The EU E-Commerce VAT Package is here. The new schemes, One Stop Shop (OSS) and Import One Stop Shop (IOSS) bring significant changes to VAT treatment and reporting mechanisms for sales to private individuals in the EU.
Our recent webinar, Back to Basics: The EU E-Commerce VAT Package, discussed the basic principles of the three key OSS schemes.
The EU E-Commerce VAT Package is a complex topic and there were a number of questions that we didn’t have time to answer during the webinar.
This is the first in a series of blogs answering your EU E-Commerce VAT Package questions, this first blog will focus on a marketplace liability.
If my business sells via a marketplace, who is responsible for the VAT? My business or the marketplace?
When a business is facilitating its sales via the use of an online marketplace, the latter may become a ’deemed supplier’, liable for the VAT, instead of the initial ‘underlying’ supplier.
In order to establish whether the marketplace would become a deemed supplier (responsible for the VAT) you would need to:
- Check whether the marketplace fulfils the conditions to ‘facilitate’ the supplies, as in certain cases there are exceptions where an online platform may not be considered facilitating the sale.
- Consider the status of your business and make sure your sales are within scope of the transactions for which a marketplace can be liable. Those transactions would be:
- B2C sale of goods in consignment of up to 150 EUR that were imported from third countries (meaning B2C sale of goods where the goods are located outside the EU at the point of sale). This applies irrespective of the place where your business is established.
- If it is a B2C intra-community distance sale of goods (meaning B2C sale of goods which were located in the EU at the point of sale) the marketplace would become liable only if your business is established outside the Community.
It’s important to note that when the marketplace acts as a deemed supplier, your business may still need to report a deemed B2B supply depending on where the goods are located at the time of the sale.
The above implications only show that the VAT treatments can vary and therefore our recommendation would be to look for advice that would be tailored to each business’s unique set up.
If a US seller is selling EU to EU via Amazon and has chosen a pan-European programme, then can the seller or Amazon still file an OSS return?
In such a scenario, Amazon would become a deemed supplier and thus be liable to account for the VAT on the B2C supplies that were facilitated through its platform. Therefore, should they use the OSS mechanism then the obligation to submit the OSS return is for Amazon.
However, there are additional VAT obligations that will occur for the US seller. Those would be related both to its role as an underlying supplier as well as to the conditions of the pan-European programme.
Since the latter suggests movement of goods between Amazon warehouses in the EU on behalf of the seller this often triggers an obligation to register the US seller in order to report the movement of its own stock.
Additionally, as an underlying supplier the US seller would have to report a deemed B2B supply to Amazon which must be determined on a transactional basis. This deemed supply could occur in different countries and may trigger an obligation to register in additional jurisdictions.
If I’m selling goods valued at more than 150 EUR from the US to the EU via Amazon, how does Amazon collect the VAT and customs from the customer – do they include these amounts in the totals at the check-out?
This type of supplies is defined as a distance sale of goods imported from third countries. The VAT liability of marketplaces is limited regarding these supplies.
For example, Amazon would be liable only for goods sold in consignment of up to 150 EUR. For supplies over that value the normal rules would apply and the seller sending goods from US to EU customers would, in principle, have two options:
- To import the goods under its ownership into the country of destination and then sell them to the final customer. This would trigger an obligation to register for VAT purposes in said country or any other EU Member State where goods are imported and sold. No thresholds apply in such cases and registration is required based on a single transaction.
- To transfer the customs formalities liability to the final customer thus making the latter the person liable for the import VAT and all associated formalities, and taxes levied at importation. Some EU Member States may require sufficient proof of authorisation from the final customer to the freight forwarded dealing with the import formalities on their behalf.
I’m a US seller storing goods in Germany and selling Germany to Germany via Amazon. Will Amazon report this in the OSS return or will they also file the domestic return on my behalf?
As a non-EU established business any B2C sales within the EU that were facilitated through an online marketplace would transfer the VAT liability to the marketplace that will assume the role of a deemed supplier. This means that the latter would have to account for the B2C sales it facilitated under its own name and not on behalf of the underlying supplier.
Additionally, sales of goods located in Germany at the time of the sale are considered as local sales (domestic supplies) when sold to private individuals in that country. Considering the OSS scheme covers only intra-Community distance sales of goods, then Amazon would be required to report such sales as an underlying supplier in its resident VAT return in Germany.
However, as an underlying supplier you would need to account for a deemed B2B supply in Germany, where the goods were located at the time of the sale.
Provided any of the elements of these transaction change e.g., goods are moved between warehouses under your name between different EU Member States, the relevant obligations would change. It’s important to be mindful of the fact that marketplace liability is determined on a transactional basis which might trigger VAT obligations in your name.