Strict investigation! A large number of sellers were forced to abandon their accounts

Compliance is the main theme!

The European market is mature for cross-border online shopping, and consumers have considerable purchasing power. It can be said that it is an important position for cross-border sellers to make money. However, one issue that cannot be ignored is that as Europe gradually increases tax compliance reviews, countries have cracked down on violations. Recently, a number of cross-border sellers have reported receiving tax refund emails. A number of sellers cannot afford the high tax refund amount and are forced to abandon their accounts.

Even a hot-selling product cannot avoid tax issues. Some time ago, Amazon's electric bicycles received a tax notice and may have to pay more than 60 million.

Europe is strictly checking tax compliance, affecting a large number of sellers!

According to feedback from cross-border sellers, with the VAT filing season and annual audits overlapping, audits in markets such as the UK and Germany are becoming more frequent. Sellers have reported being audited by tax authorities.

The seller Xiao Zhang said that he received several tax inspection emails some time ago. The tax inspection period was from August 2019 to January 2021. The tax bureau clearly stated that the amount of tax to be paid was nearly 100,000 pounds. If it was not handled properly within one month, the account would be blocked.

The seller Xiao Li needed to pay a higher amount, close to 200,000 pounds. A few months ago, one of his UK stores was audited for tax. Since the value of the goods shipped and the amount frozen were relatively large, between abandoning the account and paying the tax , Xiao Li thought it was more "cost-effective" to pay the tax .

Summarizing this wave of tax reviews, we can find that:

1. The tax bureau is "settling accounts after the autumn", and all old accounts before the implementation of the withholding policy have been dug out, mainly targeting old accounts opened before January 2021, and the number of tax audits has increased (Chinese corporate entities) .

2. The notice from the German tax bureau is issued by the audit department Finanzamt fur Korperschaften l. This department has always been strict. Now it directly retrieves data from Amazon for calculation and obtains the seller's real sales data, which means that the possibility of successful appeal by the illegal sellers is low.

3. The VAT of many sellers has been cancelled. Common reasons include long-term zero declaration. There are also many cases where the store is frozen. The main reasons are lack of agent authorization, failure to respond to letters from the tax bureau in time, and unpaid taxes.

Yi En Jun learned that in order to strengthen tax audits and combat fraud by foreign companies, the German tax bureau has set up the Berlin International Tax Bureau, which is responsible for about 115,000 companies, of which more than 110,000 are from China. It can be said that this tax bureau was born for Chinese companies.

In addition, Belgium has also joined the tax compliance array. According to news from Amazon and other platforms, sellers must upload a valid VAT registration number on the seller platform before January 1, 2024. Non-compliant seller accounts will be stopped from selling goods.

There are various signs that tax controls in Europe are becoming increasingly stringent. There are even rumors that Europe may introduce a plan to levy tariffs similar to Japan's reverse calculation method.

I have to abandon my account because the amount of tax to be paid is too large. Are there any hidden dangers in this operation?

After receiving the tax due notice, unlike Xiao Li who chose to pay the tax, a large number of sellers decided to abandon their accounts.

Xiao Liu said that the UK VAT was inspected by customs, and all customs clearance records in the past three years were turned out. He needed to pay high taxes. The amount of tax paid exceeded the total profit in the past three years. This was undoubtedly not cost-effective. In the end, Xiao Liu had no choice but to abandon the account.

Can abandoning an account solve the problem perfectly? Yienjun observed that most sellers are worried that this operation will leave many hidden dangers.

"After abandoning the UK site, will it affect the normal operation of the US site?" This is the question that Xiao Liu and many other sellers are most worried about. According to Xiao Liu's peers, abandoning the account directly after being audited in the past did not affect other sites. It may be that the current tax audit standards have been raised, and after one site is blocked, there are more and more cases of problems with other sites. In order to avoid the hidden danger of account abandonment, many peers prefer European local accounts, and mainly do account matrix. After reaching the tax-free amount standard, they stop selling and wait until the beginning of the new year to start selling again.

An industry insider said that no matter whether it is a conjoined account or not, as long as the same set of information is used to register, if one site is disabled due to problems, other sites may be at risk of being disabled at any time. Therefore, sellers who need to abandon their accounts must make plans early and transfer product inventory as soon as possible to minimize losses. Other industry insiders believe that the UK does not have the same VAT as other European countries. If the UK's VAT is checked and the site is closed, it will not affect other sites. However, if the seller's link is directed through global sales synchronization, the link will be removed.

In summary, there is actually no unified answer to the question of "whether abandoning an account will affect other sites". In any case, sellers need to do a good job of tax compliance. In particular, the European site is an important battlefield for cross-border sellers to make money. Sellers must not bury other hidden dangers for the company's operations due to non-compliance with VAT declaration, otherwise the gains will outweigh the losses.

Due to tax issues, the company may be fined more than 60 million yuan if it sells well after listing

It has been observed that no matter whether it is a big seller or a small seller, none of them can escape the scrutiny of tax issues.

Some time ago, the listed company Ninebot announced that its wholly-owned subsidiary Segway Discovery Europe BV (hereinafter referred to as "SDEBV", (Amazon's leading "electric scooter" brand) received the "Tax Matters Notice" from the Netherlands Customs and Finance Department. The details are as follows:

In 2022, SDEBV entrusted the localized production of one batch of shared E-BIKEs (electric assisted bicycles or electric pedal bikes) to a Turkish supplier (referred to as "CYCLETRON"). The company provided relevant certificates for localized production and was responsible for completing the localized production of E-BIKEs. This batch of products was mainly sold to the EU region.

As the EU tightens import controls on the E-BIKE industry, the Dutch Customs and Finance Department believes that the localization rate of Turkish suppliers does not meet the EU tax-free standards, and requires SDEBV to correct the tax rates of some products that do not meet the localization rate according to their place of origin being China, and to pay back anti-dumping duties, countervailing duties and other taxes.

According to the notification of the Netherlands Customs and Finance Department, SDEBV is required to pay 549,058.71 euros in tariffs on industrial products, 5,682,758.41 euros in final anti-dumping duties, 1,573,968.64 euros in final countervailing duties, and 452,798.09 euros in ex post interest, for a total of 8,258,583.85 euros.

Ninebot claims that the matter will not have a significant impact on the company's normal production and operations. The reason is that as of the first three quarters, shared E-BIKEs have shipped a total of 186 million yuan, and this year they are mainly exported to regions outside Europe (Europe accounts for 16%). Currently, related production has been transferred to China. However, the total amount of tax to be paid is converted into RMB, which exceeds 60 million yuan. This is undoubtedly a considerable expense. Now, Ninebot and its subsidiary SDEBV are communicating with the Dutch Customs and Finance Department, including but not limited to raising written objections.

Nowadays, the sales situation of cross-border sellers is becoming more transparent, which urges everyone to operate in compliance with regulations.