UK MFN Businesses Registered for VAT in Germany (or any other EU country) selling on International Amazon sites - help needed!


#1

Hi All,

This is query for Amazon sellers that are VAT registered in an EU country that will be fulfilling orders themselves (MFN) from 1st January into the EU.

We are currently going round and round in circles figuring out how to ship goods into the EU DDP (an Amazon requirement) without double taxation.

We are VAT registered in Germany and therefore we charge the customer VAT at the point of sale and this is remitted to the German government monthly on our German VAT return.

We have a GB EORI number only - we do not have a German EU EORI and do not have a presence in Germany.

How do we prevent import VAT from being charged upon entry into the EU i.e. to avoid a double charge (since we’ve already collected it at the point of sale)? Do we need to indicate that VAT has been paid on the customs declaration along with our German VAT number to prevent import VAT from being charged?

I’ve contacted DPD, FedEx and DHL Express and no-one can give straight answer to the question but it must be affecting so many UK businesses that are VAT registered in EU countries.

DPD say that shipments to Germany will go through their Netherlands cluster and will be charged at 21% VAT and we would need to register for VAT in The Netherlands in order to claim it back(!). So this would mean we’ve remitted and charged German VAT at 19% and remitted and we’ve paid 21% to the Dutch and the only to get that back would be to register for VAT in Holland…

FedEx say that import VAT is due upon entry into Germany it will need to be collected regardless. So how do we avoid the double charge?

DHL don’t know but will try to find out the answer (still waiting).

There must be many, many sellers in the same position as us - could a kind soul put us out of our misery and provide any clarification as to how you will be fulfilling orders on DDP terms without double taxation?

Many thanks in advance!


#2

I hope this helps you, I posted a bunch of questions to Avask, I’m going around in circles with loads of these sort of questions as we are VAT registered in the 6 PAN EU countries…

The question you are asking here, I worded it similarly and I had this answer:

Import VAT will still need to be paid providing the value of he consignment is above €22. Its is against Amazon’s policy to have the customer handle and import VAT or Duty (if applicable) so you will need to use DDP and cover this on behalf of the client. You will then be able to reclaim the Import VAT and declare the sale in the relevant VAT return as a domestic sale.

Can I ask, for the countries you are not VAT registered in, example for me would be Ireland… If I have a MFN order and with the requirement of doing DDP, how can I possibly do so without being VAT registered in Ireland? I’m under the impression that due to the distance thresholds stopping, the only way to send goods to an EU country whilst not being VAT registered in that destination country would to make the customer liable for the Vat and duty. Basically using DDU/DAP, which Amazon won’t allow.

What am I missing?


#3

As far as I can tell, if fulfilling from the UK; (this isn’t attempting to resolve other scenarios)

The only reason to be VAT registered in Germany was because you exceeded the distance selling threshold. The UK has left the EU VAT zone, so there is no distance selling threshold, we are in the same situation that an American seller would be in (for the purposes of VAT).

Since we are outside of the EU VAT zone, the only reason to be registered for German VAT would be if you store goods inside Germany.

Goods sold from the UK to Germany are now exported goods with no VAT applied.

VAT therefore needs to be applied at the border. Your German VAT registration is effectively irrelevant for goods dispatched from the UK.

In order to comply with Amazon policies, German customers buying on .de must not face additional taxes, so your goods must be shipped with a courier who can act as the importer on your behalf to process the goods as DDP.

In July 2021 The EU will enforce the delayed VAT revamp, including elimination of the low value import waiver and require online platforms to collect and remit domestic VAT on all sales of EUR150 or lower. Most sellers therefore will have VAT collected and remitted on their behalf without needing to be VAT registered themselves.

All other sales will continue to need to be shipped DDP.

From my perspective, I intend to continue to offer on the EU sites, but at a price that reflects the VAT and handling charge that would need to be paid DDP. Until July all sales will ship DDP. After that, I assume we will have guidance on how to ship goods as already VAT paid (lower value under EUR150) or continue to ship higher value items DDP.

Not going to be perfect and I expect there will be a few rough patches while it sorts out but it will get resolved.


#4

Why would you do this? Were you told that this is how it should be done or is it an assumption? Generally you cannot reclaim import VAT on goods that are destined for a consumer, only if they are going to a VAT registered business.

In your example for instance, you send a EUR100 item to Germany, you pay EUR19 VAT at import. You are then saying you should reclaim the EUR19 import VAT, but register it as a sale, at which point you’ll promptly be giving the German government the EUR19 back again. This is just creating paperwork.

Oh, the other issue is that from my experience the couriers are truly awful at accounting for and passing back DDP cost through their invoices. We’ve shipped goods DDP to clients around the World and probably have received timely paperwork in fewer than 50% of the cases.

It would seem more likely that goods fulfilled from the UK are simply export/import goods shipped DDP and that import tax/sales tax would be unrecoverable by the German customer as the seller/courier was the importer rather than the buyer.


#5

This is correct and how we are proceeding.

Have had this confirmed by our couriers and also vat specialist we use (After we had to explain the process).

However the issue with some of the vat specialists they don’t seem to explain all the options and push for registering for vat in every country, all with fiscal rep. We have had this pushed on us for quite some time and told it is the only way. But it isn’t and wouldn’t work as we don’t store the goods in other countries.

I have seen a lot of questions on the process. I shall post a summary shortly to hopefully help others out.

The big issue is Amazon have given no information on this. And looking at some sales this morning on the European channels they have removed the VAT. But we need to make sure this is added to other as DDP. So I guess we need to remove the VAT calculation service and our extra VAT numbers?

Thanks.


#6

Thank you both!

And yes more clarification / help would be much appreciated. I’m out of my depth at the moment and it’s not like I haven’t tried!

Peter, to answer your question, this answer came from Avask, if you don’t know who they are, they are EU vat specialists, we use them for PAN EU.

Not to say they are correct, as Standout says, there is a lot of misinformation by sounds of it.

For what difference it might make in the context of this answer, we have to be registered in DE, because we are also storing goods in DE. So because of this unavoidable registration, I will have to charge DE VAT for example for orders received over my website going to Germany at the German VAT rate, as we have been doing, can either of you clarify that part is correct? Or do you also believe this should be zero rated.

Can I also ask you guys, how do you do DDP and not be IOR? Can you show me an example/courier with source? I’ve looked at parcelforce and they are either DDU or DDP, the latter means we are the IOR according to them.

I did read something interesting on the avalara website, which stated the only way to do ddp without needing a VAT registration was something to do with having power of attorney on behalf of the customer.


#7

Hopefully this will help some sellers understand the requirements moving forward. Bit of a long post as tried to put everything in I have found out.

I am no expert but this is my understanding and what I have been told and had confirmed by the carriers and our vat advisor.

This is for Merchant Fufilled orders. All stock being stored and shipped from the UK. But selling on the home customers website - .de, .fr, .it etc. We are vat registered in all the EU zones due to previous distance selling rules.

Distance selling rules no longer apply since leaving the EU. So our vat registrations in those countries will have no impact on sales there now and will not need to be reported. (We still have them active and have left the registration numbers live on Amazon at the moment).

The issue is now when sending from the UK to EU we should zero vat the sale, but the customer would then be liable to pay any vat or duty. Which is against the Amazon rules when selling on the home marketplace.

The carrier we use has an option to send as DDP. The item will process through Netherlands and be custom cleared there, duty/vat paid, then moving onto the customers country and being delivered with no further fees to pay. This means 21% vat will be charged for the import in Netherlands. The important part of this is they have the customer down as the Importer of Record (IOR). This means they are the one who is actually paying the vat (Which of course will be included in the selling price already). The more complicated part is duty. This is due if over €150 and the origin of goods (where it is made) is not the UK. These fees vary and even the carriers don’t seem to know how this works if there are mutliple items in a package and a number of other circumstances.

Royal Mail do not currently have a DDP service. So it would not be possible to use them if you have to send using this method. Which is a little ironic considering Amazon had them feature on their webinars about Brexit. So you will need to move over to a carrier that can offer DDP and will custom clear the goods.

The only issue we currently have is for returns and reclaiming the vat/duty paid. If a customer sends back an item then we would have to refund them in full. But it means we have lost the original vat paid on the customers behalf. We cannot reclaim this as the customer is the IOR.

At the moment as it is still all so unclear we have increased our shipping prices. But will be taking a hit on the extra 1% vat, also any duty and vat refunds. Of course won’t be viable to keep doing this so will have to incorporate the costs somewhere.

This morning I noticed some sales on the EU sites have had the vat removed by Amazon. So I have since switched off the automatic vat calculation as Amazon have not been clear on what we should do.

A breakdown of vat/duty:

  • < 22€ - Not vat, No duty.
  • 22€ - 150€ - Vat charged (21% - most couriers seem to go through Netherlands or Belgium)
  • 150€ > - Vat charged, Duty charged (If goods not from UK)

This all changes in 6 months with OSS.


#8

Afraid I cannot help about the storage in DE and vat registration. As concentrated on finding the solution and understanding for our own scenario.

From my own experience I have felt some of the vat companies pushed their own agenda. If we took their advice we would be registered in loads of countries all with fiscal rep.


#9

Ok thanks for the information, it will be useful for many I would imagine.

I just need to get my head around everything, then it should all make sense for me!

So let me get this straight, let’s just assume for a moment you have a website (you may not, but plz imagine you have), and you have a DE registration due to previous rules or storing goods in DE… you will be making the website say vat=0.00 for any orders going to Germany right? Will you make a separate charge to the customer at checkout such as import charges or are you just going to in effect increase the old subtotal amount x 1.2? And this would be the new total amount with no vat paid at the time of sale?

I feel like once I’ve understood this part, everything else should fall into place.


#10

@Crusader, in your case, I would be looking to switch off EU shipping from Amazon UK, use .de for FBA-EFN to fulfil any EU orders from within the EU using the .de stock.

This would seem to be the way to avoid crossing the streams too badly and maintaining a sensible VAT profile?

You already have have goods inside the EU located at the lowest VAT rate nexus available. Why not leverage them?


#11

Thanks Peter, we only have about 50% of our range in DE. Some of it is just too big and bulky. Right now I have completely disabled all mfn international orders until I’m confident on what I’m doing.

Any ideas please on some of the website orders questions for example Germany that I posted above?


#12

My understanding would be that now legally goods shipped from the UK to Germany will always be an export and as such zero-rated for VAT. Your VAT registration in Germany plays no factor in this transaction as there is no such thing as distance sales and we are not in the EU VAT zone.

Because the sales are made from your UK website it is up to you if you want the customer to deal with any charges arising from import as - say a Canadian buyer might have to.

If you wanted to, you could advertise your prices ‘inclusive of any import duty and costs to EU buyers - pay no more for delivery’ In simple terms you could continue to advertise them goods at your UK VAT-inclusive price and ship them DDP and take the hit on any extra charges and so forth. This is what I think I’ll do on my website.

Alternatively you could advertise tax-exclusive prices on your website and add the proper tax rate at checkout to more accurately cover your DDP expense - charging Irish customers 21% (23% From February) and German customers 19%. The disadvantage here is sticker shock of additional charges at checkout before you get to shipping costs if you charge them.

I sell expensive British handmade items. As such my route will be to display an all inclusive price equivalent to what they would have paid in 2020 and ship everything to the EU DDP. I already offer free worldwide shipping and I know my items carry no duty charge. For me this has the benefit of simplicity for me and my customers.


#13

I’ve been reading through the thread and it’s been useful, thank you. One quick question, anything over 150 euros attracts duty, is that if country of origin is not UK? Or is it anything over 150 attracts duty regardless of country of origin?


#14

Hello, I have been wondering about this myself as I have Pan Eu VAT registration and storage. The question should also be what did the German customer pay? Looking at my MFN sales today it appears the customer has paid the German VAT element but my Click and Drop CN22 is showing the value net of VAT. So what is happening to that VAT?
Also as there are some more professional sellers on this thread with Pan EU interests so far WRO5 in Poland had lost 16 boxes of my stock and so far I have been compensated Eur. 8000 which would be wonderful if it covered the value of the stock!


#15

Could you check if the German customer did actually pay the VAT? I have started a new thread as I believe German customers are being shown the VAT inclusive price but ultimately getting this reduced to the exclusive VAT price at checkout if you are enrolled in the VAT calculation service. So a fair/correct price comparison and having the funds to send items duty paid is currently is currently not happening.


#16

Surely if it is MFN the German customer has paid the VAT - I checked my listing on de and it definitely shows a Vat inclusive price. I thought that with MFN the customer has already checked out and the funds held by Amazon in a kind of escrow until we dispatch the order


#17

If you are shipping MFN from the UK the sale is zero rated for VAT, your German VAT registration is now ignored. Check the order detail on Amazon to see if the VAT has actually been paid. Our display prices in Germany are 19% higher than the checkout amount.


#18

Hi yes I realise that my order detail page shows the Vat but with us only getting the proceeds net of vat. Are your orders not even showing the vat amount?


#19

Yes, they show the same as you however VAT is now zero and I don’t think Amazon should be showing any VAT at all or performing any calculation on our selling prices. It’s just not good business to display a higher price to the customer on the listing (which they will use for price comparisons and presumably Amazon for the buy box) when the checkout price will be 19% less.

I think it’s shortcoming of the VAT calculation service that was not designed for us leaving the EU.


#20

Got you but if Amazon have received this VAT what do they intend to do with it. I’ve messaged them but I don’t hold out much hope for a sensible reply.