Navigating VAT and Accounting for Amazon Sellers: A Comprehensive Guide

Deciding to sell goods on Amazon opens up a world of opportunities, but it also comes with its share of accounting and tax obligations. This guide aims to clarify these responsibilities and help you understand when and how to account for VAT in your Amazon sales.

Your Role as a Seller

When selling on Amazon, you are always the seller, despite Amazon handling most aspects of the sale. The relationship remains directly between you and the customer. This section clarifies when VAT should be accounted for, depending on your status as a VAT payer or non-payer.

VAT Accounting for Different Seller Types

• Non-VAT Payers

As a non-VAT payer, you do not add VAT to the selling price.

• VAT Payers

The situation is more complex for VAT payers. Whether you charge VAT depends on your customer's VAT status.

• If your customer is a non-VAT payer, you charge VAT.
• If your customer is a VAT payer, you don't charge VAT and instead use the reverse charge mechanism.

Amazon Sales Record Methods

You can manage your sales on Amazon in two ways:

FBM (Fulfillment by Merchant):

You ship goods from your own warehouse, functioning like a traditional e-shop. Sales are reported in your domestic VAT return or under the OSS (One-Stop Shop) scheme, if applicable.

FBA (Fulfillment by Amazon):

You use Amazon's storage and logistics services, with Amazon handling order fulfillment. You must register for VAT and file returns in each country where your goods are stored.

Dealing with VAT in the EU

The complexities of trading within the EU involve various considerations, including your VAT status, type of customer (business or end-consumer), and the nature of goods delivery. Additionally, monitoring your sales turnover in the EU is crucial. Exceeding the threshold of 10,000 EUR requires OSS registration or VAT registration in the member states concerned.

How VAT works

1. Selling on Amazon, Warehouse in Czech Republic, Not a VAT Payer

• Situation: You have a warehouse in the Czech Republic and sell on Amazon, but you are not registered for VAT.
• How It Works:
  • Since you are not a VAT payer, you do not charge VAT on your sales.
  • Your transactions will be considered domestic sales within the Czech Republic.
  • You should still keep accurate records of your sales and expenses for accounting purposes and any potential future VAT obligations.

2. Selling on Amazon, Warehouse in Germany, Not a VAT Payer

• Situation: You have a warehouse in Germany and sell on Amazon, but you are not registered for VAT.
• How It Works:
  • As a non-VAT payer, you won't charge VAT on your sales.
  • However, since you are storing goods in Germany, you may be subject to German tax regulations. It's essential to check if your business activity requires you to register for VAT in Germany due to the location of your warehouse.
  • Keep in mind that different EU countries have different thresholds for mandatory VAT registration based on sales volume.

3. Selling on Amazon, Warehouse in Germany, VAT Payer

• Situation: You have a warehouse in Germany, sell on Amazon, and are registered for VAT.
• How It Works:
  • Being a VAT payer, you are required to charge VAT on sales to customers who are not VAT payers.
  • If your customers are VAT registered, you may use the reverse charge mechanism, where the customer is responsible for accounting for VAT.
  • Since your warehouse is in Germany, you must comply with German VAT regulations and file VAT returns in Germany.
  • Depending on where your customers are located, you may need to consider the VAT regulations of their respective EU countries. The OSS (One-Stop Shop) scheme might be relevant if you are selling to consumers in other EU countries.

In all scenarios, it's crucial to stay informed about the changing tax laws and regulations in both the Czech Republic and Germany, as well as the general EU VAT rules that might affect your Amazon sales. Consulting with a tax professional who specializes in e-commerce and international sales is highly recommended to ensure compliance and optimize your tax obligations. We will be happy to help you.