me in the right direction.

 

I know a bit about EU VAT and can give you some info, but don't have first hand experience with the way Amazon handles it (other than from a customer point of view). You may know this already and hopefully this was part of your question. If you only wanted to know about Amazon policy, hopefully the info below will be useful for someone else.

As you probably know, any business (whether EU or non-EU based) is supposed to charge VAT depending on the country of the customer, and then pay this VAT to the country in question.

This means that if you have customers in all EU countries, you do need to charge VAT in each country separately and then pay each country their respective collected VAT. For this you would typically need to apply for a VAT number in each EU country... sounds great? welcome to Europe.

A few remarks however:
- there is an exemption if your sales volume (not the VAT due) in one specific country is under a certain threshold. Each country has its own threshold however, so you need to check for each one. Just Google "EU VAT registration threshold". For example, the threshold for Austria is 35 000 EUR. So if you sell less than 35 000 EUR of goods to Austria per year, you may apply the VAT rate of your country of establishment, instead of the country of residence of the customer (but you still need to pay VAT somewhere).

- At EU level, there is a Mini One Stop Shop (MOSS) that allows you to manage VAT in one place, but I believe it only applies to digital services.

- By default, when you sell your products to a business in an other European country, you can apply a 0% VAT rate. However, certain countries (ex: France) do not allow this when selling physical goods to businesses located in France, so you would still need to pay French VAT when selling to a French business.

As an Amazon customer (both private and business), my experience is the following: they just don't care about VAT. When I buy products for my company, I systematically ask for a VAT invoice. Note that it is automatically generated when the product is sold by Amazon directly, which is nice. But somehow I need to manually request it when I buy from a third party vendor that's not in my home country.

What happens next is almost always the same thing: I get some half-assed crappy Word invoice mentioning a company in China or Hong Kong. Most of the time, there is no mention of VAT at all. Sometimes they write some VAT rate and price, but often the rate is wrong and in any case, this has no value when I try to claim VAT back from my local tax office. Why? because this Chinese company didn't register for VAT in my country (I assume they didn't register anywhere in EU) and unless they did and they indicated their VAT number on the invoice, I won't be able to claim the VAT back.

I have asked Amazon customer service several times about this. After all, the prices are displayed on Amazon as (inclusive) and should therefore show my local VAT rate. Amazon's answer is always: "you can return the item and ask for a refund". But there are some products (small electronics usually) that are only sold via these third party Chinese sellers.

I know that this VAT issue is a big thing in Europe and governments are pushing Amazon to be held responsible but as of now, it is still not solved.