Amazon's decision to end its VAT Services on October 31, 2024, is causing problems for sellers. This is especially bad timing as it's right before the busy holiday season. Sellers now need to find new ways to handle their taxes, which could be difficult and time-consuming.
However, the decision to end the Amazon VAT Services service on October 31, 2024 comes at a very unfavorable time – just before the hottest sales period, which is the fourth quarter. For many sellers who are now focusing on preparations for Q4, the additional challenge of searching for a new accounting partner is extremely undesirable. Is it possible that Amazon did not deliver on its promises and instead its services brought more problems than benefits?
At first glance, “Amazon VAT Services” was supposed to be a godsend for sellers, offering comprehensive support in VAT registration, filing and compliance in various EU countries. Amazon’s tax partners (e.g. Avalara, AVASK, Deloitte, taxually, Singularity and others) were supposed to be a helping hand that would take on the burden of complicated tax procedures, mainly related to storing goods in various EU countries. However, the reality turned out to be less rosy.
Sellers have repeatedly reported problems in communication with Amazon partners, as well as the lack of appropriate support at key moments. In many cases, irregularities in VAT declarations led to warnings and fines imposed by tax offices. Despite the initial attractive price, "Amazon VAT Services" quickly turned out to be not only expensive but also risky, exposing sellers to serious financial consequences.
💡Change schedule:
• August 2024: Current tax partners will reportedly contact sellers to establish new terms of cooperation and enable registration of accounts on their platforms.
• September 2024: This will be the last month in which tax advisors will process VAT returns under the “Amazon VAT Services” service.
• October 2024: Final fees will be charged for VAT declarations made using this service.
• November 2024: A new phase will begin in which sellers will have to take full responsibility for their VAT declarations, working directly with new tax advisors.
☝️ Having questions about your VAT registrations or operating Amazon in the EU? Get expert advice from our team now! Schedule with us here!
💡What steps should Amazon sellers take?
1. Contact your tax advisor: If you are using “Amazon VAT Services”, your tax advisor will contact you in August 2024 to establish new terms of cooperation. Make sure to register your account on the new platform before the end of September 2024.
2. Download documentation: Amazon will allow you to download all VAT documents from Seller Central until August 31, 2025. It is recommended that sellers download this data as soon as possible to avoid losing access after this date.
3. Ending the relationship with Amazon: After October 31, 2024, all VAT filings will have to be handled directly by tax advisors. If a seller wants to end the relationship with their current advisor, they must do so before October 1, 2024, by choosing another tax service provider.
💡 Still available: “Amazon VAT Calculation Service” – another disappointment?
Similar to “Amazon VAT Services”, the “Amazon VAT Calculation Service” was designed to make life easier for sellers by offering VAT calculation and invoicing features. With this service, Amazon Business sellers can offer VAT-net prices to B2B customers, as well as earn the “Downloadable VAT Invoice” badge, which increases the visibility of their listings on the Amazon Business platform.
Sounds great, right? But not all that glitters is gold. The repeated VAT errors reported by sellers indicate that even this service is not free from serious shortcomings. As Business Insider reports, Amazon often calculated the wrong VAT rates, leading to problems for both sellers and tax authorities.Sellers often had to correct incorrect invoices later, exposing themselves to additional costs and complications. Worse, it was difficult to get quick and effective support when problems occurred. Many sellers felt they were left to their own devices, dealing with system errors for which they, not Amazon, were responsible.
Of course, there are also sellers who have been using Amazon VCS for years and have had no problems. The question is, do we really want, as sellers, to leave such an important part of our business in the uncontrolled hands of an American entity that is not necessarily known for the most careful compliance with EU standards and regulations?
💡 Change at the wrong time
The decision to end “Amazon VAT Services” comes at a time when sellers should be focusing on maximizing sales in the fourth quarter, not searching for new accounting partners. The fourth quarter is the most important period of the year for many companies, when the highest revenues are generated. The additional burden of having to change the VAT service provider may disrupt preparations for this crucial period, which may consequently translate into financial losses.
On the other hand, it can be argued that for some sellers this is a good opportunity to move to more professional and tailored services before Amazon partners “mess up” their settlements even more. Changing your tax service provider to a company such as Taxually, our partner at EXPANDO, early can help avoid potential problems and risks that could result from continuing to work with Amazon partners who do not always understand the specifics of the market and local regulations.
Summary
The end of the Amazon VAT Services service may be a relief for many sellers, not a loss. Amazon, despite its many advantages as a sales platform, often falls short when it comes to support and the quality of services offered. Many of the problems that sellers face could be avoided by choosing more reliable solutions.
Having an independent sales system provides greater flexibility and control over the business. In the face of potential account locks or other problems that Amazon can regularly create for sellers – consciously or unconsciously. In a crisis, only diversification can save the company from bankruptcy, allowing it to continue selling on other platforms.
These alternatives offer not only greater flexibility and control over tax obligations, but also solid support, which is crucial in the rapidly changing world of e-commerce. Although the decision to change an accounting partner just before Q4 may seem risky, switching to a service provider who truly understands the needs of entrepreneurs and is able to meet the challenges may prove to be a decision that will bring tangible benefits in the long run.
Want support in your Amazon selling? Need assistance in navigating the intricacies of operating in the EU? Consult with our experts and see if our services are right for you. Schedule a meeting here.
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