European station began to pay VAT
Since January this year, Amazon has begun to collect and pay VAT tax on the British site. The 20% tax rate has made many sellers feel painful. However, the latest news from Amazon shows that sellers have received email notifications: July 1, 27 Several EU countries/regions will implement new VAT regulations, and Amazon will collect them on their behalf.
Amazon stated in an email that from July 1, 2021, 27 EU countries/regions will implement new value-added tax rules on e-commerce sales, which will have an impact on sellers selling products to EU consumers through online stores such as Amazon. .
According to the email, from July 1, 2021, the European VAT will have the following key changes:
1. In the following situations, Amazon needs to collect and pay VAT for your B2C product sales in Amazon Mall:
The goods are sent from the EU address to the EU buyer, but your (sales partner) company registered address is not in the EU;
Goods are shipped directly from non-EU addresses to EU buyers, and the value of the shipment does not exceed €150. These shipments are subject to specific customs declaration and labeling requirements.
2. Imported small parcels with a value not exceeding €22 will no longer be exempt from VAT. From July 1, 2021, all imported e-commerce packages are subject to VAT regardless of their value.
3. The existing threshold for remote sales within the EU will be abandoned, and the new threshold is €10,000, which applies to the entire EU. This does not apply to sales made outside the country/region where your company's registered address is located, nor does it apply to sales where Amazon is required to collect and pay VAT.
4. The European Union will introduce an optional VAT declaration procedure called "UnionOne Stop Shop" ("Union-OSS"). With this simplified declaration procedure, sales partners with company registered addresses in the EU can uniformly declare value-added tax for their remote sales across the EU in their member states.
It is worth mentioning that these changes will not affect the sales or distribution of goods to EU B2B buyers. In such sales, the current EU VAT declaration requirements will continue to apply. Sellers still need to meet the VAT registration requirements of the EU countries/regions in which they hold inventory.
How to choose between price adjustment and sales volume?
From the original UK site to the current European site, in just four months, as long as the seller meets the requirements of the non-EU system for shipments and the total annual cross-border sales exceeds 10,000 euros, it is possible to directly perform VAT buckle. As a result, sellers will face a cost increase of about 20%. This is difficult for many sellers to accept.
When notifying the payment of VAT on the UK site, Amazon reminded the seller to increase the price and include the VAT tax in the product price. Many sellers have previously reported 0 or used a low tax rate of 6.5%-7.5%. After Amazon withholds, these sellers will have to increase their prices by about 10%-16% to be equal to their previous profits.
Nowadays, sellers are also facing the choice of price adjustment. However, for most sellers, unreasonable price increases will inevitably affect sales. For this reason, many sellers have to adjust the original price and bear the tax.
It is understood that EU companies do not need to be paid and withheld VAT, so if it is a local EU account, compared with those sellers who need to pay VAT, they can make about 20% more profits. Therefore, under the weight of VAT, some sellers may use local European accounts to keep their profits, and the prices of local accounts will surely rise. This is a big blow to the European station, where the number of sellers is already rising.