If you’re running your business or providing digital services on the Amazon platform at the moment, you plan to sell across borders.
You may need to understand the VAT knowledge necessary for e-commerce on the Amazon platform.
Although many of our previous articles have referred to VAT, this article focuses on cross-border VAT knowledge.
VAT
VAT is a general, broad-based consumption tax that assesses the added value of goods and services.
Applies to all goods and services bought or sold for use or consumption within the EU.
Typically, when a merchant conducts a transaction in an EU member state, it is required to submit a tax return to the tax authority of that country.
Although VAT policies vary slightly from country to country, each Amazon Selling Partner must comply with the VAT requirements.
VAT rates
EU law requires that the standard tax increase rate must be at least 15%, and the supply of some goods and services may involve a tax reduction (tax reduction rate of at least 5%).
In fact, the actual rates vary between EU countries for certain types of goods, which requires you to consult our professional tax team in detail to obtain accurate values.
Due to the completely different tax legislation between countries, you need to pay special attention to the VAT regulations in various European countries when you decide to expand your business internationally.
As Amazon’s preferred partner for VAT services, we have accountants in different countries to provide you with personalized service in multiple languages.
Register for VAT
When your online store operates on the Amazon platform, you need to register a VAT number with the countries involved according to the nature of your business.
It will require you to provide various detailed documents such as business address, business model and annual sales.
Once you get your VAT number, it will be automatically linked to Seller Central. After that, start to operate VAT declaration on time to ensure smooth operation.
Consequences of not complying with rules
When your business involves the EU, you are obliged to register for VAT with your country and file a VAT return as required.
Businesses who fail to meet their tax obligations on time can be subject to severe fines. The amount of the fine depends on the length of time the registration obligation has not been fulfilled and the amount of VAT payable.
If you knowingly fail to comply with your VAT obligations, you may be subject to criminal prosecution by the government of that country.
If your business is identified by Amazon as failing to comply with your VAT compliance obligations, you may lose your right to sell on Amazon.
As a VAT supplier to Amazon, we strongly urge you to complete your VAT registration as soon as possible and file your returns on time. Our professional accounting team will work with you to advance your global business.
