New government regulations! There will be a wave of store closures next January!

Among Amazon's several European sites, the German site requires the upload of VAT tax numbers, while the VAT situation at sites such as France and Italy is still unclear.

Amazon recently sent an email to sellers in France and other markets, saying, "Although France's recent VAT regulations are still unclear, we still strongly recommend that sellers prepare and upload VAT numbers for France, Italy and other countries in advance."

I believe many sellers saw this news at that time, but Amazon’s prediction of January 1 next year was still somewhat accurate. The “relevant policy changes in France” came about two months after Amazon issued the notice.

The French government recently promulgated anti-fraud regulations, which require Amazon to provide tax information of third-party sellers to relevant French agencies before January 31, 2020.

Amazon also immediately reminded all sellers on the European site through an announcement in the background.

Will the French site completely start mandatory VAT next year? What impact will it have on sellers on other European sites?

French VAT effective date

Although the French government gave Amazon a deadline of January 31, the new anti-fraud law actually came into effect on January 1, which is consistent with Amazon's previous prediction.

This time, Amazon still recommends uploading the tax number before January 1st. I guess Amazon will gradually provide the seller's tax information to the government between January 1st and 31st, rather than providing it all at once on the 31st.

The difference between these two methods is that when Amazon gradually submits tax information, if you do not have a tax number when submitting your information, you will be blocked before the 31st. This is why Amazon strongly recommends sellers to upload a tax number before January 1st. It is safe to complete the upload before then, but if you delay until after the 1st, you are in danger of being blocked.

Many Amazon sellers have questions. Didn’t Europe previously introduce a policy prohibiting Amazon from closing sellers’ stores without warning? Even if my store is closed because I don’t have a tax number, can I still give a 30-day advance notice?

It would be a violation of government regulations if Amazon shut down a seller’s store without prior notice, but another part of the new regulations would prevent this from happening.

The anti-fraud law that came into effect on January 1st not only requires Amazon to provide sales information data of third-party sellers, including identity data and tax data, but also includes a provision to "establish a process for the relevant French government agencies to directly suspend sellers who do not meet French VAT requirements from selling goods on Amazon.fr and selling goods to French buyers."

In other words, the sellers who do not meet the VAT requirements will have their sales rights removed by government agencies, not Amazon itself, so they will not be subject to the restriction of requiring advance notice before closing their stores. Therefore, if sellers do not upload their tax numbers after January 1, they may still find their stores closed when they wake up.

Impact on other European sellers

Sellers on the European site should all know that the VAT tax obligation is not just for sellers who open stores on the French site. Sellers in stores in other EU countries who generate orders to French sellers will also be at risk of bearing VAT taxes. This is what we call remote sales.

The threshold for remote sales tax in France is €35,000, which means that if a seller sells more than €35,000 worth of goods to France from sites/warehouses in EU countries outside of France within a year, he or she must bear the French VAT tax.

The French site is a relatively important site in the entire Amazon Europe site. Although its size is not as large as its big brother, the high consumption level and consumer population also make this site have great potential.

Although mandatory VAT will certainly make the costs of sellers on the European site higher than on the US site, the US is now gradually improving the collection of consumption tax. As of now, more than half of the state governments have begun to collect consumption tax on Amazon.

When the cost gap between the US and European sites narrows due to tax issues, the European site will also welcome a wave of sellers due to its less competitive market and strict government supervision.

If you want to know which states in the US need to collect sales tax from sellers, scan the QR code below to get a list from me.

PS. If you want to join the seller discussion group, you can also private message me to let me add you to the group