Marketplace facilitator collecting and remitting VAT on behalf of Amazon sellers

Does Amazon collect and pay the VAT to the government on the seller's behalf?

Many countries are looking to make sure they are getting the tax revenue from e-commerce platforms. New laws have came into effect to enforce the VAT collection.  One of them being Amazon or other marketplaces will have to collect and remit the VAT on the seller’s behalf depending on their entity’s country of registration.  In the case of the European Union, all non EU entities will have their vat collected from sales and remitted by Amazon to the respective country’s tax department.

This is great, so I don’t need to make returns anymore in the EU?

Unfortunately, even though you might not owe anything to the tax authorities, you will still have to file a return as you did before. The VAT filing reports get complicated but it is mandatory in order for the it tracks the goods from one country to another so each country can get their share of the VAT.

What about the United Kingdom?

The UK has also implemented a similar policy. Amazon collects and remits the VAT on behalf of non UK entities.  So, if you are selling on Amazon in the UK with a foreign entity, Amazon will handle the vat payments to HMRC but you still need to file.

If Amazon is collecting and remitting the money to the government, why is my accountant saying I still owe money on my VAT return?

Even though you don't have any VAT payment to make for regular sales, you may still owe something if you have any B2B sales.  These will still be your responsibility.

Another scenario where you will have to make a payment is if you liquidate any unsold inventory or returns.  You will have a VAT liability for this.

Don’t forget to file as you are only hurting yourself

If you fail to file, you will accumulate penalties and have the tax authorities coming after you and nobody wants that.

Another potential scenario will be Amazon suspending your account for not being VAT compliant due to pressure from the tax authorities.

Refund for your Input VAT!

Lastly, to make sure you file is to claim back your input vat. If you paid any input VAT, you will get a refund to your bank account. So not only are you obeying the law, you are making sure you get back the money that is yours!