Amazon as Deemed Reseller

What does it mean that Amazon is a marketplace, or more precisely, a marketplace facilitator according to the EU VAT directive 2021?

A marketplace facilitator operates an online platform where third-party sellers can list and sell their products to consumers. The marketplace facilitator plays a significant role in the transaction process, often including payment processing, order fulfillment, and customer service.

The VAT Directive, in principle, says that in such a case, Amazon is deemed to be the buyer from you and a reseller of the goods to the customer. So, the transaction is to be, by law, seen as two separate taxable events:

B2B, we sell the goods to Amazon, and B2C Amazon sells it to the consumer.

From the VAT point of view, the sale to a consumer, which would otherwise be one taxable event, is to be viewed as two transactions:

If we handed the goods from the warehouse to Amazon without any transport,

On its own responsibility, Amazon then delivered the goods to the consumer as a distant sale.

The rules for deemed suppliers (resellers) have one important effect: Amazon is responsible for collecting and remitting VAT on sales made by US-based businesses through its platform to consumers in the EU.

So, let’s suppose that I am a US seller and sell the goods on the Amazon marketplace to Czech customers from a Czech warehouse.

If it's a B2B sale to a business customer, I have to account for the tax according to the domestic rules for businesses.

In B2C sales, I am deemed to have sold the goods to Amazon in the warehouse and Amazon is deemed to have sold it to the consumer for consumption in his country. So I only have to make a VAT domestic account for the B2B sale to Amazon, report this, and Amazon will collect and pay the tax. By EU law, this virtual B2B sale to Amazon is exempt from VAT with a deduction since the VAT is secured in the second B2C transaction.

You, however, need to have a self-issued VAT invoice according to domestic law.

Please note that you may be asked to fill in the sales due to the deemed reseller regime on your VAT return - to distinguish it from other B2B sales.

Explore more insightful links related to this topic to help you better understand European VAT:

Intra-community Transfer of Goods

How VAT Works When You Sell in Europe from U.S.

Amazon VAT knowledge center

EC Explanatory Notes on VAT e-commerce rules

European Commission web page for VAT

VAT directive

Implementing regulation