The tax grouping in Link My Books relies on you having entered your EU VAT numbers into Seller Central. This article explains why.
If you are using Amazon's VAT Calculation Service and you are registered for VAT in multiple EU countries it is very important to enter your VAT numbers into seller central as soon as you get them.
Amazon will not calculate your VAT correctly until you do so and you could end up paying VAT on a single sale to two EU countries.
How does this happen?
Let's say you're registered for VAT in the UK to begin with and you have the Amazon VAT calculation service turned on. You have entered your UK VAT number on seller central. So far, so good.
Then later on you also register for VAT in Germany and France for example.
At this point Amazon don't know that you have VAT registrations in Germany or France and continue to assume that all of your EU sales that are subject to VAT, fall under the tax jurisdiction of the UK.
So Amazon continue to apply UK VAT to all sales that are subject to VAT.
The reason I say "sales that are subject to VAT" is because when you're on the Amazon VAT Calculation Service, Amazon "Zero Rate" certain sales for VAT, such as EC Business sales and sales that leave the EU.
What issue does this create?
This creates two issues.
- Since Amazon are providing VAT invoices to customers on your behalf, these will be wrong. Sales taxable in Germany, for example, will show UK VAT instead of German VAT.
- In Link My Books, since we rely on the data coming out of Amazon being correct, whilst it may look like a sale is "Tax Jurisdiction UK" it could actually be a sale that is taxable in another EU country instead.
For example, if a sale is taxable in Germany but you haven’t entered your German VAT number in seller central, Amazon will deem the sale to be "tax jurisdiction UK" and apply UK VAT.
Link My Books will then group this sale in the "UK Tax Jurisdiction Sales" group and apply your chosen tax rate to it, which would usually be 20% UK VAT.
Your third party provider calculating your French VAT may deem the sale as taxable in France and include it on your French VAT return too.
This could lead to you paying VAT on that single sale to both the UK and France.
How do I avoid this?
The takeaway from this is to ensure that you enter all of your EU VAT numbers into Amazon seller central as soon as they are registered.
This will ensure that the data we get from the Amazon VAT Transactions Report is accurate and shows the correct tax jurisdictions for each sale, which in turn will mean that the sale is correctly grouped inside Link My Books and the correct tax rates applied.
What do I do if I haven’t entered my VAT numbers on Amazon Seller Central?
If you have any VAT registrations that you have not entered the details of into Amazon seller central, the first thing to do would be to enter them now.
Then get in touch with support here at Link My Books and we can work with you on a case by case basis to work out a solution that will keep your Amazon bookkeeping accurate during the transition period up to when you eventually have all of your VAT numbers in seller central.