How EU Tax Jurisdiction Grouping Works
How to set up and use the new EU tax groupings for PAN EU VAT users
This article is for users on Amazon’s PAN-EU program with VAT registrations in the UK, DE, FR, IT, ES, CZ and PL or users who store inventory in more than one of Amazon's marketplaces.
The default set up in Link My Books is that European Amazon seller accounts use our country group breakdown for sales income. This works well for most users, but for those who are on Amazon's PAN-EU program (where Amazon is shipping their inventory around Europe) a further level of detail is required.
We have been working hard on this for a 6 months now, to be able to utilise more data from the Amazon VAT Transactions Report such as:
- Tax Jurisdiction
- Departure Country
- Arrival Country
- EU Export
- EC Business Zero Rated Sales
This will help us to make sure that the correct tax grouping occurs on your sales. We are calling this new way of breaking down sales "Tax Jurisdiction Grouping".
Issues resolved by Tax Jurisdiction Grouping
The following 3 issues are resolved by grouping by Tax Jurisdiction.
✅Correctly Identifies "Departure Country"
Currently with the standard country grouping option we have to assume that the sale departs from the marketplace it was sold on, so for example a sale from Amazon.de would therefore be assumed to have been shipped from a German Amazon warehouse. With Tax Jurisdiction Grouping we identify the actual Departure Country for each sale or refund from the VAT Report.
✅Separates EC Business Zero Rated Sales
Also for sales that were to a VAT registered buyer in an EC state where you do not have a VAT number, Amazon will automatically Zero Rate those sales under EU reverse charge VAT rules. Therefore these sales need to be identified and treated as Zero Rated EC Goods for VAT.
✅Separates EU Exports
Lastly for sales that go outside the EU, these will be Zero Rated by Amazon also so again they need to be identified and treated separately. This was handled to an extent by the old Country Grouping, but some sales slipped the net - for example sales that went to the Canary Islands were treated as "Spain" due to the country code being ES in the customer address.
How do I activate Tax Jurisdiction Grouping?
We have been testing this internally for a few months and have a few users who are testing out this new way of doing things on a beta version for us.
If you would like to test this out also then we can arrange that for you.
What would be different in Link My Books?
The difference you would see inside Link My Books would be that each time we import a settlement from Amazon into your Link My Books account we would use the data from the VAT report to confirm the tax grouping.
This would mean that you would not be able to send settlements immediately as they arrive as we would need to wait until we have the VAT data from Amazon, which they generate on the 5th of the following month.
So for example if you had a settlement that was dated:
14th - 28th November 2019
We would receive the VAT data from Amazon on the 5th December 2019 and you could then send the settlement to Xero. Until then the settlement would show "Awaiting VAT Data" on the Link My Books dashboard.
In another example if you had a settlement that was dated:
28th November - 12th December 2019
We would receive the VAT data from Amazon on the 5th December 2019 for the November part of the settlement and you could then send the settlement to Xero. Until then the invoice for that part of the settlement would show "Awaiting VAT Data" on the Link My Books dashboard.
We would receive the VAT data from Amazon on the 5th January 2020 for the December part of the settlement and you could then send the invoice for that part of the settlement to Xero. Until then the settlement would show "Awaiting VAT Data" on the Link My Books dashboard.
As long as you are happy with the above get in touch with support and we can activate Tax Jurisdiction Grouping on your account.