EU VAT Changes in July 2021: What Amazon Europe Sellers Need to Know

On July 1, the EU’s new e-commerce VAT rules came into force. They are the biggest change to EU VAT for online sellers in years, and they change how sellers on Amazon Europe report and pay VAT on sales to other EU countries.

Here is a plain summary of what changed and what it means for your Amazon business. As always with tax, check the details with a VAT specialist.

What changed on July 1

1. One EU-wide threshold

Before, each EU country had its own distance selling threshold. You only had to charge that country’s VAT once your sales there went over its threshold. Now there is a single EU-wide threshold of €10,000 a year for cross-border sales to consumers. Above that, you charge the VAT rate of the customer’s country.

2. The One Stop Shop (OSS)

To make this easier, the EU has created the One Stop Shop. Instead of registering for VAT in every country you sell to, you can report and pay VAT on cross-border sales through one quarterly return in a single EU country.

3. Marketplaces collect VAT in more cases

Online marketplaces like Amazon now act as the “deemed supplier” in certain cases. That means Amazon collects and pays the VAT instead of the seller, for example on:

• Imports of lower value goods into the EU.
• Sales by sellers based outside the EU of goods already stored in the EU.

4. Import One Stop Shop (IOSS)

The old exemption for very low value imports has ended. A new Import One Stop Shop scheme covers lower value goods sent from outside the EU directly to EU customers.

What it means for Amazon sellers

• EU based sellers using EFN will likely pass the €10,000 threshold quickly and should use OSS to report cross-border sales.
• Non-EU sellers with stock in EU warehouses will see Amazon collect VAT on many sales. You may still need VAT registrations where you store stock and for imports.
• Pan-European FBA sellers still need VAT registrations in each country where stock is stored. OSS does not replace those.

What to do now

1. Check your VAT settings and registration numbers in Seller Central for each country.
2. Decide with your accountant whether to use OSS, and register if needed.
3. Review your prices. Different VAT rates across countries may affect your margin.
4. Download Amazon’s VAT transaction reports each month so your filings are accurate.

The UK is separate

Remember that since Brexit, the UK has its own VAT system and is not part of OSS. We covered those changes in our post on Brexit and Amazon.

The bottom line

The new EU rules simplify cross-border VAT in some ways and add new obligations in others. Make sure your registrations and settings are right, and get advice from a VAT specialist. If you want help planning your European growth, see our full service account management.

FAQs

What is the EU One Stop Shop for VAT?

The One Stop Shop (OSS) lets sellers report and pay VAT on cross-border sales to EU consumers through one quarterly return in a single EU country.

What is the new EU distance selling threshold?

From July 1, 2021, there is one EU-wide threshold of €10,000 a year for cross-border sales to consumers, replacing the old country by country thresholds.

Does Amazon collect EU VAT for me now?

In some cases, yes. Amazon collects VAT on certain imports and on sales by non-EU sellers of goods stored in the EU. You may still have your own VAT obligations.