Amazon Business European Tax - who pays the VAT?


#1

Hi all, hope someone can help me, I’m trying to work through this with our accountant but don’t feel like I’m getting a satisfactory answer.

So, I’m registered for Amazon Business and VAT registered throughout Europe.

A number of sales are zero rated by Amazon (mainly B2B but also some none business B2C sales which I don’t quite understand, but anyway), both FBA and FBM orders.

So, for a zero rated sale to Italy, let’s say 100 EUR who is paying the VAT to the Italian authorities? Is the customer asked to pay the 20 EUR VAT by Amazon or am I expected to pay the 20 EUR VAT and then the customer reclaims on his side? Or am I reporting as a gross sale to the Italian authorities and paying 16.7 EUR to them (I don’t think it’s this one, but that’s what is currently happening…).

One more thing, the new E-invoicing system in Italy (sending digitally signed XML invoices from a government issued email account), my assumption is that this is only needed for Italy based businesses, but does having an Italian VAT registration / holding stock in Italy (FBA) trigger the need for this? Or does Amazon as the retail agent take on all responsibility for this?

thanks, hope someone can help me resolve this


#3

hi peter,
but if i’m vat registered in that country it doesnt go on the ec sales list at all does it?


#4

I’m sorry, I didn’t read your post clearly. Please disregard as I thought you had said you were UK registered only.


#5

Presumably, you mean you’re registered for VAT in UK AND Italy?

If you make a sale from the UK, to Italy, and you are VAT registered in the UK, and the buyer is VAT registered in Italy…

The VAT can be zero-rated as a cross-border EU transaction… because the buyer would just be claiming back the VAT you’d charge anyway.

But… If the sale is made from ‘within’ to ‘within’ the same country then it can’t be zero rated, even though the buyer could still claim it back in exactly the same way.

Amazon do exactly this when they charge all their fees. They zero rate them if you’re VAT registered (because they’re based in Luxembourg and already have your VAT number).
Except for advertising, which is now a UK-Based arm, so they have to charge the VAT and have you claim it back.


#6

Yes, UK AND Italy (plus others)

So do these transactions all need to go on the EC sales list then?

My accountant has been advising that we can’t zero rate sales as cross-border transactions once we’re VAT registered in that country.

To complicate things further then, what happens to FBA sales that are cross-border EU transactions but not from the UK (e.g. Poland to Italy), do these need to go on the EC sales list with not originating in the UK?


#7

The problem is you need accountants familiar with tax law in both countries. For sales in Italy you really need an Italian accountancy specialist.


#8

Point your accountant at:

For example, if you sell a product to an EU-VAT registered business operating in another EU country, you don’t charge VAT on that sale. If the same product is sold to the final consumer within the EU, you may need to charge VAT at the rate applicable in their country.

But read carefully, there are exceptions.


#9

See, I’m not sure I trust that site, I think it is too basic. Take the reverse implication. If you are VAT registered in the UK and make a sale to a UK business then you need to charge VAT on the sale as far as I am aware. Once you are VAT registered in a country then typically the local VAT rules take effect and I am not certain the the B2B zero rating would trump them.

But, I don’t know, I just know it is complex and I doubt that a simplistic website explanation will cover such a complex scenario as cross border EU B2B transactions when the supplier is also registered in the country of sale.

Edit, in fact the more I think about it the more I suspect that VAT should be payable.

It is comparable to a UK registered company making a sale to another UK registered company but sending the goods from Germany. I would still expect UK VAT to apply to the sale. Note, this is what I would expect I’m not an accountant and my advice is to consult a specialist. I also don’t have any faith that Amazon VAT calculation service would necessarily be suitable or capable of making the correct decisions for complex situations where sellers are registered for VAT in multiple locations and providing cross-border sales.


#10

I agree, it’s very over simplified, and even contradicts itself in places.
Re-reading some of it, it seems that ‘services’ are always zero-rated regardless, but ‘goods’ can vary.

If the sale is zero-rated then then no VAT has been charged. If it’s a B2B transaction, it’s not really an issue, the business ‘customer’ records it as a reverse charge transaction anyway.
But if they’re zero-rating B2C sales then it may be an issue, because the VAT should always be charged.

But keep in mind that the items that are ‘supposed’ to be zero rated in the UK, and the items that are ‘supposed’ to be zero rated in Italy may be different (e.g. kids clothes), in which case the zero rate could be correct.


#11

Thanks guys, I’ve been going through the transactions in detail and it gets more complicated…

For some orders Amazon are selling exclusive of VAT at my full list price (e.g. I list at 120 EUR including VAT and the sale has gone through as 120 EUR exclusive of VAT) and for other orders they’re selling exclusive of VAT at a net price (so they’re selling the same SKU at 100 EUR net, exclusive of VAT).

If I’m liable for VAT on these transactions then the sales amazon is making at a net price are going to cripple me…

Anyway, I’ve got a call with our accountant tomorrow morning, let’s see how we can sort this out…


#12

Hi Kraggle,

I noticed Amazon not charging VAT on B2B in European marketplaces ( I am VAT registered in each of these). I am curious what your accountant said? The accountants handling our returns, have been making us pay the VAT after Amazon already gave the customer a vat exclusive price. Which killed margines.


#13

We’re going to follow how amazon assign the tax. If you download the monthly vat report they break it down transaction by transaction and link to an invoice which states the exact reason (links to the relevant section of the VAT policy) that the transaction was zero rated and also which country they have assigned VAT to (not always the same as the amazon country).

It’s more work for your accountant but well worth it in the amount you’ll save (or not lose in the case where Amazon have charged a net price)


#14

Thanks, I looked at the tax code that keeps coming up on these.

Articolo 194 Direttiva 2006/112/EC

Which seems to emphasize about the supplier of goods and services does not have an establishment.

VAT shall be payable by any taxable person carrying out a
taxable supply of goods or services, except where it is
payable by another person in the cases referred to in
Articles 194 to 200 and Article 202.
Article 194

  1. Where the taxable supply of services is carried out
    by a taxable person who is not established in the Member
    State in which the VAT is due, Member States may provide
    that the person liable for payment of VAT is the person to
    whom […] the services are supplied.
  2. Member States shall lay down the conditions for
    implementation of paragraph 1.
    Article 194a
    VAT shall be payable by the person to whom the goods are
    supplied insofar he is granted the status of certified
    taxable person pursuant to Article 13a if the goods are
    supplied by a taxable person not established within the
    territory of the Member State in which the VAT is due

https://ec.europa.eu/taxation_customs/sites/taxation/files/vat_directive_with_details_for_the_definitive_system_en.pdf


#15

There’s a couple of others too, but I see this one a lot too