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charges). Merchants can report VAT in the country of delivery
EU-based merchants can register to the OSS with the tax on these consignments by using the Import-One-Stop-Shop
authorities of their country of establishment. Non-EU (IOSS).
merchants, too, can join the OSS, but they should be aware
that from July 2021, marketplaces are deemed as the sellers for The IOSS allows merchants selling imported goods to buyers in
VAT purposes in all marketplace-facilitated consumer sales the EU to collect, declare and pay the VAT to the tax authorities
(both domestic and intra-EU). Therefore, in our case, it will be instead of making the buyer pay the VAT when the goods are
Amazon that collects, reports and pays VAT on these sales made imported into the EU, as was the case before July.
by non-EU merchants.
For marketplace-facilitated imports with a value not exceeding
Another simplification: the invoicing rules of the EU country of Eur 150, the marketplace (Amazon, etc.) is required to collect,
establishment of the merchant are now applicable instead of the report, and pay VAT through the OSS in lieu of the merchant,
rules of the countries of parcel delivery (that is, of the consumer) regardless of where the merchant is based (EU=non-EU). Eur
for those sales falling under the OSS. 150 is the threshold for the low-value relief on customs duties.
The previous Eur 22 low-value relief for VAT purposes has now
Domestic B2C sales been repealed.
VAT registration is still required in all those EU countries where
a merchant holds stock. So, if a German merchant holds stock Domestic business to business (B2B) transactions.
in France, they will still need a French VAT number to report The OSS doesn’t apply to business-to-business transactions
domestic sales within France (these sales, in fact, do not flow into (domestic or intra-EU). B2B domestic transactions are usually
the OSS). subject to VAT. However, some countries do apply domestic
reverse charges when the VAT-registered merchant is established
So, merchants joining the Amazon FBA program will still outside of the country. This is the case of France, for instance: if
need their 6 or 7 local VAT numbers in the EU to report the a German merchant sells a product to a French VAT-registered
movement of stock between countries and domestic sales, business and the shipment takes place within the territory of
alongside B2B cross-border sales. France, the invoice must be zero-rated.

On the contrary, even if a merchant holds a VAT number in the Intra-EU B2B transactions
country of delivery in a cross-border EU sale, the latter sale shall Not much has changed for Intra-EU B2B transactions. If the
be reported in the OSS if the merchant is using the interface business buyer provides the merchant with a valid EU VAT
for cross-border sales. For instance: even if a merchant holds a number included in the EU VIES database, and all the other
French VAT number for its French domestic sales, they will be requirements are met, the sale must be zero-rated, and the
required to include in the quarterly OSS reports all consumer business buyer will report an intra-EU acquisition in the country
sales from Germany to France (if they use the OSS). of destination. Moreover, the seller must report the intra-EU
sale in the Intrastat dispatch form of the relevant period, when
Non-EU merchants applicable.
There are new rules for non-EU merchants, too. From July,
marketplaces are liable for VAT when they facilitate the Commingling invoices
following supplies of goods made by a seller not established in Commingling transactions are inventory swaps between two
the EU to consumers in the EU: Amazon FBA merchants or between an FBA seller and Amazon
• intra-EU distance sales of goods (regardless of the Retail. Items in the merchant inventory that are identified using
transaction value); manufacturer barcodes are commingled with items of the exact
• domestic supplies of goods (regardless of the transaction same products from other merchants who also use manufacturer
value). barcodes for those items.

A marketplace is considered to have facilitated the sales of goods The commingling swaps may occur either locally in one country
when it allows a buyer and a seller to interact and where the (domestic commingling) or cross-border. In substance, Amazon
result is the sale of goods to that buyer. buys products from one merchant and resells them to another
merchant. Amazon generates an output invoice for the selling
Imports from outside the EU – the IOSS merchant and an input invoice for the buying merchants.
From July, new rules also apply to individual imports into the All these transactions may affect the VAT obligations of the
EU with a value not exceeding Eur 150 (aggregated value of concerned merchant. Quite a headache… ••
the goods inside a consignment, without considering shipping

Alan Rhode is a co-founder at Taxmen, the one-stop-shop for legal and tax services to the e-commerce industry.

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