VAT registration questionnaire received

56 posts in this topic

Posted

I run a UK based company selling on eBay.co.uk, Amazon.co.uk Amazon.fr (since March 2010) and Amazon.de (since August 2010).

Back in 2010 when I looked into selling abroad using Amazon FBA service (this is a service where I send them my stock and they hold it for me in their respective French or German warehouses and despatch the orders on their websites).

As I was due to sell in France first I spoke to a couple of British VAT consultants based in France and who were expert in French VAT as I was not sure if I needed to register for VAT in France / Germany. Their response was as follows:

Having had time to digest your situation and taking into account our various emails and telephone conversation. With the additional information that you have now supplied being the Amazon invoices, I no longer feel that a French registration is necessary in your circumstances.

My reasons for this are as follows:-

1. Amazon are based in Luxembourg not France.

2. You do not deal with the client or supply them directly, Amazon does everything.

3. It appears from the Amazon invoices that they are buying the product from you and are selling it under their own name.

4. Amazon collect the funds and pay you direct less a commission they deduct.

5. Amazon are using intercommunautal TVA (VAT) numbers on their invoices, hence they are 0 rating the 'purchase' from yourself.

6. Amazon are holding your stock on a sales or return basis.

I trust I have fully understood the situation and that this reply meets your requirements.

As Amazon were my customer this same principle would apply to Amazon.de sales. Since I started selling on amazon.de in august 2010 I have sold 230K Euros. The last 12 months of which turnover has been 200k Euros. I also sell from the UK to German customers (Roughly about 1000 Euros per month - way below any threshold).

Yesterday I received a Questionnaire for VAT registration purposes from the Finanzamt Hannover-Nord. The questionnaire seems to be full of loaded questions with one outcome (I have to register for German VAT and no doubt they will like backdated VAT). The issue is in my case based on the answers above from the 2 VAT experts I consulted in France Amazon are my customer for the 230k sales via Amazon.de so based on that I would not have to register. I have tried to contact a few English speaking German VAT advisers via Google but have not received a reply. If anyone can assist or can provide a good English speaking contact that would be greatly appreciated as I have been given a deadline of Feb 27 to get this questionnaire returned by to avoid penalties.

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Posted

Thomas Zitzelsberger

Tel. +49 89 78018197

http://www.expattax.de/index.php/team/thomas-zitzelsberger

You had better call him, now is high season for tax returns and he might not get back to you directly if you just send him an e-mail.

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Posted

Many thanks for your assistance

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Posted

May be consulting one of the Big4s will help in your case. The service may be little costly but they are supposed to be the best.

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Posted

I don't think you are liable for VAT in Germany. The advice you got was correct. You are not a German entity, you are not operating as an entity in Germany. The fact you are trading via a .de site does not mean you have a legal presence in Germany. The stock situation is ambiguous and the authorities will try to uise that against you. The "presence" is the important aspect and if the authorities decide that in their view you have legal "presence" in Germany, then they will come after you not only for VAT for also for corporation tax and other taxes. Although there is a double taxation agreement Germany/UK, the last thing you want is tax liability outside the UK.

If Hannover-Nord is involved, it means you're on the radar and they will try to frighten you into paying VAT. Put up huge resistance - once you make just one payment, they'll be on your case forever more. You will have to spend some money getting them off your back. You don't need a big four company - just someone experienced in VAT issues with international transactions.

Good luck

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Posted

Having had time to digest your situation and taking into account our various emails and telephone conversation.

1. Amazon are based in Luxembourg not France.

I've given your situation full consideration after reviewing our emails and telephone conversation.

1. Amazon is based in Luxembourg, not France.

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Posted

I don't think you are liable for VAT in Germany. The advice you got was correct. You are not a German entity, you are not operating as an entity in Germany. The fact you are trading via a .de site does not mean you have a legal presence in Germany. The stock situation is ambiguous and the authorities will try to uise that against you. The "presence" is the important aspect and if the authorities decide that in their view you have legal "presence" in Germany, then they will come after you not only for VAT for also for corporation tax and other taxes. Although there is a double taxation agreement Germany/UK, the last thing you want is tax liability outside the UK.

And this is utter utter tosh.

Makes no difference if you are a German entity (whatever that means). The "presence" is not important in the slightest.

And nooooooooo. Just because you have a legal obligation to pay VAT in a country it does NOT mean you pay company taxes there. That depends on whether you have a "permanent establishment" in the country.

I pay lots of VAT every quarter to the UK, but not a penny in Company Taxes as my operation is 100% based in Germany.

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Posted

It's all one simple click away in English on the HMRC website:

http://www.hmrc.gov.uk/vat/managing/international/exports/goods.htm#2

Do you need to register for VAT in other EU countries?

For distance sales, you must charge VAT at UK rates in the normal way. However, each country has a 'distance selling threshold'. If the value of your sales to that country exceeds this threshold, you must register for VAT in that country, and charge their rate of VAT on sales to that country.

And the thresholds are here:

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/distance_selling/index_en.htm

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Posted

Thanks very much for all your replies. It is greatly appreciated. As I can tell from the various responses there is a certain amount of conjecture about exactly if I need to register for VAT or not. I have a call this morning with a German VAT advisor and will inform them of the situation and details of this post, which will help them to assist.

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Posted

After being on the phone for 40 minutes I think the tax lawyer was leaning towards the fact that you were right. He is going to speak to the tax authorities to see what the situation is and will report back but it's not looking too great at present. It would appear Greece is to blame for this as Germany needs to claw back some money thanks to Greece letting everyone retire at 55....thanks Greece.

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Posted

Yeah, that's it - blame Canada Greece.

The VAT regime has been in force for many years, long predating the Greek debt crisis. Sorry if you're being facetious and I missed it, but you seem rather serious.

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Posted

You are quite correct in that the VAT regime has been around for much longer than the Greek crisis but unfortunately Germany has been saddled with sorting out the runts of the family and needs all the money it can get so perhaps it is a scenario they are looking more closely at aspects of tax collection which were not top priority before. I was being a bit facetious too.

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Posted

Germany has always been tough on tax. That is why they still have an economy that works. Greece and Italy are lazy about collecting tax - hence a large reason they are actually in the cack.

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Posted

As an update from yesterday I have spoken to a 2nd VAT company (a UK based multi national VAT advising company) and they are investigating the matter. They do not believe that I have to register in Germany from initial conversations but I am providing them with more information today. This is becoming as clear as mud.

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Posted

Dude....this is cut and pasted from the HMRC website:

Do you need to register for VAT in other EU countries?

For distance sales, you must charge VAT at UK rates in the normal way. However, each country has a 'distance selling threshold'. If the value of your sales to that country exceeds this threshold, you must register for VAT in that country, and charge their rate of VAT on sales to that country.

How clear is that? Or do we think your French muppet advisors are correct and HMRC are just writing this stuff randomly for fun?

Only if you can confirm to me, that in fact you ONLY sell products DIRECT to Amazon 100% and never actually deal with a real German end-user could this be vague?

It's pretty useful in life, when you realise you are wrong, to acknowledge it and get on with the solution. The Germans and nobody else is gonna be interested in your team of ill-advised advisors. Looks clear as day to me here....unless you never actually deal with end-users at all?

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Posted

From Amazon.co.uk:

Q: What tax reporting requirements will I have if my FBA products are exported to another EU country?

A: You are solely responsible for the calculation, invoicing, reporting and payment of all duties, taxes, or other deductions, and for any Intrastat declarations of both transit and arrival of goods in intra-community supplies. Please consult your attorney or your tax advisor before you enable FBA Export for EU.

Q: Do I have to collect VAT for items exported to another EU country?

A: Yes. The price you specify for your FBA products, as displayed in the price to the customer, must include VAT for the destination country.

Btw the VAT rules are mostly the same in all EU countries. So it´s not just a problem of german law. If you get in trouble with the german Finanzamt, you could also get in trouble with the french fisc. At least in that case you could probably sue your advisors for damages...

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Posted

Our OP still has not confirmed if these hard drive cases and stuff that he imports from China are sold and invoiced DIRECTLY to the end users (99% sure that is the case) or if in fact he is supplying directly to Amazon (unlikely I think).

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Posted

In response to the previous 3 replies I thank you for your help in this matter. I understand that distance selling means when an item is sold from a UK country to a foreign resident. I file my instrastat returns monthly and make sure my sales from my Amazon.co.uk and eBay.co.uk accounts based in the UK mean that the distance selling thresholds for each EU country are not exceeded on an annual basis.

Where there is conjecture is that I have had 3 separate vat experts (2 in France and 1 in the UK with Euro knowledge) advise me that people buy from Amazon. At that point Amazon buy the stock from me and sell it to the customer. Based on this information the hypothesis is that Amazon are my customer and due to that I do not have physical 'presence' in either France or Germany.

I am not saying any any way that just because I have had 3 separate advisor's say the same thing it is 100% correct. That is why I have employed these 2 advisor's who are currently looking into this.

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Posted

Very very simple question that you are evading:

DO YOU INVOICE MR. HERMAN-THE-GERMAN-PUNTER DIRECT FOR HIS 2.5" HARD DRIVE ENCLOSURE?

or do you just invoice Amazon for 1000 x 2.5" Hard Drive enclosures every 3 months?

That is the $64,000 question.

It is a simple question and leads to a simple definitive answer. You are either a wholesale volume supplier to Amazon (which I doubt), or you are selling....like all the other 3rd party resellers....to customers overseas and being charged 20% by Amazon for marketing, warehousing, banking etc etc.

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Posted

That is the $64,000 question.

Can anybody claim that, or does the answer have to come from the OP?

If anyone can play, I'm going with, "He sends the invoice to Hermann".

Or we could do it jeopardy style:

I'll take Business Facts for $64,000

Answer: "The OP"

Question: "Who sends his invoices to Hermann and not to Amazon?"

** I do feel bad for OP, though. That's gonna be a hefty bill, that he didn't include in his prices.

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Posted

In answer to your question I have not billed any German customers. Nor have I billed Amazon. I was advised by the 2 French advisor's that on Amazon's invoices to me they were purchasing the item from me. Maybe I have made a mistake in thinking that getting 2 separate advisor's (who both stated the same answer) was enough due diligence. Maybe I should have billed 'Hermann'. This is the whole reason for me to post this thread.

If I have to register for VAT in Germany I will do so, however, as someone who is not a cross border VAT expert I have to rely on advice I sought and I had 2 separate people state the same advice which I followed. Both were registered VAT tax advisor's.

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Posted

** I do feel bad for OP, though. That's gonna be a hefty bill, that he didn't include in his prices.**

I don't....not just yet.

Surely he MUST have charged VAT to someone???

The invoices he gets that are zero rated from Amazon only account for around 12% of the sales prices at the very most. As it is electronics items he will be charged a basic 7% from Amazon, and then whatever he pays for warehousing etc. So sure...he gets an Amazon invoice for like 12% zero rated. What about the rest of it???

If he is just despatching from the Amazon back office (which only shows basic numbers), and never cutting a proper invoice from his own systems then that is just dumb.

Or does he really think that sales to other European countries is VAT FREE? Surely he must have charged VAT at the UK rate at least???

In which case he can easily just reverse the cash from the UK VAT authorities to the Germans.

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Posted

In answer to your question I have not billed any German customers. Nor have I billed Amazon.

Oh my God. Ya kiddin me?

So you just kinda vaguely sent a load of products out and never actually invoiced Amazon or the punters? Sorry but that is just plain dumb.

How the hell can you do any accounts without invoicing people? What could your annual accounts possibly look like? A few hundred grand of VAT free sales.

Speechless. And forget hiding behing advisors...this is basic 1.2.3. business stuff.

as someone who is not a cross border VAT expert

You don't need to be a "cross border VAT expert" to know you have to invoice someone for the goods.

You owe Germany 20% and France 19.6% of everything you sold from Day 1 (assuming you never charged UK VAT as is now becoming clear).

p.s. Based on the €230,000 gross turnover that is €36,722 you currently owe Germany, and whatever you owe France as well.

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