VAT OSS Amazon: in this article, you'll find out what has changed with taxes and how it affects e-commerce sellers, especially those who sell on the Amazon platform!
VAT OSS Amazon
VAT OSS Scheme (One-Stop-Shop) was introduced by the amendment of Directive 2006/112/EC (VAT Directive). The main objective is to simplify the accounting for VAT on online sales to other European Union countries.
This change affects all entities in the e-commerce supply chain. It includes sellers, sales services, postal operators, couriers, customs administration, and tax administration. The primary purpose of the introduction of VAT-OSS is to provide convenience to traders. They will no longer have to register in each country separately and submit multiple VAT returns. The administrative burden of global expansion will be minimised.
VAT-OSS is an extension of the already operating VAT-MOSS (Mini-One-Stop-Shop) system. MOSS applies to sales of digital products.
Its premise is highly relevant for Amazon sellers. Amazon is the most popular e-commerce platform in the world and one of the most popular in Europe. Its importance is growing. Europeans generate more than 900 million visits per month. Moreover, as many as 7 out of 18 local marketplaces are located in EU member states. Even though it’s only been six months since VAT-OSS went into effect, entrepreneurs from Poland and across the EU are already feeling the positive effects of the change. Companies, including sellers on Amazon, can focus 100% on scaling sales. And also, on improving strategy instead of dealing with bureaucracy.
What is ICDS?
Starting from 1 July 2021, a new term – ICDS, or Intra-Community Distance Sales of Goods was introduced with VAT OSS. The name replaces the mail order.
When deciding to use the OSS, all ICDS sales must be declared under this procedure. This applies not only to ICDS sales from Poland, but also to sales from all other EU member states. All ICDS will be accounted for in one country of identification. In practice, it is the country where the company’s registered office is located.
VAT-OSS does not apply to domestic sales, which are still accounted for under the general rules.
VAT-OSS – Main principles
To main principles of VAT OSS Scheme belong:
reducing the amount of paperwork that businesses have to do. Polish traders will only have to send one return to the Polish tax authorities.
no need to register for VAT in multiple EU countries;
facilitating cross-border trade;
unification of the VAT threshold across the European Union. Evening it out to EUR 10,000 of the value of B2C sales made in all EU countries;
under the legislation introduced, online sales sites are deemed to be the supplier. What’s more, they are required to collect and pay VAT.
Selling through Amazon and VAT
VAT OSS Scheme provisions apply to online sellers who have an annual turnover greater than EUR 10,000 in all EU countries. Which issues should be considered when using Amazon’s various selling models? The necessity to pay VAT and register depends on the sales model chosen.
Do you need help in selling on Amazon?Contact us! >
VAT-OSS and Amazon FBM
The introduction of VAT OSS Scheme on Amazon is a significant improvement for those who sell by mail order from their own warehouses, I.e., under the Fulfilment by Merchant model.
The seller is not obliged to register for VAT activities in every EU country in which they sell.
VAT registration should only be done in the country from which the goods are shipped. In this country, VAT returns are submitted to and payments are made to one tax office. The tax office chosen by the entrepreneur will handle the VAT incurred in accordance with VAT-OSS on his behalf.
VAT-OSS and Amazon FBA
The situation is different for sales under the Fulfillment by Amazon model. VAT-OSS does not consider the fact that the goods are stocked in different European Union countries. When choosing the FBA model, the trader is not exempt from registration for VAT in other countries. If you choose this form of storage of goods, you will still need to pay VAT to the local tax authorities. Registration for the VAT-OSS exemption removes the requirement to register for VAT in EU Member States. This is where Amazon does not have logistics centers and therefore, doesn’t stock goods.
Selling via Amazon and VAT – key changes for traders
The VAT OSS provisions introduced are not compulsory. The trader can decide whether they want to account for VAT on a single declaration or whether they prefer to do so in each EU country separately.
When you are a selling party on Amazon, filing a VAT OSS return is not the final step in the process. If you don’t change the settings on your account, the account might get locked.Do you sale on Amazon and want to know more about VAT-OSS? Do you need help related to the introduction of VAT-OSS to Amazon? Contact us!
Amazon VAT changes: What traders need to know
In addition to the need to register and implement changes to the account, there are further requirements. Due to the introduction of an amendment to the law on accounting for sales within EU countries, Amazon sellers are now required to list the gross price of the goods and separately the VAT rate on listings published within EU member states. This enables Amazon to collect the relevant VAT from the customer.
As of 1 July 2021, EU sellers whose annual turnover from all international sales within the EU exceeds a threshold of EUR 10,000 are required to charge VAT at the applicable rate in the country to which they send their goods. Amazon pays VAT on sales of goods to customers in EU countries and on international sales within the EU for goods where the seller is not an EU-registered company and the seller’s goods are within the EU.
How to register for VAT-OSS?Interesting fact: According to Articles 28k(4) and 22a(3) of the VAT Act, an entrepreneur may register for VAT OSS by the 10th day of the month. However, it must be following the month in which the transaction for which the limit of EUR 10 000 is made.
The procedure for registering for VAT OSS in the Member States of the European Union is carried out through the local OSS portals for clearing and registration. A VIU-R form must be completed. There is a government website in Poland for this purpose, and the form can be found in accounting systems. It is only possible to submit it electronically. An electronic signature is required – it is not possible to send the form via a trusted profile.
For sellers with their registered office in Poland, the competent tax office for VAT-OSS registration and submission of returns & payment of VAT is the Head of Second Tax Office Warsaw-Śródmieście.
Please Note! If you don’t have a qualified signature, an authorized representative can submit the VIU-R form on your behalf. In order to appoint a representative at the Second Tax Office Warszawa-Śródmieście, you will need to fill in a PPS-1 power of attorney. You will also have to pay a stamp duty of PLN 17.
The new VAT OSS settlement procedures can be quite an improvement for entrepreneurs who want to conquer European e-commerce markets.
Do the VAT procedures on Amazon seem confusing to you? We cordially invite you to contact us! Specialists from Gonito will clear any doubts and will help you to run your Amazon account in all its complexities.
Do you want to know more? See webinar with our expert – Damian Wiszowaty, CEO Gonito: