Taxes & Law

Important changes for online retailers with Amazon's reverse charge

Fatih-Kağan Taşkoparan

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Amazon is and remains one of the most popular marketplaces for online retailers in Germany. For those of you who sell via Amazon, the way in which VAT must be reported and paid will change from August 1, 2024. The new regulation particularly affects the application of the so-called Reverse charge procedure. It is therefore all the more important to get an overview of the latest developments and changes in the procedure now. We have picked out and summarized the most important points for you.

What is the reverse charge procedure?

With the reverse charge procedure (§ 13b UStG), also known as "Reversal or shifting of the tax liability", the VAT is not paid by the service provider Amazon itself, but by the service recipient. This mainly applies to services such as advertising services, fulfillment fees, etc. and means that online retailers must calculate the VAT on the fees invoiced by Amazon themselves and pay it to the tax office.

Conversion of billing: What exactly will change from August 2024?

Until now, Amazon fees have been billed via Amazon's Luxembourg branch, which meant that the reverse charge procedure mentioned above applied. From August 2024, however, Amazon will invoice via local branches in most countries where retailers are based - including Germany.

This also means that services to German online retailers must be invoiced with German VAT, which the retailers can in turn deduct as input tax or have refunded as part of their advance VAT return.

However, the most important effect of the changeover is that the reverse charge procedure will no longer apply in many cases. This means that the VAT on Amazon fees must be shown on the invoice and paid directly to the tax office by retailers. At the same time, the need for liquidity on the part of online retailers is also likely to increase, because even if the VAT can be refunded as input tax with a time lag, the additional financial burden is still there.

What do online retailers need to consider now?

Retailers should prepare well for the new regulation and check what impact it will have on their tax accounting. Accounting systems may also need to be adapted and employees trained accordingly.

The changeover to Amazon billing entails some important changes for many online retailers. In order to ensure a smooth transition, retailers should therefore inform themselves about the topic at an early stage, make the necessary adjustments and integrate them into their work process.

If you have further or specific questions about Amazon's reverse charge, it would be advisable in any case to contact specialized tax advisors.