Disclaimer: you should get tax advice from your accountant or tax adviser, these instructions are for technical configuration of A2X.
Amazon offers the Pan EU FBA program to place your stock in multiple EU countries. This is fantastic for customers as they can receive orders much more quickly in those countries, and it can boost your sales growth in the EU. But as with many things, this growth and customer satisfaction comes at a cost of more business complexity.
By having stock in the EU countries and fulfilment operations, you will need to be VAT registered - a fact Amazon includes in their FAQ.
Neither Xero nor QuickBooks are designed to handle multi-country VAT returns. The process is complex, requiring specific country tax experts to review and prepare each return that complies with the local laws.
A2X can use the Amazon VAT data to help with your local VAT return and maintain accurate VAT information in your accounting system for other international VAT returns.
For an overview of VAT handling for Amazon sellers in UK and Europe please see this guide.
To enable VAT jurisdiction tracking in A2X you need to be using the Amazon VAT calculation service (VCS). You can enable the setting and specify all of your VAT registrations in the A2X Settings > VAT page as shown below.
Once enabled you will see the jurisdiction for all your Amazon sales in each marketplace and can account for the VAT in each as required by your accountant or tax adviser to ensure an accurate VAT return in your accounting system and an accurate record of the VAT collected by Amazon in each country.
Additionally, VAT jurisdiction tracking will also account for sales exported from the EU and for sales made to other businesses in the EU (B2B sales). You can find out more about the different types of VAT transactions you will see when this setting is enabled.
Timing of Amazon's VAT data
One important consideration when choosing to use VAT jurisdiction tracking is that the VAT data is not available from Amazon until after month end (typically the 3rd or 4th day of the next month). A2X will place the settlements on hold if the required VAT data is not available and once it is available the new VAT data will be added to the settlements and they will be taken off hold.
If you need to finalize an accounting period such as month-end, quarter-end or year-end earlier than the VAT data is available from Amazon, you can post the on-hold settlements to your accounting system even if they are on-hold. Then remove and re-send them again once the VAT data is finalized. This way you can complete your financial accounting, and bring in the VAT information once it is available.
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