Amazon B2B Reverse Charge VAT change

CATEGORY: Marketplaces
Reverse charge VAT on B2B transactions

Amazon are updating the European VAT Calculation Services Methodology policy to apply Business-to-Business (B2B) product-specific VAT calculations to certain types of listings across Amazon’s European stores. Reverse Charge VAT will come into effect.

0% Reverse Charge European VAT Calculation

Following the introduction of the EU B2B product specific VAT calculations, effective from the 7th of February 2023, Amazon will apply the product-related domestic reverse charge (0% VAT) to sales that meet the following conditions:

  • Sale of electronic items subject to the product-related domestic reverse charge. These vary by country but typically include cell phones, computer chips, e-readers, laptop computers, tablet computers or video game consoles
  • Domestic B2B sale
  • Shipment value is above applicable thresholds (generally around EUR 5,000)
  • Sale occurs in United Kingdom, Germany, Romania, Czech Republic, Austria, Denmark or Latvia

Basically what this means is that normally when a business supplies a business VAT would be charged by the seller and reclaimed by the purchases. Instead, VAT won’t be charged or reclaimed effectively zero rating the supply. For the reverse charge to take place the purchaser has to supply their valid VAT number which Amazon will have on record for business purchases.

Apart from ensuring your VAT accounting takes into account reverse charge VAT purchases, the people this will most impact are those on special VAT schemes or those trading below the VAT registration threshold and so wouldn’t normally collect VAT. The price the purchaser pays will be net of VAT whether the VAT has been built into your pricing or not.

You will need to check with your accounting solution provider to make certain they will take into account these changes to ensure you don’t pay VAT on B2B sales where it hasn’t been charged.

You can review the details to the Amazon European VAT Calculation Services Methodology updates on Amazon’s Changes to program policies page.

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