Working with a tax agent to manage the VAT-compliance of your business is ideal. Many of those who sell on Amazon choose to work with tax agents as it makes their job a lot simpler. It also ensures they can focus on their companies growth rather than the management. This is particularly true when sellers work with countries who use another language.
Some of the benefits of working with VAT agent include:
It saves time – Filing in VAT returns can take a lot of time. When you outsource the work to an agent you can focus on other aspects of the business.
It’s more accurate – Tax laws tend to change regularly and each country has its own tax laws. When you work with an expert they are more likely to complete your VAT returns accurately and in accordance with the very latest tax laws and rules.
You don’t need to worry about languages – VAT returns need to be filled out using the local language. When you expand your business into new European Union territories you’ll need to start filing the return in that country’s language. One of the good things about a tax agency is they have partners or offices in each EU country. This means you can rest assured that your VAT needs are looked after.
The Downsides
You have to pay – Accountants can be expensive and you might need to hire different accounting firms. If you hire a large accountancy that covers a lot of EU countries you could pay more than if you hired a small accountancy firm in every country. I
Amazon VAT Calculation Service
Amazon’s VCS has been designed to manage the VAT FBA sellers. This is where they buddy up with large accountancy firms so that they can file the necessary VAT returns. While this might sound like a good idea, it’s not really recommended.
Using VCS can cause a lot of issues. For example, in one case, they missed a client’s first three months of filings. This resulted in the client having to pay huge fines. Secondly, a client overpaid VAT, and thirdly, when they were asked to stop filing they carried on for six months. In the end, the client filed each VAT return twice, which in itself caused major issues.
If this was not enough, VCS uses an automated system which can and does break down from time to time. When this happens, no-one seems to be there to help you. It could, therefore, be better if you used an accountancy firm to do the work for you. Sometimes, being able to speak to a human can make a huge difference.
What You Could Do
You could consider using a tax firm in every country. Working this way could be a good balance between cost and ease of use. However, you should always make sure that you keep a close eye on your VAT matters. This is to ensure that you remain compliant with every country’s VAT legislation.
Below you will find a few tips that could help you with regards to VAT:
- Check all of your VAT registrations – Which ones are in-process and which are live? Are all of the current ones added to Amazon Seller Central?
- Is Amazon’s VAT Calculation Service on? – When it is you should find that it gives you a lot of detail about your transactions.
- Check the types of products you sell – Do they come with a standard VAT rate? Are you selling anything that has a different rate?
- Do your product listings have the correct rate of Vat applied?
To check your VAT rates, go to the Tax Document library. You can find this at Amazon Seller Central → Reports → tax Document Library. You can typically find the invoices listed under 3 categories, which are Product Ads, Amazon Merchant Seller Fees and Amazon FBA Fees.
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