How is Amazon's European VAT tax calculated? How long does it take to file VAT?

Whether you are doing domestic e-commerce or cross-border e-commerce, there will be tax issues involved. Merchants who open stores on Amazon need to understand the relevant information about VAT tax and declare it in a timely manner in accordance with regulations. So how is Amazon's European VAT tax calculated? Next, we will explain this aspect to you.

Taking the UK as an example, the total tax cost is 20% (calculated based on the stand rate). This tax is divided into two parts. One part is the import VAT collected by the customs upon entry, and the other part is the sales VAT collected from consumers at the time of sale.

Import VAT = (declared value + duty + freight)*20%;

Sales VAT = selling price/(1+20%) *20% (selling price includes tax);

Actual tax payable = sales VAT - import VAT;

Note: For Chinese e-commerce sellers, the UK VAT is generally divided into two tax rates, one is the flat rate (7.5%), the other is the stand rate (20%). Here is an explanation of these two tax rates:

Flat rate is equivalent to domestic small-scale taxpayers. Like domestic small-scale taxpayers, it is also subject to restrictions. Sellers with annual sales of less than 150,000 pounds can apply for a flat rate. The tax rate is 7.5%. There is a 1% discount in the first year, so the first year is 6.5%.

The stand rate is similar to the general taxpayers in our country, and there are certain standards. For sellers with annual sales exceeding 150,000 pounds, they must choose the stand rate, which is a 20% tax rate, when applying for VAT registration.

How long is the VAT declaration period?

First declaration period: After the merchant receives the UK VAT number, the first declaration period will be stated in the letter from HMRC. Merchants need to pay attention to the first declaration period mentioned in the letter from HMRC. Generally speaking, if the merchant obtains the VAT number on October 21, 2021, the first declaration period is October 21, 2021 - November 30, 2021. Merchants need to declare the transactions from October 21 to November 30 truthfully between December 1 and 31, 2021, and pay the corresponding taxes.

Subsequent declaration period: After the first declaration period, the normal declaration period will be resumed, with each period lasting three months. Since merchants obtain VAT numbers at different times, different merchants have different declaration periods, which is inconsistent with the concept of natural quarters.

In addition, each VAT number is unique, so when businesses declare, they must not abuse the VAT number applied for by other companies or individuals as their own VAT account number. Once found out, the consequences will be serious!