When dealing with Amazon’s European marketplace, it is important to understand how Value Added Tax (VAT) is collected and reported in different countries. Regulations vary from country to country, and here are some suggestions to help sellers better handle VAT matters on Amazon Europe.
1. VAT Registration
Depending on your sales in Amazon’s European marketplace, you may need to register for VAT in different European countries. Generally, VAT registration is required when your sales reach or exceed a certain country’s threshold. The specific thresholds vary from country to country, and detailed information can be found on the websites of each country’s tax authorities.
2. VAT Collection
Once VAT registration is completed, you need to collect the corresponding VAT from European buyers who purchase your products. VAT rates vary from country to country due to their tax laws. Amazon will automatically calculate and collect the corresponding VAT based on the buyer’s location and then display it in your sales report.
3. VAT Filing
Depending on the regulations of each country’s tax authorities, you need to declare and pay VAT on a regular basis. The frequency of filing is usually once a month or once a quarter, depending on your sales and the regulations of the country where you are located.
Amazon European VAT tax calculation example
Take the UK as an example, the total tax cost is calculated according to the standard tax rate of 20%. This tax includes import VAT and sales VAT.
Import VAT calculation formula:
Import VAT = (declared value + tariff + freight) * 20%
Sales VAT calculation formula:
Sales VAT = selling price / (1 + 20%) * 20% (sale price is tax-inclusive)
Actual tax payable:
Actual tax payable = sales VAT – import VAT
For Chinese e-commerce sellers, the UK VAT involves two tax rates, namely flat rate (7.5%) and standard rate (20%).
It is very important to understand the VAT regulations and declaration requirements of each country, and ensure timely registration and declaration according to sales and turnover. It is recommended to consult a professional tax advisor or accountant to ensure compliance with local tax regulations and timely fulfillment of relevant declaration and tax payment obligations.