VAT rules for selling through Amazon & online marketplaces

In this month’s Horsham Accountancy Blog, we focus on changes to the VAT rules that affect you if you sell your goods through Amazon or other online marketplaces.

Legislation introduced last year allows HM Revenue and Customs (HMRC) to hold the operator of an online marketplace “jointly and severally liable” for the unpaid VAT of overseas sellers operating on their marketplace where:

• an overseas seller operating on the marketplace hasn't registered for UK VAT
• the operator of the online marketplace knew or should have known, that the seller should be registered for UK VAT.

This means that online marketplaces, like Amazon, need proof that you are a tax registered company in certain countries with similar legislation, like Germany.

If you've been contacted by Amazon asking for proof of VAT or tax registration for the country where you sell goods, this is probably the underlying reason. If you need more information on this please see below.

What is the definition of an online marketplace?

So what is an online marketplace in the eyes of HMRC?

HMRC categorise an online marketplace as a website that anyone - including the online marketplace operator - can use to offer goods for sale.

You operate an online marketplace if you control access to it, or its contents.

This applies even if the online marketplace:

• is not established in the UK
• sells its own goods over the internet.

Changes to tax laws in Germany

If you have customers in Germany, you should be aware that the German tax authorities have recently implemented similar legislation. Every company selling to Germany below or above the threshold must register with the German tax office.

The registration provides sellers with a Trading number in Germany and allows the German Office to get data from Amazon and check if you need to be VAT registered. If you are below the threshold no action is taken. They will continue to check every year and when, or if, you hit the threshold they will contact you.

From 1 January 2019, online marketplace providers were required to record specific information on sales of goods where the transport of the goods either starts or ends in Germany. Joint and several liabilities for the online marketplace came into effect from 1 March 2019.

If you sell to customers in Germany or abroad we strongly recommend that you seek professional financial guidance. We can help with this, with help from our specialist partners, should you need it.

You can find out more about your VAT obligations if you use an online marketplace to sell goods here https://bit.ly/2d5vcOt.

Learn more about the VAT online seller checks here https://bit.ly/2IrorBU.

Based near Horsham, West Sussex, Giltinan and Kennedy LLP is regulated by the Institute of Financial Accountants (IFA) and is proud of its reputation for providing excellent advice and first class tax return, payroll, financial and accountancy services to its range of business and personal clients. It works with organisations, large and small, across many sectors. 

To find out how we could help you by proactively managing your finances, get in touch here.