Amazon sales: watch out for Commingling!

Sellers using Amazon remain responsible for accounting for VAT correctly in each country. Under the Commingling programme you also need to be clear on whether you owe VAT and whether you can deduct it.

Amazon and FBA

Dutch e-commerce sellers using Amazon often make use of Fulfilment by Amazon (FBA). From a VAT perspective the seller supplies the goods directly to buyers and Amazon handles everything around shipping and returns, that is the physical flow of goods. The shop need not worry about dispatch and can focus on selling. Because the sale is made directly to the buyer, the seller usually accounts for the VAT due itself. Amazon is not the seller, merely an intermediary.

Where the seller uses Pan-European FBA, its stock may sit in fulfilment centres across several member states. VAT due in other member states on EU distance sales can be declared and paid in the Netherlands through the One Stop Shop (OSS), after which the Dutch Tax Administration passes that VAT on to the foreign authorities.

In addition, the seller must in short file VAT returns in every member state where its stock is held. Those returns cover the VAT on local sales, which may not go through the OSS, and also intra-Community supplies and acquisitions, exports and transfers of own goods. The Amazon VAT transactions report can be downloaded from the Amazon account and contains all the data needed for correct returns. Our software, adapted specifically for that report, processes these transactions into correct EU returns.

Amazon FBA Commingling

Many sellers also take part in the FBA Commingling programme. Goods from the seller's own stock are exchanged for identical goods belonging to Amazon or to other participating FBA sellers. Amazon does this to improve efficiency and shorten delivery times: combining goods from different sellers lets it fulfil orders faster.

In the Amazon VAT transactions report these transactions appear as:

• Commingling Sell, the sale of goods to Amazon or another FBA seller
• Commingling Buy, the purchase of goods from Amazon or another FBA seller

These are local B2B transactions in which an Amazon entity acts as buyer (on a Sell) and as seller (on a Buy).

What you need to check

To process these transactions in the local returns you need to know whether you owe VAT on the sales and whether VAT has been charged to you. That depends on the reverse charge rules and on where the Amazon entity concerned is established. Germany in principle has no reverse charge where a non-established business sells to a business established there, while other member states often do apply one in those situations.

Those details cannot be derived from the Amazon VAT transactions report. Look instead at the monthly invoices Amazon makes available. They show where the buying or selling Amazon entity is established, and on that basis you can determine whether you owe VAT on the Commingling Sell transactions and can deduct VAT on the Commingling Buy transactions.