Amazon – European Online Sellers and New Invoicing Rules

A few days ago, Amazon, the e-commerce giant, introduced significant changes to simplify the European business environment and streamline tax practices. These changes are designed to make conducting business in Europe less demanding while improving compliance with tax regulations.

The key change involves a new invoicing model. Instead of the current responsibility held by Amazon Services Europe s.a.r.l., local Amazon branches in each country will now handle invoicing. This shift will affect how VAT is calculated and reported.

Previously, Amazon’s Luxembourg-based company managed to invoice, and VAT was charged to the seller under the reverse charge mechanism. This meant that online sellers did not need to pay VAT upfront. However, starting August 1, 2024, the new rules will require VAT to be paid in advance according to local rates.

These changes will impact the business processes of online sellers, including invoicing, tax reporting, and the way Amazon handles payouts. The new rules apply to sellers in countries where Amazon has local branches, such as the United Kingdom, Germany, France, Italy, Spain, the Netherlands, Poland, Belgium, and Sweden.

Sellers operating in these countries will now need to invoice through Amazon’s local branch and pay VAT upfront, which was not previously required. This shift necessitates increased attention to local tax regulations to recover VAT costs effectively.

It is important to note that sellers outside of these nine countries will not experience these changes, as their VAT handling will remain the same as before the new rules were implemented.

Amazon EU is making these adjustments to better align its operations with European local tax laws. As a result, online sellers will need to adapt their invoicing and tax reporting procedures to meet the new requirements and avoid issues with their accounting.