Value Added Tax, or VAT, can be confusing for small sellers who want to expand throughout the EU and UK. Learning how to register and when to pay can take hours of time. Many sellers don’t have the time to sit down and learn when they’re trying to grow their business domestically. They also don’t want to spend time and money hiring consultants to help them start the process. This service is only available to EU-based sellers.
But you shouldn’t let your fear of learning the processes and procedures stop you from selling abroad. Where other sellers may avoid selling globally because of the complexities of the regulations, you can gain a competitive advantage by learning about the requirements. What you’ll discover is that VAT is no more difficult than sales tax in the United States.
You’ll want to consult a professional, as laws and regulations constantly change, and you’ll want to make sure that your business is in compliance. You don’t want a surprise bill from the HRMC (the UK tax agency) later for failing to pay. Amazon ensures accuracy by working with the tax agency Avalara. Some sellers may be familiar with Avalara since it’s a popular automated tax service in the US like TaxJar. If you’re looking for other sales tax-related services or other Amazon services, check out our list of Amazon services and apps.
First and foremost, most sellers will have to register for VAT if inventory is stored in the country and sold to consumers within that country. Other EU countries have sales thresholds that you have to meet before you’re required to register for VAT. For instance, the UK has a domestic VAT threshold of £85,000 while Germany’s threshold is £17,500.
You can learn more and simplify the entire VAT process by signing up with Amazon VAT Services. If you want an alternative solution, SimplyVAT is another service Amazon sellers use. Read Amazon’s official page for VAT Services.
To use Amazon VAT services, you’ll need to meet these requirements.
First, you’ll need to activate Amazon VAT Calculation Service (VCS) through your Amazon seller account. This is required for VAT filings.
Secondly, you’ll have to be based in the EU, as only EU sellers are supported.
Other sellers may want to consider SimplyVAT.
VAT Services Benefits
If you sign up with Amazon VAT services, which is €400 per year per country, you’ll receive these benefits:
- Free VAT registration number if required
- Filing VAT takes only minutes every month
- Monthly, quarterly, and annual VAT filing as required
- Intrastat reporting
- EC Sales List reporting
- Locally required reporting like Spesometro in Italy
- An additional €100 per year for filing for your business transactions off Amazon
- Ability to subscribe per country: Czech Republic, France, Germany, Italy, Poland, Spain, and the United Kingdom
There’s an additional VAT services fee that is charged on your Amazon account. This fee will show up as a “Miscellaneous Adjustment” on your existing balance.
VAT Process on Amazon
If you’re interested in the process, your monthly tasks for VAT processing is below.
- Amazon consolidates all of your transactions from the marketplace into one Amazon VAT Transactions Report by the 3rd of each month, so you’ll have to edit your Product Tax File by then if you need
- If you have off-Amazon transactions (an additional €100 per year), complete your Additional VAT Report by the 6th of each month
- Review and approve your filings
- Make your VAT payment—Amazon provides you with the amount and the proper tax authorities for the payment
Learning about taxes is just a required part of doing business on any marketplace. Don’t let fear of the unknown keep you away from growing your business internationally. By using Amazon VAT Services to manage your VAT filings, payments, and reporting, you’ll save countless hours from having to do the work yourself. You’ll also save thousands of dollars from having to pay an additional employee or tax professional to complete the filings for you. You can then focus on your business and increase your sales instead of focusing on such a tedious task.
Increase your business by selling to all of the EU marketplaces with over 700 million potential customers. Expand your business and create an international brand by selling on the EU marketplaces. And have VAT automated through Amazon so that you don’t have to worry or spend more time than is necessary.