Amazon have updated their VAT service for 2022. Previously, sellers could sign up for the service and not be charged for the first 6 months. However, sellers who sign up for the service from the 1st of January 2022 will now have to pay fees from the first month of joining. This is likely a reaction to the struggles that marketplaces are experiencing with complying with the tax rules that came into force last summer. In today’s article we’re going to take a look at the tax rules surrounding online marketplaces and how you can ensure that you comply with all of them.
The EU Tax Rules For Online Marketplaces
It had been clear for a long time that the rules regarding VAT and ecommerce had been outdated. That is why last summer the EU introduced a new set of tax reforms regarding the collection and calculation of VAT on ecommerce transactions. For online marketplaces, this meant that they were given much more responsibility when it comes to VAT reporting. In many cases, it is now the responsibility of the online marketplace to record and declare the VAT on sales made on their platform.
This change placed a lot more strain on online marketplaces. If they fail to record and report the VAT of the sales made on their platform correctly they are in danger of receiving fines. This is why we are seeing the introduction of services such as the Amazon VAT service. These services will make it easier for marketplaces to accurately report the VAT that is now their responsibility to declare. This is especially difficult when one considers the varying nature of VAT rates across the EU.
The Amazon VAT Service
The Amazon VAT service essentially allows sellers to manage their VAT requirements in one place. Via a third-party service provider, sellers are able to complete all their VAT registration and filing obligations. This service can be used in seven countries; UK, France, Germany, Italy, Spain, Czech Republic and Poland.
The service will cost €33 per month, per country that you are registered in without fiscal representation. If you sign up before the new year, Amazon will cover the cost of the first six months. However, from the new year this will no longer be the case and sellers will need to begin paying from the month that they sign up. It is worth knowing that you can also transfer any existing VAT responsibilities that you may have over to the service to let Amazon and the third-party service provider deal with them. Find out more about to get started with the service here.
What About Other Online Marketplaces?
This strain doesn’t just apply to Amazon. All online marketplaces have felt the stress of complying with the VAT rules for ecommerce. Etsy have announced to their sellers that they must comply with their new regulations or risk having their accounts frozen. These regulations include updating their taxpayer ID and their addresses.
Etsy have informed sellers that this is due to new regulations that state that Etsy must report payments over $600 on behalf of sellers from the beginning of 2022. Currently, this figure is $20,000, so obviously this means that Etsy are about to feel the burden of much more administrative costs. This is why services such as the Amazon VAT service are so invaluable.
We Can Act As A Third-Party Service Provider For The Amazon VAT Service
As usual, we would like to take this opportunity to remind you that our long history of working with Amazon and eBay sellers means we can offer you expert advice. As a trusted member of the Amazon Service Network, we can act as a third-party service provider for the Amazon VAT service.
As well as helping with your Fulfilment, we would be more than happy to help you register for the OSS and help you with all your VAT compliance needs in case your account faces any issues. So please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com for a quote today.
