What is VAT

VAT (Value-added Tax), originated in France, is a tax system used in the European Union. It is equivalent to China's VAT and Australia's GST (Goods and Services Tax).

event

In June 2018, Amazon required sellers to upload their German, French, Italian and Spanish VAT numbers to the seller platform before August 31. Failure to complete the above operations before the deadline will violate the relevant VAT requirements and the seller will not be able to warehouse the goods or continue to sell goods in the mall.

As early as mid-March 2018, Amazon required sellers to upload tax numbers within 30 days; in mid-April, the German site strictly checked VAT, and nearly a thousand Amazon German stores were closed for not submitting VAT tax numbers. Even hundreds of thousands of euros in funds and inventory in some sellers’ accounts were frozen; in early May, Amazon’s UK site issued another "red" signal warning, notifying sellers that they must upload UK VAT numbers before the deadline or their accounts will be frozen.

Comparison table of VAT rates and declaration periods in the UK, Germany, France, Italy and Spain

UK VAT calculation

The actual VAT that the seller needs to pay = sales tax VAT - import value-added tax (IMPORT VAT).

Import VAT = (declared value of goods + first-leg freight + tariff) × 20% (import VAT sellers can apply for a refund). Usually, sales tax VAT refers to the after-sales tax that must be paid after the goods are sold. Different categories of products charge different VAT rates. Most products are calculated at the standard VAT rate of 20%. In the EU market, the general sales tax VAT is borne by the customer, that is: sales tax VAT = product list price (price before tax) × 20% (this is borne by the customer).

Precautions

The VAT number is unique. The overseas warehousing service company you use cannot pay the VAT on your behalf, and you cannot use the VAT number of the overseas warehousing service company or other individuals as your own VAT account number.

Time and materials required for VAT registration in the UK, Germany, France, Italy and Spain

Amazon remote sales tax reporting

Remote sales refers to the transaction amount from the local warehouse directly to the customers in other countries. Tax declaration is made in the country where the shipping warehouse is located. However, if the goods are transferred from the local warehouse to the warehouse in other countries and then shipped to customers in other countries, then VAT registration for other countries is required.

Amount:

UK 70,000 GBP, Germany 100,000 EUR, France 35,000 EUR, Italy 35,000 EUR, Spain 35,000 EUR, Poland 160,000 Polish Zloty (PLN), Czech Republic 1,140,000 Czech Koruna (CZK).

*Note: When the distance sales tax exceeds the distance sales tax amount, it is necessary to register for VAT in the local country for declaration.

How to register for VAT

·U.K:

You can complete the application through the relevant website of the UK Revenue and Customs (HMRC). After filling in the relevant information, the UK Revenue and Customs (HMRC) will create a VAT online account (sometimes also called a Government Gateway account) for you. You can also appoint a third-party agent service provider to apply for a VAT tax number.

·Germany:

You can register for a VAT number by post or online.

You can contact the German tax office to obtain the relevant application form. The German tax office will send you a VAT registration application form. You must fill in your personal information and your company information. You need to return the completed and signed form to the tax office; after the tax office reviews it, it will send you the VAT number.

You can also register for a Value Added Tax (VAT) number by submitting your information on the German tax website.

If you have already submitted an application, you can obtain a VAT number from the German Central Tax Office (Bundeszentralamt für Steuern): The application has no fixed format and must include the following information: the name and address of the applicant, the application number, and the information of the German tax office to which the application is submitted. The contact address of the German Central Tax Office is as follows: Bundeszentralamt für Steuern, 66738 Saarlouis (Fax: 06831 456120).

You can also appoint a third-party agent to register for a VAT number.

About Flat Vat (low tax rate)

Application Requirements

Sellers with annual sales of less than 150,000 pounds can apply for flat VAT. Generally, most Chinese sellers' products are taxed at 6.5% in the first year (the first year after VAT takes effect) and 7.5% in the second year, but the VAT paid on imports cannot be deducted. And the final tax rate needs to be determined after the tax bureau has determined the tax rate.

If your annual sales do not exceed 230,000 GBP, you can continue to use this low tax rate. In the second year, your tax rate will return to 7.5%, and you will pay VAT = sales * 7.5%.

Difference between Flat vat and Standard vat

The application process is the same. The difference is that the import VAT using STANDARD VAT (standard tax rate) can be deducted from the sales VAT, while using FLAT VAT, the import VAT cannot be deducted from the sales VAT.

*Notes:

1. Once you apply for flat vat, you cannot cancel it midway. You must declare it for 4 quarters. If you do not apply for cancellation after 4 quarters, you will have to continue to use flat vat for 4 more quarters (even if you declare zero, you must complete 4 quarters and cannot cancel it, unless the account is cancelled), unless you feel that your annual sales will exceed 230,000 pounds. At this time, you must apply to the tax bureau 2 months before the next declaration to adjust the flat vat back to standard vat.

2. After applying for flat vat, you must declare for 4 consecutive quarters (even if you declare zero, you must complete 4 quarters and cannot cancel, except if your account is cancelled). If you do not apply for withdrawal after 4 quarters, you must continue to use flat vat for another 4 quarters, and so on. Every four quarters is a stage. If you want to withdraw, you must apply 2 months before the end of the stage.

For example: if you file a claim in March, June, September, and December, and you file in March 2016, you can start using flat vat in June. You can apply to withdraw from flat vat after the March 2017 claim. If you do not withdraw, you will have to continue using flat vat until after the March 2018 claim. In short, you can only withdraw from flat vat if you file in April and May of each year.

3. If you feel that your annual sales will exceed 230,000 pounds, you must apply to the tax bureau to adjust the flat vat back to the standard vat at least 30 days before the next declaration.

4. If you use flat vat, you must declare 100% of all Amazon data. The UK will frequently audit FLAT vat. If your account has sales before VAT or has underreported before, the risk will be very high. If you are audited, in addition to paying all unpaid taxes, the tax bureau will determine the amount of the fine based on the circumstances.

The difference between VAT and EORI

The VAT number is used when selling. If the seller has a VAT number, the sales tax VAT (1/6 of the final selling price of the goods) must be included in the sale. EORI number is the abbreviation of Economic Operator Registration and Identification. This number is a registration number required for individuals/companies in the EU who have economic activities, especially import and export businesses. Regardless of whether there is a VAT number or not, if the seller wants to import goods to the UK in the name of the importer and then refund the import tax (IMPROT VAT) (only for merchants with VAT numbers), he must submit this EORI number to the customs. Both VAT and EORI numbers are unique. The EORI corresponding to the corresponding VAT number should be in the format of GB-VAT number-000, without hyphens.

VAT in other non-EU countries