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New Amazon VAT Service Update Alert!
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It had been clear for a long time that the rules regarding VAT and ecommerce had been outdated.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.
Ecommerce for Christmas Soars As Black Friday Dips
You may be surprised to know that Black Friday sales actually saw a decrease from 2020 by about 14%. This was likely to do with supply chain issues and the inevitable drop in ecommerce from peak pandemic levels. However, this drop off is not indicative of the festive shopping season as a whole. Indeed, it is expected that more people will actually complete their Christmas shopping online than ever before. Here’s our opinion on why and our choices for trends that ecommerce sellers should be preparing for over this festive season.
Ecommerce Will Still Flourish This Christmas
It is being estimated that European ecommerce revenues will surpass 396 billion euros by the end of 2021. This shows just how popular shopping online has become since the pandemic. Undoubtedly, this will continue with many surveys suggesting that shoppers will carry out the majority of their Christmas shopping online this festive period.
Sellers should be aware of this and prepare their delivery options accordingly. Couriers will be under immense stress over the coming weeks so it is worth suggesting to your customers to get their orders in early. Many retailers are advertising their delivery ‘cut-off’ points, essentially informing their potential consumers of the latest that they can make a purchase and receive it before Christmas day. This is a wise strategy for sole traders to imitate.
Online Marketplaces Set To Dominate This Christmas
Online marketplaces have become the first port of call for online shoppers. Recent research has shown that the majority of consumers now use online marketplaces as a search and comparison tool when they’re looking for a product. Online marketplaces in Europe are thought to have enjoyed revenues totalling somewhere between 120-150 billion euros in 2021. This means they fall just shy of being responsible for half of all the European ecommerce market sales.
Sellers should be aware that the popularity of each marketplace differs by country. As you might expect, Amazon is the dominant platform in most countries. However, Allegro is the dominant force in Poland and Bol.com is the preferred platform for most Dutch consumers. Evidently, consumers tend to prefer to use their domestic platforms. Sellers should keep this in mind when trying to sell over Christmas and into the new year. If a lot of your customer base is abroad, perhaps you should look into setting yourself up on their domestic online marketplace. This would obviously require VAT registration, but that’s where we come in…
If You Are An Ecommerce Seller, We Can Help You
If you have any concerns about dealing with the upcoming holiday season, we at J&P have the qualifications and knowledge to help you plan ahead, so please do not hesitate to get in touch should you have any further questions about selling on online, or if you need any help with adapting your business.
We can get you VAT registered across the EU and can file your returns. Essentially, we sort out your tax so you can deal with selling your products. You can contact us at enquiries@jpaccountant.com, on our social media, or give us a call on 0161 637 1080. Finally, we would just like to wish you a merry Christmas from all of us here at J&P!
Panic As EU VAT Gap Widens After Pandemic
Before the pandemic, the EU VAT gap was beginning to shrink as member states improved their collection processes. New reporting techniques such as e-invoicing meant that member states were on the right track to reducing the tax gap. However, the pandemic saw consumption decline and GDP growth slow, and thus the EU VAT gap widened once again. Today we’re going to take a closer look at the figures, and what steps we can expect to see the member states take to try and combat this trend.
EU VAT Gap Widened
Currently, experts are predicting that the EU VAT gap will equate to more than €164 billion by the end of the year. This would mean that the EU has roughly lost €4,000 a second. This would represent a considerable jump from 2019, where EU countries are thought to have lost roughly €134 billion in lost tax revenue. This was a decrease of €7 billion from 2018.
Another way that we have seen countries lose money is from tax fraud. Many dubious opportunists attempted to con tax authorities during the pandemic by wrongly applying for the aid offered by governments during the pandemic. At the time of writing, governments from all over the world are investigating these individuals in an attempt to recoup some of their lost money, and to reduce the EU VAT gap.
What Measures Are We Likely To See Introduced To Combat The EU VAT Gap?
As mentioned in the previous section, governments are likely to step up their attempts to find misplaced taxpayers’ money from the pandemic. In addition, we will certainly see an increase in tax investigations. This will likely affect ecommerce sellers. Since ecommerce is still a relatively new marketplace, tax authorities are yet to work out how to adequately collect tax from this industry.
Furthermore, the EU VAT gap is likely to benefit from the introduction of environmental taxes. Globally, we are about to see a huge increase in environmental taxes as governments seek ways to force companies to lower their carbon footprint. This will represent quite a difficult task for MNEs as there are very few tax professionals who specialize in this area. Should you and your business require any support with environmental taxes such as plastic taxes or carbon taxes, we can help. Contact us today for a free consultation regarding the tax services we can offer to help you and your business.
If You Are An Ecommerce Seller, We Can Provide You With Solutions
This an exciting time to be an ecommerce seller, but at the same time these constant rule changes can be distressing and confusing. Luckily, we are here to support you through the EU VAT gap. Whether it is expanding your business to another country or you just need supply chain support, we at J&P Accountants have been supporting ecommerce sellers for years and can offer you a range of services.
If you are a business who participates in cross border ecommerce, we would be more than happy to help you register for VAT, file your VAT returns, and help you comply with VAT in case your account faces any issues. At J&P, helping your business is our passion, and we understand that companies across the UK are at risk now more than ever. We are here to support you through the Coronavirus crisis and the busy festive period, so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com.
Which Couriers Are Struggling To Deliver Results?
You know how it is; you hear a knocking at the door, you put down your brew and rush to the door, only to find a ‘we missed you’ note on the floor and then have to go and pick up your parcel that you’ve been so excited for from the post office the next day. Whilst this tale has become normalized, it is a real issue for ecommerce sellers and consumers alike. In order to shed light on the issue, Citizen’s Advice have ranked couriers based on survey results. Let’s take a look how the delivery service providers fare in the league table.
So, How Were The Delivery Service Providers Ranked?
The survey asked participants to rank different service providers based on customer service, trust, and how many problems they’d faced. What was worrying was that none of the service providers received more than 3 out of 5 star overall. The highest overall score was Amazon Logistics with a score of 2.75 stars out of 5.
Bottom of the list was Hermes. Hermes received a score of 1.5 stars, only just bettered by Yodel, who received 1.75 stars. When looking at the individual scores, the result seem to get more concerning. For example, 48% of participants claimed they were unable to achieve their desired outcome when their delivery had an issue, a figure that rose to 56% for Yodel.
Why Are Couriers Struggling So Much?
The obvious answer seems to be the pandemic. This is evidenced by the fact that the Citizen’s Advice’s website page ‘if something you ordered hasn’t arrived’ has been viewed 160,000 times this year. This is almost a 70% increase on the same period in 2019 before the pandemic. The truth is that these service providers have struggled to keep pace with the massive surge in ecommerce.
Throughout lockdowns, since people couldn’t shop in physical shops they have instead been shopping online. This has put a massive strain on couriers. Citizen’s Advice are suggesting that if people want to avoid missing deliveries, it is definitely worth checking with a neighbour or local shop whether your parcels can be delivered there as an alternative. It is also worth trying to talk directly to the seller if you are buying from a sole trader.
We Provide Ecommerce Solutions
As usual, we would like to take this opportunity to remind you that our long history of working with sole traders means we can offer you expert advice.
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.
Amazon Will No Longer Accept Visa Credit Cards
Amazon sellers and consumers should be aware that as of January 19th 2022, Amazon will no longer accept Visa credit cards issued in Britain as a viable payment method. It has been announced that this is due to the high fees charged by Visa credit cards for transactions. Businesses of all sizes have voiced displeasure at the fees charged by card networks, but of course not many businesses have the power to restrict customer choice. Amazon, one of the only companies who are big enough to take this stand, may be about to make a huge shift in the market.
Why Are Amazon Putting A Stop To Visa Credit Cards?
The issues between merchants and card providers have been going on for years, so on the surface it seems strange that Amazon are choosing now to halt the use of Visa credit cards on their site. However, if you delve a bit deeper it is clear that this is because of the effects of Brexit.
As stated by EU and UK law, card providers can only charge a maximum of 0.3% per transaction. When the UK was still in the European Union, this applied to all transactions. However, since the UK have left the EU, this law only applies to in-person transactions, meaning that the credit card companies can charge more for online purchases. This has resulted in Visa raising their fees by a staggering 500% to 1.5%.
Since most purchases on Amazon UK are made for products in the UK this wouldn’t seem like the worst thing. However, when you buy something from Amazon UK you are actually buying something from the Amazon European headquarters, meaning that Visa have been making millions from UK credit card transactions on Amazon.
What Have Visa Said?
As you can imagine, Visa are extremely dismayed by this latest development. They believe that Amazon are limiting consumer choice and that the consumers are the main victims of Amazon’s move to remove Visa credit cards as an option on their site. However, it is quite clear that Visa are the party that stand to lose the most in this situation.
Amazon are still allowing consumers to use Mastercard credit cards, which suggests that they’ve reached an agreement with them over fees. They are also still allowing the use of American Express since they have not attempted to raise fees for UK to EU transactions. Clearly, the global ecommerce giant are staring down Visa and attempting to force them to lower their fees.
Will Amazon Stopping The Use Of Visa Credit Cards Affect Sellers Or Consumers?
The answer of this question of course depends upon how much you want to use your Visa credit card. Amazon are still allowing transactions using Visa debit cards and other credit card suppliers so you still have a lot of purchasing options. It would be wise for you to change your default payment method from your Visa credit card before the changes come into effect in January 2022.
As for sellers, this is very unlikely to change much for you. It is still worth being aware of the news though in case you receive any complaints or questions about failed payments if your customer attempts to pay with a Visa credit card.
We Specialize In Supporting Amazon Sellers
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 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.
Support For Amazon Sellers This Festive Season
As all ecommerce sellers know, the global supply chain issues are going to make fulfilling orders this Christmas very difficult. Amazon have recognized the strain that their sellers are under, and in order to alleviate this they are introducing new measures to support their sellers. Firstly, Amazon are increasing the inventory space at their fulfilment centres. They are also introducing a new service called Amazon Upstream Storage in order to streamline the inventories of Amazon sellers. Let’s take a look at these new measures and how Amazon sellers can take advantage of them this festive season.
Global Supply Chain Issues A Hot Topic This Festive Period
The global supply chain issues have been present for quite some time now. The reasons for this include a shortage of workers, shipping delays and disruption at ports. Partly, this is due to the blockade at the Suez canal earlier in the year, but more recently we have seen congestion at ports in America with cargo ships floating in the Hudson Bay for weeks at a time.
We have also seen congestions at ports in the UK. This is partly due to businesses and customs operatives still struggling to adapt to Brexit regulations. Furthermore, we can’t forget the affect the pandemic has had on the demand for ecommerce. All of these issues have resulted in major delays all over the world. Unfortunately, Amazon sellers are not exempt from these problems.
So How Are Amazon Trying To Help Their Sellers
Amazon are well aware of the supply chain issues that their sellers are facing. The first thing they have done is attempted to convince consumers to do their gift shopping earlier. We have seen evidence for this in the shape of their ‘Black Friday-like’ deals earlier in the year. The hope was that this would spread out the festive shopping period, making fulfilment easier.
On top of this, they have also introduced new measures to support their sellers. These measures were mentioned in the introduction. We believe that Amazon sellers will benefit greatly from the new support. Let’s take a closer look at this support.
Increased Storage Space At Amazon Fulfilment Centres
Amazon have made it common knowledge for a while now that they were investing heavily in their fulfilment network. In 2021 alone, amazon added 10 new fulfilment centres across the EU and UK. In September, Amazon launched operations at 7 new fulfilment centres. In addition, they even added more space at their existing centres.
As a result of this, Amazon have notified sellers in one of their latest announcements that they have increased their restock limits across many of their fulfilment centres. This will be invaluable for their sellers leading up to the holidays. Sellers are advised to review their inventory health and to ensure they are optimizing their FBA selection.
Amazon Upstream Storage Introduce To Support Amazon Sellers
This new service is mainly focused on helping sellers bringing their inventories over from China and Hong Kong using Amazon’s Global Logistics capabilities. The hope is that the new service will help sellers streamline the replenishment of their inventories at Amazon fulfilment centres.
The benefits of the new service include affordable bulk storage and speedy replenishment of inventories at an affordable price. The service is fully automated and will automatically move inventory from upstream storage into Prime-ready fulfilment centres. The service is being called Amazon Distribution on some parts of Amazon’s website, and they have also referred to the service as STAR in some of their communications with sellers. You can find out more about FBA changes in our article regarding Amazon FBA changes to consider before Black Friday.
We Specialize In Supporting Amazon Sellers
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 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.
