We strictly follow EU and UK directives pertaining to VAT, UOSS, IOSS and Non-UOSS schemes. Details and examples of our implementation of the relevant directives are outlined in this document, so you have a clear picture of how we handle and calculate your VAT.
This document describes the methodology we apply to calculate VAT.
SimpleVAT will automatically create VAT invoices and credit notes to the Customer in the name and on behalf of the Seller. The Seller, however, legally remains the issuer of the VAT invoice that has been generated using SimpleVAT. In case SimpleVAT is configured to upload invoices to the marketplace(s), or via email, the seller must ensure that they no longer produce VAT invoices and credit notes using alternative software suites.
A unique VAT invoice and credit note sequence will be created for each country within which the Seller has a government-validated VAT registration number and which will be printed on the documents. Invoice numbers are created in numerical sequence. In the event a Seller deactivates SimpleVAT and then re-activates the service the sequence will continue from the last number.
VAT invoices are available for download in your SimpleVAT account under the Invoices section
VAT rates, as well as VAT calculation rules and logic, are reviewed monthly. In case the legal framework has changed, for example, in case the VAT rate has changed in an EU-member state, we shall incorporate the necessary changes in our service's methodology accordingly.
All refund amounts will follow the VAT calculation treatment of the original sales transaction to which they relate.
SimpleVAT will calculate VAT on Customer return and non-customer return related refunds and adjustments, for example a Seller issues a partial refund against the product but did not require the Customer to return it.
SimpleVAT will calculate VAT on any refunds issued by the seller via Seller Central. All such refunds are issued at the sole discretion of the seller.
SimpleVAT does not support VAT Only Refunds. This mainly applies to B2B cross-border supplies of goods in the EU where the customer informs the seller afterwards about his VAT registration number in the other EU Country and claims refund of the VAT charged. If Seller wants to process a VAT Only Refund, then Seller must use the ‘Goodwill’ refund option and produce their own credit note and new VAT invoice.
VAT is pre-calculated at order checkout using the VAT calculation rules and rates in effect on the order checkout date. However, the VAT actually charged to the Customer will be based on the VAT calculation rules (including the VAT registration number status of the Seller and the Customer), rates and actual Ship-from/to location in effect at the time.
Depending on how a shipment is fulfilled, payment method charge authorization could occur shortly after an order is submitted or immediately prior to product shipment.
SimpleVAT utilises three primary components to support VAT calculations displayed during the listing of a product, order checkout and on the invoices:
SimpleVAT uses the Seller-provided tax inclusive selling price (“Display price”) and the logic described below, which is based on the Seller’s VAT registration status, to determine which VAT rate will be used to determine the tax exclusive price (“VAT exclusive price”), where applicable.
Sellers are expected to provide an item display price targeted at customers in the local marketplaces (United Kingdom, Germany, France, Italy, Poland, The Netherlands, Spain and Sweden) on which they list their items. Therefore, generally, the calculation of VAT from the display price will be performed in the following precedence:
Following are some examples to demonstrate the VAT exclusive price determination methodology set out above. The standard German VAT rate (19%) and Polish VAT rate (23%) have been used in the below examples. The actual VAT rate used will depend on the PTC (see section 7.0).
Example A:
A German VAT-registered Seller that lists an item at €11.90 on Amazon.de will see the following VAT exclusive price for an item subject to VAT at the standard rate (or the total price paid including any applicable VAT):
11.90/ (1 + 0.19) = €10.00
A Polish VAT-registered Seller, whose ‘default country for VAT exclusive price’ is also Poland and who is not VAT registered in Germany, lists an item at €12.30 on Amazon.de. The Seller will see the following VAT exclusive price (the total price paid including any applicable VAT) for an item subject to VAT at the standard rate:
12.30/ (1 + 0.23) = €10.00
Example B:
EU Business-to-Consumer (B2C) transaction: Seller has a VAT registration number in the destination country or has opted into UOSS and ships the product to a Customer who is not VAT registered in the EU, then SimpleVAT will use the ‘Ship-from’ country VAT rate to determine the VAT exclusive price from the display price. VAT rate applied depends on the PTC defined by the Seller in their tax settings;
Following is one of the example outcomes for an EU B2C transaction. For complete list of EU B2C outcomes. Please refer to section 9.1. Calculation of VAT from the display price to determine the VAT exclusive price.
A German VAT-registered Seller, that lists an item at €11.90 on Amazon.de, ships the product from Germany to a customer in Poland, Seller will see the following VAT exclusive price for an item subject to VAT at the standard rate:
11.90/ (1 + 0.19) = €10.00
Once the VAT exclusive price is determined, based upon the logic detailed above, VAT calculation is performed once more on the VAT exclusive price. This results in an accurate VAT inclusive price which is also the total price charged to the customer.
Once the VAT exclusive price is determined, the final VAT inclusive selling price is determined by performing a VAT calculation using the methodology described above. This calculation considers three primary components, that is, VAT registration numbers, SimpleVAT rules and logic and accompanying SimpleVAT methodologies, in order to perform the calculation.
Following are some examples to demonstrate the VAT calculation:
VAT exclusive item price calculation: 11.90/ (1 + 0.19) = €10.00
Final VAT inclusive item price calculation: 10.00 * (1 + 0.20) = €12.00
This is because VAT is due in Austria at 20%. The VAT exclusive price stays the same but the price paid by the customer increases due to the higher VAT rate in Austria.
In this instance the Seller does not have either a valid VAT number in Austria or a UOSS registration then under EU VAT rules no VAT calculation can occur.
VAT exclusive item price calculation: 11.90/ (1 + 0.19) = €10.00
Final VAT inclusive item price calculation: 10.00 * (1 + 0.20) = €12.00
The Seller charges destination VAT for their B2C cross-border sales under their UOSS VAT number, in this example 20% Austrian VAT is due. The VAT exclusive price stays the same but the price paid by the Customer increases due to the higher VAT rate in Austria.
VAT exclusive item price calculation: 11.90/ (1 + 0.19) = €10.00
Final VAT inclusive (total price paid including any applicable VAT) item price calculation: 10.00 * (1 + 0.00) = €10.00
VAT exclusive item price calculation: 11.90/ (1 + 0.19) = €10.00
Final VAT inclusive item price calculation: 10.00 * (1 + 0.19) = €11.90
Origin VAT has been charged as Distance Sales VAT cannot be charged because the Customer has a Local IT VAT number (i.e. it is not a B2C sale and the Distance Sales VAT rules do not apply) and the 0% VAT exemption on intra-EU supply of goods cannot be applied because the customers VAT number is not valid on VIES.
Promotions are fixed-price inclusive, meaning the VAT inclusive promotion value is only determined upon the calculation of the final VAT inclusive selling price (see section 8.2 A). The VAT calculated on the promotion follows the VAT rate associated with the item. Once the VAT inclusive promotion value is determined, we will use the VAT rate associated with the item to derive the VAT exclusive promotion value.
Example A:
VAT exclusive item price calculation: 11.90/ (1 + 0.19) = €10.00 (Display price on .de website)
VAT inclusive item price calculation: 10.00 * (1 + 0.20) = €12.00 (as VAT due in Austria)
VAT inclusive item promotion calculation: 12.00 * 0.10 = €1.20
VAT exclusive item promotion calculation: 1.20/ (1 + 0.20) = €1.00
Final VAT inclusive item price calculation: 12.00 – 1.20 = €10.80
Example B:
VAT exclusive item price calculation: 11.90/ (1 + 0.19) = €10.00 (Display price on .de website)
VAT inclusive item price calculation: 10.00 * (1 + 0.00) = €10.00
VAT inclusive item promotion calculation: 10.00 * 0.10 = €1.00
VAT exclusive item promotion calculation: 1.00/ (1 + 0.00) = €1.00
Final VAT inclusive item price calculation: 10.00 – 1.00 = €9.00
Shipping charges are fixed-price inclusive, meaning the price of shipping will not vary based upon the transactional details listed in section 6.0. Only the VAT exclusive shipping charge may vary from one transaction to another and please see shipping taxability option below.
Example A:
A German and Austrian VAT-registered Seller ships an item from Germany to a B2C Customer in both Germany (19%) and Austria (20%) and the VAT inclusive shipping charge is the same to both countries, that is, €5.00. In both cases, the customer will always pay the full €5.00
Fixed VAT inclusive shipping charge to a German Customer: €5.00
VAT exclusive shipping price calculation: 5.00/ (1 + 0.19) = €4.20
Fixed VAT inclusive shipping charge to an Austrian Customer: €5.00
VAT exclusive shipping price calculation: 5.00/ (1 + 0.20) = €4.17
A German and Austrian VAT-registered Seller ships an item from Germany to a B2B Customer in both Germany (19%) and Austria (0% - intra-community supply of goods on the basis that valid VIES VAT number is provided) and the VAT inclusive shipping charge is the same to both countries, that is, €5.00. In both cases, the customer will always pay the full €5.00.
Fixed VAT inclusive shipping charge to a German Customer: €5.00
VAT exclusive shipping price calculation: 5.00/ (1 + 0.19) = €4.20
Fixed VAT inclusive shipping charge to an Austrian Customer: €5.00
VAT exclusive shipping price calculation: 5.00/ (1 + 0.00) = €5.00
Shipping Taxability Options:
By default, each shipping charge is assigned the same product tax code as the corresponding item. Therefore, the same product taxability rules will be applied to shipping charges. A Seller may override the default shipping taxability rule by designating if shipping should always be taxable at the standard VAT rate.
Sellers should consult a tax advisor if they need assistance in configuring this tax setting for their business.
Gift wrap charges are fixed-price inclusive, meaning the total price of gift wrap will not vary based upon the transactional details listed in section 6.0. Only the VAT exclusive gift wrap charge may vary from one transaction to another and please see gift wrap taxability option.
Example A:
A German and Austrian VAT-registered Seller gift wraps an item and ships it from Germany to both a Customer in both Germany (19%) and Austria (20%). The VAT inclusive gift wrap charge is the same to both countries, that is, €3.00. In both cases, the customer will always pay the full €3.00.
Fixed VAT inclusive gift wrap charge to a German Customer: €3.00
VAT exclusive gift wrap price calculation: 3.00/ (1 + 0.19) = €2.52
Fixed VAT inclusive gift wrap charge to an Austrian Customer: €3.00
VAT exclusive gift wrap price calculation: 3.00/ (1 + 0.20) = €2.50
A German and Austrian VAT-registered Seller gift wraps an item and ships it from Germany to both a Customer in both Germany (19%) and Austria (0% - intra-community supply of goods on the basis that a valid VIES VAT number is provided). The VAT inclusive gift wrap charge is the same to both countries, that is, €3.00. In both cases, the Customer will always pay the full €3.00.
Fixed VAT inclusive gift wrap charge to a German Customer: €3.00
VAT exclusive gift wrap price calculation: 3.00/ (1 + 0.19) = €2.52
Fixed VAT inclusive gift wrap charge to an Austrian Customer: €3.00
VAT exclusive gift wrap price calculation: 3.00/ (1 + 0.0) = €3.00
Gift Wrap Taxability Options:
By default, each gift wrap charge is assigned the same product tax code as the corresponding item. Therefore, the same product taxability rules will be applied to gift wrap charges. A Seller may override the default gift wrap taxability rule by designating if gift wrap should always be taxable at the standard VAT rate.
Sellers should consult a tax advisor if they need assistance in configuring this tax setting for their business.
The ‘Ship-to’ location is based on the customer-supplied country, county/province, city and postal code as SimpleVAT will also handle VAT calculation for orders shipped to certain VAT excluded territories . SimpleVAT will calculate tax based on the tax location our system determines to be the most accurate when cross-referenced to the customer-supplied address.
The SimpleVAT jurisdiction selection logic uses information from four transaction-related details to determine whether it is a B2B (Business-to-Business) or B2C (Business-to-Customer) transaction as well as the VAT jurisdiction and tax type (i.e., VAT). The four transaction-related details are:
All the government validated EU and UK VAT registration numbers that have been submitted by you can be found under VAT Numbers in your account.
All EU and UK VAT registration numbers that have been supplied by the Customer in their SimpleVAT account will be taken into consideration.
Since January 1, 2020, EU VAT legislation requires an EU VAT number (valid in VIES) of the customer in another country than the ship-from country as a substantive condition to VAT exempt/zero rate cross-border supplies of goods.
Where a customer does not have a VIES valid VAT number but instead a local VAT number, the EU VAT exemption of cross-border supplies of goods cannot occur, instead origin (ship from location) VAT will be charged. This applies specifically to customers in Italy and Spain.
For example, when a Seller (with a VIES valid VAT registration number in Germany) ships products from Germany to business customers in Spain who only have local Spanish VAT numbers, the Seller is not able to treat the cross-border supply as VAT exempt/zero rated and German VAT is due as the country of origin for the movement of goods.
SimpleVAT will use all valid VAT registration numbers (EU27 and UK only) in order to determine the jurisdiction in which the transactional VAT liability exists. SimpleVAT will not accept and will disregard any local EU VAT numbers you attempt add to your account. VAT registration numbers can be provided during, or after, the initial setup process and then managed from the 'VAT Numbers' section in your SimpleVAT account.
SimpleVAT performs regular validations (please see below) on VAT registration numbers supplied by both you and your customers. Only government-validated VAT registration numbers granted by EU Member States, or the UK government, will be used for VAT calculation purposes.
VAT registration numbers are validated via various methods:
Starting July 1, 2021, a seller is either required to have a VAT registration number in each of the EU countries they perform B2C Distance Sales or be registered for the Union One Stop Shop (UOSS) scheme.
If the seller does not provide a VAT number in the destination country and has not opted into the UOSS simplification then SimpleVAT will charge the customer the VAT inclusive price but not perform a VAT calculation or generate a VAT invoice. SimpleVAT will only generate a receipt for all orders where the downloadable VAT invoice badge was displayed and the seller will therefore be responsible for generating their own invoice.
SimpleVAT requires seller's legal name in their SimpleVAT account to match exactly with the legal name associated with seller's VAT registration number.
If a seller has a Group VAT registration number, and the company registering for VAT Calculation Services is not the representative member, seller must provide their 'Certificate of Members' which states all the Legal Company names associated with the VAT registration number. The legal name of the Company with which Seller registers on SimpleVAT must be shown on this certificate in order to pass the legal name eligibility check.
Following are the requirements for a seller to ensure accurate VAT calculation:
The UK formally exited the EU’s Single Market and Customs Union on January 1, 2021 (“Brexit”). From this date, the UK introduced a new set of VAT rules which changes the way that VAT is accounted for certain sales made by sellers to UK customers.
From January 1, 2021, the marketplace operator (Amazon, eBay, OnBuy, etc.) is responsible for
collecting UK VAT on the following sales of goods
delivered to customers in the UK, who are not UK VAT registered:
Where either of these supplies take place, the marketplace operator (Amazon, eBay, OnBuy, etc.) will calculate and collect UK VAT from the customer at checkout and remit this directly to the UK Tax Authorities. Sellers will not receive the UK VAT amount in their disbursements and will not be required to remit these amounts to the UK Tax Authorities.
There are exceptions for some sales of goods delivered to customers in Northern Ireland, for which seller may remain responsible for accounting for any UK VAT due.
Sellers remain responsible for accounting for any UK VAT on any other supplies including supplies to UK VAT registered business customers. The methodology described in this document will continue to apply for these supplies.
Norway has implemented Norwegian VAT on eCommerce legislation which changes the way VAT is accounted on certain sales made by sellers to Norwegian customers.
From 28 April 2021, the marketplace operator is responsible for collecting Norwegian VAT on sale of
goods delivered
to customers in Norway, where:
For these transactions, the marketplace operator has the duty to calculate and collect Norwegian VAT from the customer at checkout, and remit this directly to the Norwegian Tax Administration. Sellers will not receive the Norwegian VAT amount in their disbursements and are not required to remit these amounts to the Norwegian Tax Administration.
If you deliver goods to Norwegian customers, who are registered for Norwegian VAT (B2B customers), your B2B customer will be responsible to self-account for any Norwegian VAT through their VAT return.
There are no changes to your VAT responsibilities if you deliver from inventory held in Norway or if you are established in Norway. You are responsible for accounting any VAT due on these sales.
From July 1, 2021, the marketplace operator will collect VAT on the following e-commerce sales of
goods delivered
to customers in the EU, who are not VAT registered (B2C), where:
Where either of these supplies take place, the marketplace operator will calculate and collect EU VAT from the customer and remit this directly to the respective EU Tax Authorities. Sellers will not receive the EU VAT amount in their disbursements and will not be required to report or remit these VAT amounts to the EU Tax Authorities.
The VAT rate charged by the marketplace operator will be the one applied in the country of delivery to your customer i.e. if the goods are delivered to a customer address in Spain, the marketplace operator will apply the relevant Spanish VAT rate.
The marketplace operator will not collect VAT on the sale or delivery of goods to VAT registered customers in the EU where current VAT reporting requirements will continue to apply. You will still be required to meet your VAT registration requirements in the EU countries in which you hold inventory.
For any orders that the marketplace operator is responsible to collect VAT from the customer at checkout and remit this directly to the relevant tax authorities, the marketplace operator will use its own product-related VAT rate settings to perform the VAT calculation. In case the marketplace operator provides functionality to make product-level VAT rate settings, the marketplace operator will not use those to calculate VAT on these supplies.
Product-level VAT rate settings set by sellers will continue to be used on all other supplies for which seller remains responsible for any VAT or import fees due.
Starting July 1, 2021, the following changes to the VAT treatment and reporting of EU cross-border distance sales (B2C) have been introduced in the EU:
The distance selling thresholds set at each EU Member State are abolished and a general tax at destination principle for all cross-border B2C supplies of goods will apply, i.e. VAT is due in the EU country where the goods are shipped to. As a result, you may be required to obtain a VAT registration number in each EU Member State to where you perform B2C Distance Sales.
There is an exception to the above rule for 34 Micro-Business. Where the cross-border distance sales shipped from your principal place of business (“PPOB”) do not exceed EUR 10.000 on an annual basis, you may charge and collect VAT from the country of dispatch (i.e. your PPOB). Orders fulfilled from other countries will not benefit from this exception and will be taxed in the country of delivery.
To remove the high administrative burden of obtaining EU VAT Registration Numbers (VRN) and managing VAT filings in up to 27 EU countries, the EU has introduced a Union One Stop Shop (UOSS) solution. When opting in for UOSS, there is no need to register for VAT in all EU countries where your goods are shipped to the customers (B2C). You can report all EU B2C Distance Sales through a single VAT return filed in your country of establishment, irrespective of the actual ship from and ship to countries. Note that this does not remove other obligations for obtaining a VAT registration number, such as holding inventory in other EU countries.
SimpleVAT will exclusively perform VAT calculations for the United Kingdom (‘UK’) and the 27 European Union (‘EU’ or ‘EU27’) Member States on products sold on marketplace operators' websites in the EU and the UK. The VAT calculations are performed based on seller-determined tax settings and any other related seller information set up during configuration. SimpleVAT does not currently perform VAT calculations in countries located outside the EU and the UK.
SimpleVAT's software contains VAT calculation rules and logic, including logic related to rounding of the calculated amounts, and supports the following VAT calculations and related functions:
Further information: This relates to instances where a customer is VAT registered and established in the country where the transaction takes place for VAT purposes and the seller is only VAT registered in this country (but not established). Countries that have implemented non-resident domestic reverse-charge mechanism are Belgium, France, Italy, Netherlands and Spain.
A French VAT registered Seller who does not have a physical presence in France lists an item at € 12.00 on Amazon.fr, ships the items from France and sells the item to a B2B Customer located in France.
VAT rate = 0% (non-resident domestic reverse-charge)
VAT exclusive item price calculation: € 12.00/ (1 + 0.20) = € 10.00 (Base price on which domestic reverse-charge is calculated).
Final VAT inclusive item (including applicable VAT) price calculation: € 10.00 * (1 + 0.00) = €10.00
SimpleVAT does do not currently support the following calculations and related functions:
SimpleVAT relies on the accuracy of the VAT registration numbers, PTC (Product Tax Code), and other VAT calculation settings supplied, or configured by the user in their account and, if applicable, the VAT registration number supplied by the Customer. Sellers are solely responsible for ensuring that their information and settings, including ship from locations are updated to their SimpleVAT account where necessary are at all times accurate and up-to-date. SimpleVAT does not represent or warrant that the VAT calculations or VAT invoices produced by SimpleVAT will at all times be correct or that they will at all times be reported timely to the relevant Tax Authority (where the services include such reporting) and we are under no obligation to (but may in our discretion) verify or correct the information supplied by the seller or the customer. In particular, SimpleVAT assumes no liability for VAT invoices which are incorrect as a result of inaccurate or incomplete information supplied by the seller or the customer. Additionally, where SimpleVAT requires sellers to provide valid credentials for e-invoicing/e-reporting use cases, it cannot create a VAT invoice if the seller does not provide these. SimpleVAT assumes no liability for the inability to issue a VAT invoice in these specific circumstances.
The Invoices report includes detailed VAT calculation information. This information is essential in the preparation of your periodic VAT returns. You can access this report by navigating to Invoices in your SimpleVAT account and selecting the 'Invoices report' option under the EXPORT dropdown.
We recommend that you sign up to our premium service tier and have our tax advisors handle the compilation and filing of your returns.
