EU VAT Calculation Services Methodology

Last updated on 18 December 2019.

Contents

1. Purpose
2. Overview
3. Seller VAT Calculation Eligibility Criteria
4. VAT Registration Numbers
5. Determining the VAT Jurisdiction
6. Assigning a Product Tax Code (PTC)
7. Assigning 'Default country for VAT exclusive price'
8. Determining the VAT Exclusive/Inclusive Price
9. Time of Sale for VAT Calculation
10. Refunds
11. VAT Rate Maintenance
12. VAT Invoicing
13. VAT Calculation Reporting
14. VAT Calculation Services Enrolment/Activation
15. Deactivation

1. Purpose

This document describes the methodology we apply to calculate VAT for Sellers using Amazon's VAT Calculation Services.

2. Overview

Amazon’s VAT Calculation Services will exclusively perform VAT calculations for the 28 European Union (EU) Member States on products sold on Amazon’s European/EU marketplaces. The VAT calculations are performed based on Seller-determined tax settings and any other related Seller information set up during configuration. Amazon’s VAT Calculation Services do not perform VAT calculations in countries located outside the EU.

VAT Calculation Services: Amazon’s VAT Calculation Services utilise third-party VAT calculation software: Vertex Indirect Tax O Series. This software contains VAT calculation rules and logic, including logic related to rounding of the calculated amounts. Amazon’s VAT Calculation Services support the following VAT calculations and related functions:

• VAT rates (including monthly updates);
• VAT jurisdiction determination;
• VAT exclusive price logic:
  • i.e. how VAT will be calculated from the seller’s inclusive display price;
• Pre-populated product tax codes (PTCs) to support product-specific taxability across the EU member states;
  • For example: Books, clothing and food;
• The ability to add/remove VAT registration numbers;
• The ability to specify a single ‘default deliver-from’ location for Seller-fulfilled orders;
• The ability to select a Seller-selected default PTC;
• The ability to set an ASIN/SKU-level PTC;
• The ability to select a Seller-defined default country for determining the VAT exclusive price;
• The ability to specify tax settings to calculate VAT on delivery and gift wrap;
• The ability to handle B2B (business-to-business) and B2C (business-to-consumer) transactions;
• VAT Calculation report;
• Detailed monthly Amazon VAT Transactions report including details on VAT rate, VAT amount and VAT exclusive price to facilitate VAT reporting; VAT invoice and credit note generation;
• VAT invoice and credit note generation;
• XML invoice and credit note creation on domestic B2B supplies in Italy; and
• Non-resident domestic reverse charge calculations;

  Further information: This relates to instances where a Customer is VAT registered and established in the country where the transaction takes place for VAT purposes and the Seller is only VAT registered in that country (but not established there). Countries that have implemented non-resident domestic reverse charge mechanism are Belgium, France, Italy, the Netherlands and Spain.

  Example of a non-resident domestic reverse charge transaction:

  A French VAT-registered Seller who does not have a physical presence in France lists an item at €12.00 on Amazon.fr, dispatches the item from France and sells the item to a B2B Customer located in France.

  VAT rate = 0% (non-resident domestic reverse charge)

  VAT exclusive item price calculation: €12.00 / (1 + 0.20) = €10.00 (base price on which domestic reverse charge is calculated).

  Final VAT inclusive item (including applicable VAT) price calculation: €10.00 * (1 + 0.00) = €10.00

Amazon's VAT Calculation Services do not currently support the following calculations and related functions:

• Any reverse charge calculation other than that described above;
  • For example: Product-related reverse charge calculation on domestic supplies such as mobile phones, above a threshold; any other non-resident domestic reverse charge etc.
• The ability to specify multiple 'deliver-from' locations for Seller-fulfilled orders;
• VAT calculation on PrimeNow transactions;
• VAT calculation on Sellers’ local VAT registration numbers (i.e. not VIES validated);
• VAT calculation on digital products and services, including a delivery of goods that were ancillary to a supply of services;
• Calculation of customs duties, taxes and fees due on the importation of goods:
  • For example: Goods imported from China into the EU;
• Calculation of local tax rates in the following territories, where currently only mainland tax rates are supported, for example:
  • Corsica (France);
  • Azores and Madeira (Portugal);
• Calculation of the Impuesto General Indirecto Canario (IGIC) in the Canary Islands (Spain) and
• XML invoice and credit note creation on domestic B2B supplies in Hungary.

  Refer to VAT Calculation Services – FAQs for a list of EU territories that fall outside the scope of EU VAT rules;

• Calculation of any regulatory or environmental fees/taxes:
  • For example: Bottle deposits and Waste Electrical & Electronic Equipment (WEEE);
• VAT calculation at the delivery level:
  • That is, Amazon's VAT Calculation Services calculate VAT at the unit level and this is then multiplied by the quantity of the product purchased;
  • Example: If a Customer purchases 10 units of product X, then Amazon's VAT Calculation Services calculate VAT on one unit and then multiply the value by 10;
• Post-transaction VAT calculation, invoicing (and correction documents such as credit notes) and reporting corrections;
• Generation of VAT returns and other tax-related reports:
  • For example: Intrastat and European Sales Listings/Recapitulative Statements;
• VAT obligations in respect of the EU cross-border movement of Seller’s own goods, such as goods transferred between Amazon Fulfilment Centres (FCs);
  • Further information: The Seller will be responsible for ensuring that the necessary compliance-related obligations are fulfilled. The details of EU cross-border FC-to-FC transfers are available in the Amazon VAT Transactions Report in the Reports section in the Seller Central account; and
• Any special VAT schemes including the Cash Accounting scheme, Second Hand Margin Scheme or special publishers' VAT regime;

Amazon's VAT Calculation Services rely on the accuracy of the VAT registration numbers, PTC (Product Tax Code) and other VAT calculation settings supplied, or configured by the Seller via Seller Central and, if applicable, the VAT registration number supplied by the Customer. Sellers are solely responsible for ensuring that their information and settings, including deliver-from locations, are updated in Seller Central where necessary and are at all times accurate and up to date. Amazon does not represent or warrant that the VAT calculations or VAT invoices produced by Amazon's VAT Calculation Services will at all times be correct or that they will at all times be reported in a timely manner to the relevant Tax Authority (where the services include such reporting) and we are under no obligation to (but may in our discretion) verify or correct the information supplied by the Seller or the Customer. In particular, Amazon assumes no liability for VAT invoices that are incorrect as a result of inaccurate or incomplete information supplied by the Seller or the Customer.

3. Seller VAT Calculation Eligibility Criteria

Following are the requirements for a Seller to be eligible to enrol for VAT Calculation Services:

• VAT Registration Number
  • Seller has a valid EU intra-community VAT registration number that is valid on VIES (VAT Information Exchange System of the EU Commission)
    • VIES is an electronic means of validating VAT identification numbers of economic operators registered in the European Union for cross-border transactions on goods or services;
  • Seller is VAT registered in the locations where they allow their inventory to be placed and request VAT calculations to be performed;
• Legal Name – The Seller’s legal name in Seller Central must match the legal name associated with their respective VAT registration number held by the Tax Authorities;
• Default Country for VAT Exclusive Price – Seller must select one of the EU28 countries as their 'Default Country for VAT Exclusive Price' and must have a VIES-valid VAT registration number in the chosen country;

4. VAT Registration Numbers

Amazon’s VAT Calculation Services will use all VIES-validated VAT registration numbers (EU28 only) in order to determine the jurisdiction in which the transactional VAT liability exists when selling on Amazon’s European marketplaces. VAT Calculation Services will disregard for VAT calculation and invoicing purposes any local VAT number that a Seller has on their account. VAT registration numbers can be provided during the VAT Calculation Services enrolment process and then managed from the 'Tax Information' section available in Seller Central under 'Account Info'.

Amazon performs validations (please see below) on VAT registration numbers supplied by both Sellers and Customers. However, Amazon cannot guarantee the validity of a VAT registration number used in its VAT Calculation Services at any time. Only VIES-valid VAT registration numbers granted by EU Member States will be used in VAT Calculation Services.

VAT registration numbers are validated via various methods:

• If a VAT registration number is activated for intra-community (EU cross-border) transactions, it will be validated via the EU VAT Information Exchange System (VIES) database. Further details about the validation process can be found here;
• Amazon allows Customers to enter their local VAT registration numbers (VAT registration numbers that can be validated only via a Local Tax Authority website) in Italy and Spain. From 1 January 2020, these local VAT registration numbers will no longer qualify for the VAT exemption of intra-community B2B supplies of goods – instead these transactions will be subject to origin (deliver-from) VAT. These local VAT registration numbers are validated by the process described below:
  • For Italian VAT registration numbers, these are validated against the local IT tax authority website, Agenzia;
  • For Spanish VAT registration numbers, a copy of the VAT certificate is required. Further details about this verification process can be found here;

The requirement to have a VAT registration number where the Seller stores inventory

• If a Seller has goods stored in one of our European Fulfilment Centres (FCs), the Seller must have a VIES-valid VAT registration number in that jurisdiction for VAT Calculation Services to perform VAT calculation and invoicing. For example, if a Seller has goods in a German FC, then the Seller should have a German VAT registration number that is valid in VIES;
• If a Seller successfully joins VAT Calculation Services and then subsequently removes VAT registration numbers from their Seller Central account or if a Seller does not have a VIES-valid VAT registration number for a given jurisdiction, then VAT Calculation Services will charge the Customer the VAT inclusive price but not perform a VAT calculation or generate a VAT invoice. VAT Calculation Services will only generate a receipt for all orders where the downloadable VAT invoice badge was displayed and the Seller will therefore be responsible for generating their own invoice;

Seller Central legal name

VAT Calculation Services requires the Seller's legal name in Seller Central to exactly match the legal name associated with the Seller's VAT registration number. Once a Seller's legal name has been correctly entered and if the Seller wants a different 'Trading Name' to be displayed on their storefront, then the Seller can achieve this by updating their ‘Display Name’ found under ‘Account Info’ in their Seller Central account.

Group VAT registration number

If a Seller has a Group VAT registration number, and the company registering for VAT Calculation Services is not the representative member, the Seller must provide their 'Certificate of Members' which states all of the legal company names associated with the VAT registration number. The legal name of the company with which the Seller registers on VAT Calculation Services must be shown on this certificate in order to pass the legal name eligibility check.

5. Determining the VAT Jurisdiction

The Vertex jurisdiction selection logic uses information from four transaction-related details to determine whether it is a B2B or B2C transaction as well as the VAT jurisdiction and tax type (i.e. VAT). The four transaction-related details are:

• Seller VAT registration number(s);
• Customer VAT registrations number(s) (if applicable);
• Deliver-from location (departure country);
• Deliver-to location (arrival/destination country).

5.1 Seller VAT Registrations:

All the VIES-valid EU member state-granted VAT registration numbers that have been supplied by the Seller under Account Info > VAT Information (also described as 'Place of Establishment Information' on certain marketplaces) in the Seller Central account.

5.2 Customer VAT Registrations:

All EU Member State-granted VAT registration numbers that have been supplied by the Customer in their Amazon account will be taken into consideration.

EU VAT legislation will require from 1 January 2020 an EU VAT number (valid in VIES) of the customer in a country other than the deliver-from country as a substantive condition for VAT-exempt/zero-rate cross-border supplies of goods.

Where a customer does not have a VIES-valid VAT number but instead a local VAT number, the VAT exemption of cross-border supplies of goods cannot occur, and instead origin (deliver-from location) VAT will be charged. This applies specifically to customers in Italy and Spain.

For example, where a Seller (with a VIES-valid VAT registration number in Germany) dispatches products from Germany to business customers in Spain who only have local Spanish VAT numbers, the Seller is not able to treat the cross-border supply as VAT-exempt/zero-rated and German VAT is due as the country of origin for the movement of goods.

5.3 Deliver-from location:

5.3.1. Products shipped using Fulfilment by Amazon (FBA): Upon dispatch of the product, the final VAT calculation will use the actual ‘Deliver-from’ location (departure country) for deliveries originating from an Amazon fulfilment centre.

5.3.2. Seller-fulfilled products for VAT calculation purposes: Seller-fulfilled shipments will use the ‘default deliver-from’ location (departure country) configured within the Seller’s VAT calculation settings. Sellers must update the default deliver-from location in their Seller Central account if this is different from the actual deliver-from location.

5.4 Deliver-to location:

The ‘deliver-to’ location is based on the Customer-supplied country, county/province, city and postal code as Amazon’s VAT Calculation Services will also handle VAT calculation for orders delivered to certain VAT-excluded territories. Amazon’s VAT Calculation Services will calculate tax based on the tax location that our system determines to be the most accurate when cross-referenced with the Customer-supplied address.

5.5 Distance Sales

Both VAT Calculation Services and VAT Services on Amazon assume that the Seller has opted for taxation in the country of arrival of their delivery as of the moment the Seller possesses a valid VAT registration number (provided by the Seller in their Seller Central account). This implies that an EU cross-border sale of goods to consumers (distance sale) will always be taxed in the EU country of arrival of the delivery ('destination country') if a valid VAT registration number for that country is available.

The general VAT rules that apply on distance sales state that these sales are taxed in the EU country of dispatch of the delivery ('departure country') as long as the Seller has not reached a certain threshold of distance sales performed to a specific EU country. However, it is possible for the Seller to opt to tax their distance sales immediately in the arrival country. Therefore, where a Seller has not exceeded the distance-selling threshold for one or more of their VAT registered countries, the Seller must ensure that they have duly informed the relevant tax authorities to immediately tax their distance sales in the EU country of arrival prior to enrolling for VAT Calculation Services.

6. Assigning a Product Tax Code (PTC)

The PTC is important in order to determine the applicable VAT rate on the products listed by the Seller in the relevant country where VAT is due (tax jurisdiction).

As a system default, the standard rate PTC (A_GEN_STANDARD) will be set as the Seller’s default PTC once VAT Calculation Services are enabled. VAT Calculation Services will always apply the standard VAT rate on the products in each of the countries (for example, currently 19% in Germany, 20% in United Kingdom).

If a Seller wishes to change the system default position and assign another PTC, the Seller can do so by either changing the Seller-selected default PTC assignment within their tax settings, or by setting offer-level PTC assignments. An offer-level PTC assignment applies on an individual offer basis and can also be used to choose a PTC that is different from the Seller-selected default PTC. The offer-level PTC assignment will take precedence over the default PTC.

Please refer here for the list of specific PTC codes and associated VAT rates.

7. Assigning ‘Default country for VAT exclusive price’

7.1. Fulfilment by Amazon (FBA) products:

• EU Sellers enrolled in FBA: The ‘default country for VAT exclusive price’ will be pre-selected in the Seller’s tax settings to reflect the country of the ‘default deliver-from’ (departure location) address, provided that the Seller has a VIES-valid VAT registration number in the ‘default deliver-from’ country in their Seller Central account;
• Non-EU Sellers enrolled in FBA: Non-EU Sellers who dispatch products from locations outside the EU and are using the FBA service will have to provide the ‘default country for VAT exclusive price’. The Seller-chosen country must have a VIES-valid VAT registration number in the EU28 in their Seller Central account;
  Note: If Sellers are importing products from outside the EU, clearing the duties and taxes associated with that import and then making local (intra-EU) sales from any EU28 location, Sellers may specify that importation point as the default deliver-from location. In that case, the ‘default country for VAT exclusive price’ will be pre-selected to reflect the country of the ‘default deliver-from’ address.

7.2. Seller-fulfilled products:

For Sellers that have their ‘default deliver-from’ (departure location) address located outside the EU, VAT Calculation Services will not generate VAT invoices or perform VAT calculations. The Seller will be responsible for creating VAT invoices and accounting for VAT on all their self-fulfilled orders.

8. Determining the VAT Exclusive/Inclusive Price

Amazon’s VAT Calculation Services utilise three primary components to support VAT calculations displayed during the listing of a product, order checkout and on the invoices:

• VAT registration numbers and VAT calculation settings configured by the Seller;
• Logic and rules built into Vertex Indirect Tax O Series;
• Accompanying methodologies applied by Amazon – for example: VAT exclusive price determination and the allocation of order-level promotions to individual items in an order.

Amazon’s VAT Calculation Services uses the Seller-provided tax inclusive selling price (“Display price”) and the logic described below, which is based on the Seller’s VAT registration status, to determine which VAT rate will be used to determine the tax exclusive price (“VAT exclusive price”), where applicable.

8.1 Calculation of VAT from the display price to determine the [actual or] VAT exclusive price:

Sellers are expected to provide an item display price targeted at customers in the local marketplaces (United Kingdom, Germany, France, Italy or Spain) on which they list their items. Therefore, generally, the calculation of VAT from the display price will be performed in the following precedence:

8.1.1. For business-to-business (B2B) transactions:

• If the Seller has a VIES-valid VAT registration number in the marketplace country, then VAT Calculation Services will use the marketplace VAT rate to determine the VAT exclusive price from the display price. The VAT rate applied depends on the PTC defined by the Seller in their tax settings alongside other logic requirements; or
• If the Seller does not have a VIES-valid VAT registration number in the marketplace country, then VAT Calculation Services will use the Seller-defined ‘default country for VAT exclusive price’ location rate to determine the VAT exclusive price from the display price. The VAT rate applied depends on the PTC defined by the Seller in their tax settings alongside other logic requirements;

8.1.2. For business-to-consumer (B2C) transactions:

• If the Seller does not have a VIES-valid VAT registration number in the destination country and delivers the product to a Customer who is not VAT registered, then VAT Calculation Services will use the ‘Deliver-from’ country VAT rate to determine the VAT exclusive price from the display price. The VAT rate applied depends on the PTC defined by the Seller in their tax settings; or
• If the Seller has a VIES-valid VAT registration number in the marketplace country, then VAT Calculation Services will use the marketplace VAT rate to determine the VAT exclusive price from the display price. The VAT rate applied depends on the PTC defined by the Seller in their tax settings; or
• If the Seller has a VIES-valid VAT registration number in the destination country and the Seller has provided the ‘Default Country for VAT Exclusive Price’ then VAT Calculation Services will use the ‘Default Country for VAT Exclusive Price’ VAT rate to determine the VAT exclusive price from the display price. The VAT rate applied depends on the PTC defined by the Seller in their tax settings; or
• In all other instances, VAT Calculation Services will use the ‘Deliver-from’ (please also refer to distance-selling rules above) country VAT rate to determine the VAT exclusive price from the display price. The VAT rate applied depends on the PTC defined by the Seller in their tax settings.

Below are some examples to demonstrate the VAT exclusive price determination methodology set out above. The standard German VAT rate (19%) and Polish VAT rate (23%) have been used in the below examples. The actual VAT rate used will depend on the PTC (see section 6.0).

Example A:

• Business-to-Business (B2B) transaction: If the Seller is VAT-registered in the marketplace country and sells the product to a VAT-registered Customer within the EU, we will use the marketplace country VAT rate of the product to derive the VAT exclusive price.

  A German VAT-registered Seller that lists an item at €11.90 on Amazon.de will see the following VAT exclusive price for an item subject to VAT at the standard rate (or the total price paid including any applicable VAT):

  11.90 / (1 + 0.19) = €10.00

• Business-to-Business (B2B) transaction: If the Seller does not have a VAT registration number in the marketplace country and sells the product to a VAT-registered Customer within the EU, we will use the Seller’s ‘default country for VAT exclusive price’ VAT rate to derive the VAT exclusive price.

  A Polish VAT-registered Seller, whose ‘default country for VAT exclusive price’ is also Poland and who is not VAT-registered in Germany, lists an item at €12.30 on Amazon.de. The Seller will see the following VAT exclusive price (the total price paid including any applicable VAT) for an item subject to VAT at the standard rate:

  12.30 / (1 + 0.23) = €10.00

Example B:

Business-to-Consumer (B2C) transaction: If the Seller does not have a VAT registration number in the destination country and delivers the product to a Customer who is not VAT-registered in the EU, then VAT Calculation Services will use the ‘Deliver-from’ (please see comments in respect of distance selling) country VAT rate to determine the VAT exclusive price from the display price. The VAT rate applied depends on the PTC defined by the Seller in their tax settings;

8.2 Calculation of VAT on the VAT exclusive price:

Once the VAT exclusive price is determined, based upon the logic detailed above, VAT calculation is performed once more on the VAT exclusive price. This results in an accurate VAT inclusive price, which is also the total price charged to the Customer.

8.2.1. VAT Calculation on Item:

Once the VAT exclusive price is determined, the final VAT inclusive selling price is determined by performing a VAT calculation using the methodology described above. This calculation considers three primary components, that is, VAT registration numbers, Vertex rules and logic and accompanying Amazon methodologies, in order to perform the calculation.

Below are some examples to demonstrate the VAT calculation:

• Business-to-Consumer (B2C) transaction: A German and Austrian VAT-registered Seller lists an item at €11.90 on Amazon.de, dispatches the item from Germany and sells the item to a B2C Customer based in Austria (VAT rate = 20%):

  VAT exclusive item price calculation: 11.90 / (1 + 0.19) = €10.00

  Final VAT inclusive item price calculation: 10.00 * (1 + 0.20) = €12.00

  This is because VAT is due in Austria at 20%. The VAT exclusive price stays the same but the price paid by the Customer increases due to the higher VAT rate in Austria.

• Business-to-Business (B2B) transaction: A German and Austrian VAT-registered Seller lists an item at €11.90 on Amazon.de, dispatches the item from Germany and sells the item to a B2B Customer based in Austria (VAT rate = 0% - intra-community supply of goods):

  VAT exclusive item price calculation: 11.90 / (1 + 0.19) = €10.00

  Final VAT inclusive (total price paid including any applicable VAT) item price calculation: 10.00 * (1 + 0.00) = €10.00

• Business-to-Business (B2B) transaction: A German and Italian VAT-registered Seller lists an item at €11.90 on Amazon.de, dispatches the item from Germany and sells the item to a Customer based in Italy with a local IT VAT number:

  VAT exclusive item price calculation: 11.90 / (1 + 0.19) = €10.00

  Final VAT inclusive item price calculation: 10.00 * (1 + 0.19) = €11.90

  Origin VAT has been charged as Distance Sales VAT cannot be charged because the Customer has a local IT VAT number (i.e. it is not a B2C sale and the Distance Sales VAT rules do not apply) and the 0% VAT exemption on intra-EU supply of goods cannot be applied because the customer’s VAT number is not valid on VIES.

8.2.2. VAT Calculation on Promotion:

Promotions are fixed-price inclusive, meaning the VAT inclusive promotion value is only determined upon the calculation of the final VAT inclusive selling price (see section 7.2 A). The VAT calculated on the promotion follows the VAT rate associated with the item. Once the VAT inclusive promotion value is determined, we will use the VAT rate associated with the item to derive the VAT exclusive promotion value.

Example A:

• Business-to-Consumer (B2C) transaction: A German and Austrian VAT-registered Seller lists an item at €11.90 on Amazon.de and sells the item to a B2C Customer based in Austria (VAT rate = 20%) with a 10% promotion:

  VAT exclusive item price calculation: 11.90 / (1 + 0.19) = €10.00 (Display price on .de website)

  VAT inclusive item price calculation: 10.00 * (1 + 0.20) = €12.00 (as VAT due in Austria)

  VAT inclusive item promotion calculation: 12.00 * 0.10 = €1.20

  VAT exclusive item promotion calculation: 1.20 / (1 + 0.20) = €1.00

  Final VAT inclusive item price calculation: 12.00 – 1.20 = €10.80

Example B:

• Business-to-Business (B2B) transaction: A German VAT-registered and Austrian VAT-registered Seller lists an item at €11.90 on Amazon.de and sells the item to a B2B Customer based in Austria (VAT rate = 0% - intra-community supply of goods on the basis that a valid VIES VAT number is provided) with a 10% promotion:

  VAT exclusive item price calculation: 11.90 / (1 + 0.19) = €10.00 (Display price on .de website)

  VAT inclusive item price calculation: 10.00 * (1 + 0.00) = €10.00

  VAT inclusive item promotion calculation: 10.00 * 0.10 = €1.00

  VAT exclusive item promotion calculation: 1.00 / (1 + 0.00) = €1.00

  Final VAT inclusive item price calculation: 10.00 – 1.00 = €9.00

8.2.3. VAT Calculation on Shipping:

Shipping charges are fixed-price inclusive, meaning the price of shipping will not vary based upon the transactional details listed in section 5.0. Only the VAT exclusive delivery charge may vary from one transaction to another – please also see delivery taxability option below.

Example A:

• Business-to-Consumer (B2C) transaction:

  A German and Austrian VAT-registered Seller ships an item from Germany to a B2C Customer in both Germany (19%) and Austria (20%) and the VAT inclusive delivery charge is the same to both countries, that is, €5.00. In both cases, the customer will always pay the full €5.00

  Fixed VAT inclusive delivery charge to a German Customer: €5.00

  VAT exclusive delivery price calculation: 5.00 / (1 + 0.19) = €4.20

  Fixed VAT inclusive delivery charge to an Austrian Customer: €5.00

  VAT exclusive delivery price calculation: 5.00 / (1 + 0.20) = €4.17

• Business-to-Business (B2B) transaction:

  A German and Austrian VAT-registered Seller dispatches an item from Germany to a B2B Customer in both Germany (19%) and Austria (0% - intra-community supply of goods) and the VAT inclusive delivery charge is the same to both countries, that is, €5.00. In both cases, the Customer will always pay the full €5.00.

  Fixed VAT inclusive delivery charge to a German Customer: €5.00

  VAT exclusive delivery price calculation: 5.00 / (1 + 0.19) = €4.20

  Fixed VAT inclusive delivery charge to an Austrian Customer: €5.00

  VAT exclusive delivery price calculation: 5.00 / (1 + 0.00) = €5.00

Delivery Taxability Options:

By default, each delivery charge is assigned the same product tax code as the corresponding item. Therefore, the same product taxability rules will be applied to delivery charges. A Seller may override the default delivery taxability rule by designating whether delivery should always be taxable at the standard VAT rate.

Sellers should consult a tax advisor if they need assistance in configuring this tax setting for their business.

8.2.4. VAT Calculation on Gift Wrap Charges:

Gift wrap charges are fixed-price inclusive, meaning the total price of gift wrap will not vary based upon the transactional details listed in section 5.0. Only the VAT exclusive gift wrap charge may vary from one transaction to another – please also see gift wrap taxability option.

Example A:

• Business-to-Consumer (B2C) transaction:

  A German and Austrian VAT-registered Seller gift-wraps an item and dispatches it from Germany to a Customer in both Germany (19%) and Austria (20%). The VAT inclusive gift wrap charge is the same to both countries, that is, €3.00. In both cases, the customer will always pay the full €3.00.

  Fixed VAT inclusive gift wrap charge to a German Customer: €3.00

  VAT exclusive gift wrap price calculation: 3.00 / (1 + 0.19) = €2.52

  Fixed VAT inclusive gift wrap charge to an Austrian Customer: €3.00

  VAT exclusive gift wrap price calculation: 3.00 / (1 + 0.20) = €2.50

• Business-to-Business (B2B) transaction:

  A German and Austrian VAT-registered Seller gift-wraps an item and dispatches it from Germany to a Customer in both Germany (19%) and Austria (0% – intra-community supply of goods on the basis that a valid VIES VAT number is provided). The VAT inclusive gift wrap charge is the same to both countries, that is, €3.00. In both cases, the Customer will always pay the full €3.00.

  Fixed VAT inclusive gift wrap charge to a German Customer: €3.00

  VAT exclusive gift wrap price calculation: 3.00 / (1 + 0.19) = €2.52

  Fixed VAT inclusive gift wrap charge to an Austrian Customer: €3.00

  VAT exclusive gift wrap price calculation: 3.00 / (1 + 0.0) = €3.00

Gift Wrap Taxability Options:

By default, each gift wrap charge is assigned the same product tax code as the corresponding item. Therefore, the same product taxability rules will be applied to gift wrap charges. A Seller may override the default gift wrap taxability rule by designating whether gift wrap should always be taxable at the standard VAT rate.

Sellers should consult a tax advisor if they need assistance in configuring this tax setting for their business.

9. Time of Sale for VAT Calculation

VAT is pre-calculated at order checkout using the VAT calculation rules and rates in effect on the order checkout date. However, the VAT actually charged to the Customer will be based on the VAT calculation rules (including the VAT registration number status of the Seller and the Customer), rates and actual Deliver-from/to location in effect at the time a payment method charge is authorised.

Depending on how a shipment is fulfilled, the payment method charge authorisation could occur shortly after an order is submitted or immediately prior to product dispatch.

Many factors can change between the order checkout date and the payment method charge authorisation date. As a result, the pre-calculated VAT amount may differ from the amount actually charged. For example: VAT calculation rules or rates and the actual Deliver-from location may change (located under Fulfilment by Amazon Settings) and this could lead to an increase or decrease in the VAT charged and hence an increase or decrease in the price margin.

10. Refunds

All refund amounts will be treated as VAT exclusive and VAT calculations on refunds will follow the VAT calculation treatment of the original sales transaction to which they relate.

The Customer refund process will depend on whether the product is delivered using Fulfilment by Amazon (FBA) or is Seller-fulfilled.

10.1 Products delivered using FBA:

Our VAT Calculation Services will calculate VAT on Customer return and non-customer return related refunds and adjustments. For example, a Seller issues a partial refund against the product but did not require the Customer to return it.

10.2 Seller-fulfilled products:

Amazon’s VAT Calculation Services will calculate VAT on any refunds issued by the seller via Seller Central. All such refunds are issued at the sole discretion of the seller.

Amazon’s VAT Calculation Services does not support VAT Only Refunds that produce a credit note and a new 0% VAT invoice. This mainly applies to B2B cross-border supplies of goods where the customer informs the seller afterwards about his VAT registration number in the other EU country and claims a refund of the VAT charged. If a Seller wants to process a VAT Only Refund, the Seller must use the ‘Goodwill’ refund option and produce their own credit note and new VAT invoice.

11. VAT Rate Maintenance

VAT rates, as well as VAT calculation rules and logic, are supplied by our third-party provider, Vertex, which provides monthly updates that we implement before the end of the calendar month.

12. VAT Invoicing

Amazon’s VAT Calculation Services will automatically create VAT invoices and credit notes to the Customer in the name and on behalf of the Seller. The Seller, however, remains legally the issuer of the VAT invoice that has been generated using Amazon’s VAT Calculation Services. VAT calculation and invoice generation will also occur on orders that were placed prior to the activation date but fulfilled after the activation date. The Seller must ensure that they no longer produce VAT invoices and credit notes for such orders and all transactions that occur after enrolment for Amazon’s VAT Calculation Services.

Sellers still need to provide credit notes, as required, for transactions that occurred prior to enrolment for VAT Calculation Services but which are only returned/refunded after.

12.1. Invoice Number

A unique VAT invoice and credit note sequence will be created for each country within which the Seller has a VIES-valid VAT registration number, which will be printed on the documents. Invoice numbers are created in numerical sequence. In the event a Seller deactivates VAT Calculation Services and then re-activates the services, the sequence will continue from the last number.

12.2. Types of documents:

• Simplified VAT Invoices and Simplified Credit Notes: These will be generated when a Seller sells under their Spanish VAT registration number to Customers who have not provided a VAT registration number, a business registration number or their citizen ID.
• Receipts: No VAT invoices will be generated when:
  • a Seller sells under their Italian VAT registration number to Customers who have not provided a VAT registration number or a Codice Fiscal in their Amazon account;
  • a Seller dispatches goods from one of our European fulfilment centres but does not have a valid VAT registration number in that jurisdiction and for those orders a downloadable VAT invoice badge was granted;
• XML invoices: These will be generated for domestic B2B sales in Italy and the SDI (Sistema di Interscambio) will send this directly to the customer if the following conditions are met:
  • Seller has entered their SDI, Account ID and/or Certified Email Address; or
  • Seller has a VAT registration number and is physically present in Italy (a physical presence is considered true if the address associated with the Seller’s Italian VAT registration number is in Italy). Refer to VAT Calculation Services – FAQs for more information;

12.3. Accessing VAT invoices:

VAT invoices are available for download in Seller Central:

• Seller Fee invoices – can be accessed by navigating to the ‘Tax Document Library’ folder available under the ‘Reports’ tab and choosing the ‘Seller Fee Invoices’ tab;
• Amazon VAT Calculation invoices – the Seller can bulk-download VAT invoices generated by VAT Calculation Services by navigating to their Seller Central account. Select the ‘Tax Document Library’ folder available under the ‘Reports’ tab, click the ‘Amazon VAT Calculation’ tab and select ‘VAT Invoices’ from the ‘Report Type’ drop-down box. The invoice URLs will also be embedded as part of the VAT Calculation report extracted for a chosen period;
• Italian XML invoice – the Seller can obtain Italian XML invoices by going to their personal tax portal on the Italian tax authority website. Please note that Amazon will provide a duplicate PDF document for each order in Seller Central but this is not an official invoice. The Seller can only obtain the official invoice from their personal tax portal.

13. VAT Calculation Reporting

For Sellers who use Amazon’s VAT Calculation Services, the VAT Calculations report will include VAT calculation information for Sellers. This information can be useful in the preparation of the Seller’s periodic VAT returns. Seller can access this report by navigating to their Seller Central account: Select the ‘Tax Document Library’ folder available under the ‘Reports’ tab, click the ‘Amazon VAT Calculation’ tab and select ‘VAT Calculations’ from the ‘Report Type’ drop-down box.

Additional information can also be found in the monthly Amazon VAT Transactions Report that is available in the ‘Reports’ section of the Seller Central account.

Sellers should consult a tax advisor if assistance is needed in the compilation and filing of any tax-related returns.

14. VAT Calculation Services Enrolment/Activation

During VAT Calculation Services enrolment, Sellers will be provided with the opportunity to determine when the calculation service will commence. The VAT Calculation settings will be effective from 12:00:00 AM UTC for any activation date the Seller chooses.

Please note that any amendments made by the Seller to their calculation service commencement date post activation requires 30 minutes for the changes to take effect in the system. Sellers are advised to monitor their transactions for the period when the change is being made and make any corrections as required.

15. Deactivation

Sellers will be provided with the opportunity to deactivate VAT Calculation Services. Sellers will be solely responsible for calculation, VAT invoicing and reporting from that date onwards.