Do I need to register for VAT immediately? Isn’t there a limit of 70,000€?
OK, so I mentioned that there are two perspectives. This limit refers to Distance selling EU VAT thresholds within the EU.
If you are selling on Amazon but fulfilling your own orders from Finland, then these thresholds, or limits, are relevant. For the countries of Amazon’s 5 European countries, the limits are:
- Germany €100,000
- France €35,000
- Italy €35,000
- Spain €35,000
- UK £70,000
So if you are shipping from Finland into these countries, you do not need to register for VAT until you have shipped this value of product. This changes, however, if you are using the Fulfilment by Amazon service (FBA), because with FBA you put your stock into one of Amazon’s Fulfilment Centres (FC). In this situation, there are no thresholds. From the moment your stock is being stored in another country, you are required to register to pay VAT in that country.
Here’s a link to a website with more information about this:
Do I need to set-up a new company in another country? How do I register for VAT?
No you do not need to set-up a new company. It is possible for a Finnish company to only register to pay VAT in another country. You will get a tax number in that country, associated with your existing Finnish company. I started working with a tax advisor two years ago, and it was quite a long process from registering to starting to pay the VAT in Germany.
Amazon now has a new programme, with a partner company Avalara, which allows you to register for VAT right inside the Seller Central portal. As I said, I have no connection to these companies, but the pricing seems to be really good, 400€ per year including the VAT submissions. In comparison, my company is currently paying 800€ per year for similar service.
Registering for this is a four-step process, and you will need to fill in forms and upload company documents to the tax advisor. In short, this is how the process goes:
- Select the countries you want to register in
- Remove any unnecessary countries
- Click “Agree and Continue”
- Confirm your subscription
- Amazon will provide an Excel sheet for you to enter your company information – simply click “Download”.
- Collect the Required Documents
- Amazon will tell you all the documents you need to provide to the tax adcisor, to help identify your company and its owners.
- Upload the documents for verification.
- Download and print the forms
- Amazon will provide pre-filled forms for you to check and sign
- Click “Download”
- Sign the forms and post them to the tax advisor
How do I report and pay my VAT?
Simply put, here is the monthly (or Quarterly) process:
- You download a report from Seller Central
- You upload this to your tax advisor
- Your tax advisor will file a VAT return, and advise you how much you need to pay
- You make a payment to the tax authorities
Different countries have different rules about VAT payments: UK is quarterly, 4 times per year, Germany is monthly. Your tax advisor will confirm what you need to do.
One piece of breaking news, as on mid-June 2018. There is a message on Seller Central which says:
“Thank you for your interest in ‘VAT Services on Amazon’. We are temporarily unable to accept sign-up requests. You can click here to get notified when we are able to process your request.”
I don’t know what the problem is, possibly too much demand, as one of my customers is currently waiting for their registration to be finalised. Hopefully, they will be back up-and-running soon, and all of this info will still be relevant!