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Amazon VAT Agreement

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What is the Amazon VAT Agreement?

The VAT agreement for Amazon sellers serves to determine whether and how much the marketplace can charge VAT on incurred costs such as monthly seller fees and other Amazon services, such as PPC advertising.

Until October 2018, all invoices to entrepreneurs from Germany were issued by Amazon Luxembourg. If the Amazon seller was registered for tax in Germany and had also entered their VAT ID in Seller Central, Amazon issued a net invoice referencing the so-called reverse charge procedure. With the transfer of the VAT liability to the seller, this was taken into account in the VAT advance return in Germany.

As part of a restructuring at Amazon, since October 2018, the online giant has been issuing invoices for services related to Sponsored Ads, i.e., PPC campaigns, through local advertising subsidiaries in the UK, Germany, France, Spain, and Italy, with specified VAT.

What effect does entering the VAT ID have on Amazon?

Without a registered VAT ID, Amazon charges 19% German VAT on all its services. At the same time, the seller is obligated to remit the 19% VAT to the tax office. A refund of the VAT paid twice cannot be claimed.

With the registered VAT ID, the reverse charge procedure is applied. For the online seller, this means that they declare the VAT directly to their tax office and may offset it as input tax.

What are the Amazon VAT agreement terms?

Who can use the VAT agreement?

If the online seller operates a business in one of the countries listed below and has a tax number from the tax authority in that country, they can submit this to Amazon via Seller Central and thereby conclude a VAT agreement with Amazon.

For which countries is the use of the VAT agreement permitted?

VAT numbers from the following countries are accepted on Amazon:

  • 27 member states of the European Union (VAT identification number)
  • United Kingdom (VAT identification number)
  • Liechtenstein (VAT identification number)
  • New Zealand (GST number)
  • Russia (State Registration Number)
  • Switzerland (VAT identification number)
  • Australia (Australian Business Number)
  • Taiwan (Unified Business Number)
  • Serbia (VAT identification number)
  • Albania (VAT identification number)
  • Belarus (VAT identification number)
  • Saudi Arabia (VAT identification number)
  • United Arab Emirates (VAT identification number)
  • Turkey (Tax Identification Number, VKN)
  • South Korea (Business Registration Number)
  • Quebec (Quebec Sales Tax Number)
  • Turkey (Turkish Tax Identification Number)
  • South Africa (VAT identification number)
  • India (Goods and Services Tax ID)

What requirements must the retailer meet to be able to use the VAT agreement?

Before the tax number is submitted, the seller must verify that they agree to the applicable Amazon terms and confirm this. If the information is incorrect, there is even a risk that Amazon may temporarily suspend the account until the matter is reviewed.

  • The tax number that the seller enters in Seller Central belongs to the business that the seller operates and from which they make sales on Amazon.
  • All transactions of the seller account are business transactions of the company.
  • The tax number and all other provided information about the business are truthful, accurate, and up to date. In the event of a change, the information must be updated immediately.
  • All information, including the tax number, is collected, processed, and managed in accordance with the terms of the Amazon Services Europe Business Solutions Agreement and the privacy policy.
  • WARNING: Amazon reserves the right to request additional information to verify the validity of the seller account information, including the tax number. This information must be provided upon request by Amazon.
  • Amazon reserves the right to charge all applicable and uncollected VAT amounts if the provided tax number is invalid. The irrevocable right to charge the seller’s credit card with these uncollected VAT amounts must be granted to the online giant.

Which Amazon fees are subject to VAT in Germany?

As of October 1, 2018, Amazon issues all invoices for services related to Sponsored Ads, i.e., PPC campaigns, through local advertising subsidiaries. These are:

  • Amazon Online UK Limited
  • Amazon Online Germany GmbH
  • Amazon Online France SAS
  • Amazon Online Spain S.L.U.
  • and Amazon Online Italy S.r.l.

This means that online sellers from the UK, Germany, France, Spain, and Italy must be charged local VAT by Amazon.

By completing the VAT agreement, the applicable tax rates in the respective countries will also be charged.

What does this look like in practice?

PPC services on Amazon.de

If a seller from Germany books an advertising campaign on Amazon.de, it will be charged by Amazon Online Germany GmbH from Germany with 19% VAT.

PPC services on other marketplaces

However, if he books a campaign on Amazon.es, the service will be charged by Amazon Online Spain S.L.U. at 0% VAT. The seller must therefore initiate the reverse charge procedure.

Attention: When it comes to invoicing, the location of the seller’s registered office is decisive. If the German seller has a tax number, for example, in Spain, the invoice will always be issued to the registered office and the corresponding VAT ID number – that is, in Germany. Therefore, there is no additional reporting obligation in Spain due to the advertising costs incurred on Amazon.es.

Is there sales tax on Amazon FBA?

Fulfillment by Amazon (FBA) is a service billed by Amazon Luxembourg. For a German seller, this means that no VAT is charged on the FBA fees. The reverse charge procedure applies here.

For goods shipped via FBA, the seller must charge the buyer VAT. In this case, the location of the shipping warehouse from which the goods were dispatched does not apply; instead, the place of supply, which is the buyer’s country, is relevant.

How can I submit my Amazon VAT number for VAT purposes?

How to submit your VAT ID to Amazon:

  • Log in to Seller Central.
  • Click on “Account Info” under Settings.
  • Click on “VAT ID” in the Tax Information section.
  • Click on “Add a VAT identification number.”
  • Select Germany from the list of countries.
  • Add your VAT ID.
  • Select an address or add a new address.
  • Click on the link to the tax registration agreement to read the terms.
  • Click on “Add VAT ID.”