After withholding VAT in Europe, sellers may still need to report/pay taxes

July 7, 2023

Seller friends may know that since European e-commerce VAT regulations officially came into effect in July 2021, Amazon has withheld VAT for B2C orders sent by Chinese sellers within Europe. So, after withholding payment is implemented, will the seller's friend be fine with everything and no longer need to register a tax ID?Is there no need to file a tax return or pay tax anymore?That's not the case!

1
What situations require the use of European VAT under withholding
Tax ID for tax filing/payment

Inventory has never been generated locally in the UK or EU:

If you are a pure self-shipping seller who ships entirely from China and have never produced inventory in the UK or EU, you generally do not need to apply for a tax ID and make sales tax returns after withholding payment. However, it is important to note that you may need to make relevant declarations at customs when shipping. Please consult your freight agent for details.

Generate inventory locally in the UK or EU:

If you generate inventory in the UK or the EU, you will need to apply for the tax number of the country where the inventory is located, upload it to Seller Central, and complete tax returns regularly as required. Please note: Sellers are subject to tax reporting obligations even if the order is withheld.

At the same time, some orders require tax payment after filing, because not all orders will be withheld. Currently, only some B2C orders will be withheld, and B2B orders will not be withheld (key points)!

● For B2C orders shipped from within the UK or the European Union that have been withheld by Amazon, although you no longer need to pay taxes yourself, you still need to complete the reporting process to ensure compliance with the tax process; you only need to declare the net value without VAT
● Cross-border transfers of inventory within the UK or the EU do not need to pay taxes, but they still need to be reported to the Inland Revenue Department
● For orders shipped from within the UK or EU that are not withheld by Amazon (e.g. B2B orders), you are required to file your own regular returns and pay VAT on time (very important)

VAT filing and payment schedule for European countries

*Note: Due to the processing time required for international transfers, it is recommended to complete the payment 3-4 days before the due date!

Regarding which B2C orders will be withheld, you can judge by referring to the following EU withholding self-inspection idea map:

UK e-commerce VAT Act self-inspection ideas

EU e-commerce VAT law self-inspection ideas

2
What are the consequences of tax non-compliance

Failure to meet the above compliance requirements may have serious consequences for the account being suspended from selling!Don't take it lightly!

Suspension of selling privileges

If you have generated inventory in the corresponding country and haven't uploaded a valid tax number, then your selling privileges on the corresponding site may be suspended until you upload a valid VAT number before you can resume.

Among them, the German site will suspend account sales rights within 24 hours of generating inventory but not uploading a valid tax number; the UK site will suspend account sales rights for 90 days!

Tax audits

If you fail to file a compliance declaration or pay VAT fees that have not been withheld (e.g. B2B orders) within the specified period, you may be subject to tax audits by the Inland Revenue Department. Additionally, the Inland Revenue Department may also impose additional fines for failure to file or pay taxes in a timely and complete manner.

3
How to avoid European VAT tax non-compliance

Based on statistics on sellers who received audit notices from tax authorities in 2022, 93.8% of sellers whose selling rights were restricted due to tax issues did not use Amazon's VAT integration services. 61.4% of sellers who successfully handled tax checks and restored their selling privileges, used Amazon's VAT integration services. *

*The above data is for reference only. Please refer to actual or government information. It does not constitute any tax, legal or other professional advice, and must not be used as such advice

For the different tax compliance needs that sellers may face, Amazon's VAT integration service is your best choice to complete tax registration, reporting and payment in one stop.

Official product, reliable and controllable

● Amazon strictly screens high-quality taxes, maintains close ties with the Inland Revenue Service, understands the new regulations of the Inland Revenue Service as soon as possible and provides solutions quickly
● Amazon monitors the communication and performance of tax agents in real time, responds quickly, and promotes tax agency service processes
● First-hand tax agent, instant subscription communication, no intermediary service provider

Fast compliance, saving time and peace of mind

● You can get a tax ID within a week as soon as possible to seize the European market
● After obtaining the tax ID, directly help the seller upload it to the seller platform, without the seller having to do anything
● Help sellers comply, respond quickly to tax office checks, and have a high historical average compliance rate

Transparent fees, safe to use

● Buy 5 get 2 free: If you declare VAT in 7 countries, you only need to pay the corresponding filing fees for 5 countries
● Monthly billing, free transfer, and free cancellation; you can save up to 70% on subscriptions to Poland and the Czech Republic
● All historical accounting data in Seller Central is open and transparent (orders that receive refunds outside of the order or orders that accept off-order discounts), or is regarded as an activity that claims information related to sales rankings in the product title or description

Online declaration, I decide on my declaration

● Review and file online on the 4th to 7th of every month to keep abreast of the tax situation
● Covers a variety of declaration types: VAT returns, EU sales lists (ECL), Instrastat, etc.
● Any non-Amazon transaction can be added for reporting

Time Sale festival:
For sellers new to the European site in 2022 only,
Save up to 598 euros!

Starting the service from January 1 to December 31, 2022, you can enjoy:

Free registration in the UK+any EU country VAT+EORI (original price 50 euros/country)
6-month free declaration (original price €33/month/country)
Financial representative fee for 6 months (previously €21/month/country, if the country applies to financial representation)

Tax compliance tips reference*:
1. Choosing a reliable tax service provider
2. Fulfill tax registration obligations in a timely manner
3. Full declaration
4. Pay taxes on time
5. Respond promptly to IRS emails
*The above tips information does not constitute any legal or tax advice. If you have any questions, we recommend that you contact your legal advisor or tax advisor

New Seller Onboarding Guide Video

Before entering Amazon, please read the registration guide video, prepare relevant registration materials in advance, understand the specific registration process, and help you start a store smoothly!

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