Commingling (virtual tracking) VAT FAQ

What is commingling and how does it relate to virtual tracking?

Commingling allows Amazon to fulfil orders using identical products from different sellers. Doing so enables us to process a customer order more efficiently and expedite delivery from the fulfilment centre that is closest to the buyer.

By using virtual tracking with the manufacturer barcode, we can trace the source of eligible products throughout the fulfilment process, despite the virtual transfers of ownership that commingling entails.

These virtual transfers of ownership can occur either locally in one country (domestic commingling) or cross-border in the EU (cross-border commingling). Additional seller eligibility requirements apply for cross-border commingling.

What are the requirements for domestic and cross-border commingling?

Your eligible products with the manufacturer barcode can be commingled domestically if valid VAT numbers are provided in the countries where the inventory is stored.

To participate in cross-border commingling, you must be enrolled in Pan-European FBA or Fulfilment Network Expansion (Central Europe Programme). Additionally, you must provide valid VAT numbers to Amazon in at least two of the following countries: the UK, Germany, France, Italy, Spain, Poland and the Czech Republic.

Commingling can occur only in or between the countries for which you provide a valid VAT number.

What is VAT, and am I obliged to register for VAT in a country?

VAT, in the EU and the UK, is a consumption tax assessed on the value added to goods and services. It applies to goods and services that are bought and sold for use or consumption in the EU and the UK. For more information, go to our VAT Knowledge Centre or consult your tax advisor.

Is commingling subject to VAT, and if so, why?

Yes. Commingling is a virtual transfer of ownership of products between two sellers and qualifies as a supply of goods for VAT purposes in the countries involved in the transfer (two countries for cross-border commingling, one country for domestic commingling).

How will the commingling transactions be invoiced for VAT?

When a product is commingled, Amazon will issue two additional invoices to record the virtual transfer of inventory. These additional invoices are generated monthly and show the aggregated commingled transactions per country.

• A self-bill invoice for the sale of your product to the other seller, including the taxable base and the VAT payable amount
• An invoice for the acquisition of the same product from the other seller, including the taxable base and the VAT receivable amount.

Input VAT is the VAT mentioned on your incoming invoices from Amazon. Usually, input VAT is deductible, but we recommend that you consult with your tax advisor if you have questions.

How is VAT calculated on my inventory items in case of commingling?

Your offer price for the listing in the store where the item is sold will be used to calculate the taxable base (the amount on which the VAT amount will be calculated). The resultant taxable base will be used to compute the corresponding VAT amount for the acquisition of the same product from the other seller.

If you are enrolled in Amazon’s VAT Calculation Service, Amazon will take the product tax code (PTC) that you have assigned to your offer and use the corresponding VAT rate. If you have not activated the VAT Calculation Service, Amazon will assign the product tax code and corresponding VAT rate.

If the product is acquired from another FBA seller or from Amazon Retail, we will use the product tax code assigned by Amazon.

My products are not zero-rated, so why is no VAT mentioned on the invoice?

In principle, sellers should charge VAT due on the supply of goods and pay this VAT to the tax authorities. In certain countries (the Czech Republic, France, Italy, Poland and Spain) and in certain cases (depending on where your company is established or registered), a local reverse-charge mechanism applies.

This means that the VAT due is not charged on the invoice by the supplier but is accounted for by the customer. The customer then must report the VAT due in their VAT return but can deduct this amount in the same VAT return (generally no cash-flow impact).

In the case of commingling, a local reverse-charge mechanism may apply:

• For the sale of the product, you must only report the taxable base in your VAT return. Amazon will account for the VAT due in its own VAT return.
• For the acquisition of the same product from the other seller, you must report the taxable base and the corresponding VAT due and VAT deductible amount in your VAT return. Consult your tax advisor for the correct reporting requirements.

Which VAT numbers do I need for participating in commingling?

In principle, you always must have a VAT registration in the country where you hold inventory.

Commingling transactions can take place only if you have a valid VAT number in the country or countries where both fulfilment centres are located. Our system is set up to verify if the VAT numbers provided through Seller Central are valid and will proceed only if a valid VAT number in both countries is provided.

Where can I add my VAT numbers in Seller Central?

Go to the VAT/GST registration numbers page and enter your available VAT numbers by country.

How do I report commingling transactions in my VAT return?

When you prepare your VAT reporting, treat these commingled transactions the same as any of your other local sale (Commingling_Sell) and purchase (Commingling_Buy) transactions. These commingling transactions will be reported in your Amazon VAT Transactions report.

The fields Total activity value amount excluding VAT and the VAT amount for both Commingling_Sell and Commingling_Buy transactions are shown as a positive value in the report. Therefore, make sure that you correctly calculate your final VAT position.

For more information, go to Amazon VAT Transactions report FAQ.

What is a self-bill?

By default, the supplier is required to issue a VAT-compliant invoice to the customer. Parties can agree to self-bill, which means that the customer prepares the supplier’s invoice in the name and on behalf of the supplier. The self-billing process lowers the administrative burden for sellers.

For commingling transactions, Amazon issues a self-bill invoice for all the sales of products to another FBA seller (or Amazon Retail), per country, on a monthly basis. Self-billing is in accordance with the Amazon Services Europe Business Solutions Agreement.

The self-bill invoice, at a minimum, will contain the following information:

• Your name, seller ID and relevant VAT number
• Amazon’s address and relevant VAT number
• Sales price (taxable base)
• Product tax code
• The applicable VAT rate
• The applicable VAT amount

Where can I find information about my commingling transactions?

You can find information about your commingling transactions in the following data sources:

• Seller payment reports: The related VAT credits and debits are reported in the seller payment reports under What events occurred during the statement period? – Commingling VAT. These give you a clear overview of the corresponding payable and receivable VAT in the UK, Germany, France, Italy, Spain, Poland and the Czech Republic.
• Tax document library: All the invoices issued by Amazon can be downloaded in PDF format from the tax document library. If you have questions about the invoices, contact Selling Partner Support. However, because this data is retrieved from the data in your account settings, we recommend that you verify your data as well to ensure that it is correct and up to date.
• Amazon VAT Transactions report: The Amazon VAT Transactions report provides detailed information for commingling transactions. To learn more, go to Amazon VAT Transactions report FAQ.

Do my commingling transactions have an impact on the distance sales regime?

If you already charge VAT on your distance sales in the country of arrival (either because you exceeded the distance-selling threshold for this country or because you opted to charge VAT in this country), the commingling programme should not affect the applicable country VAT rate.

If you charge VAT on your distance sales in the country of departure (because you have not exceeded the distance-selling threshold for the country of arrival and you have not opted to charge VAT in this country), the applicable VAT rate is based on the actual ship-from country.

As a Pan-European FBA seller, you allow Amazon to store goods in and fulfil orders from European countries (the UK, Germany, France, Italy, Spain, Poland and the Czech Republic). Therefore, deliveries to buyers can happen from all seven of these countries and then are subject to country-of-departure VAT. Commingling might increase the number of deliveries from one or more European countries.

To verify all tax consequences for your situation, we recommend that you consult your tax advisor.