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New Rules for VAT (Value Added Tax) Collection on Amazon Europe Sales

Amazon, eBay Take Differing Views But Oppose VAT Rules for EU

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By Joe Kirwin

Amazon and eBay have taken divergent views in opposing pending European Union plans to make online platforms liable for collecting VAT on imported goods.

EU countries are entering the final stretch of negotiations on the VAT e-commerce plan. Amazon.com Inc. has signaled that it can accept partial responsibility in collecting value-added tax via a withholding agent role. However, eBay Inc. is adamantly opposed to any role for collecting VAT, and has launched an online campaign urging small businesses to oppose changes proposed by the EU.

An e-commerce tax consultant familiar with the negotiations told Bloomberg BNA Oct. 13, on condition of anonymity, that Amazon will back a “withholding model,” also known as a “split-payment” system. According to documents seen by Bloomberg BNA, Amazon believes the withholding model doesn’t require an online marketplace to register for VAT as the seller of goods.

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Widespread Criticism

Meanwhile, eBay’s online campaign, which it launched in late September, is a full attack on the EU’s proposal, including provisions that call for the elimination of a VAT exemption on small consignments and new rules that would require small “micro” enterprises to pay VAT on cross-border sales, in addition to sales outside the EU.

“New EU VAT rules are in the pipeline that would harm internet-enabled small businesses and artisans and the consumers that shop with them,” eBay’s online petition states.

Ecommerce Europe, which represents hundreds of online merchants and includes Amazon and eBay, has been lobbying intensely against the pending plans to make online platforms liable for VAT. While it backs the proposal as a whole, it notes that the original legislation put forward by the European Commission at the end of 2016 didn’t include provisions imposing VAT liability on online platforms. The organization has also noted a lack of an economic impact assessment of the proposals.

Despite its opposition to making online marketplaces fully liable for collecting VAT, Ecommerce Europe has adapted its position in recent months and said it could endorse the withholding model for online marketplaces.

“This system is widely considered by the OECD and various non-EU countries,” Ecommerce Europe said in a Sept. 28 statement. “The withholding model stops short of deeming the marketplace as a supplier of the goods for VAT purposes, with no shift in liability for VAT. The legal seller of the goods retains VAT registration and compliance obligation.”

No Give by EU Countries

Despite the push by Ecommerce Europe and Amazon to consider the withholding model, it hasn’t been adopted by EU member states, based on the latest compromise text drawn up by EU presidency holder Estonia, a copy of which was obtained by Bloomberg BNA.

“The failure of EU member states to take on the withholding model is a lost opportunity,” Alan Rhode, a VAT consultant based in London, told Bloomberg BNA Oct. 13 via email. “It is being discussed in the OECD. It is also the model that the United Kingdom is considering after Brexit.”

EU countries are in favor of forcing online marketplaces to collect VAT because it would dramatically reduce the administrative work for national tax authorities.

“There are basically three large online marketplace platforms,” an EU diplomat told Bloomberg BNA. “Collecting VAT from three companies instead of thousands of small companies is obviously much easier.”

To contact the reporter on this story: Joe Kirwin in Brussels at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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