VAT/GST for Marketplace

Taxamo Marketplace

Bringing digital VAT/GST compliance offerings to marketplaces and sellers

As online marketplaces reach increasingly global audiences, Taxamo Marketplace helps marketplace businesses comply fully with changing international tax regulations.

Global Context

Obligations on marketplaces to account for VAT/GST/Sales tax have increased exponentially since 2015.

  • In the US since Wayfair, more than 35 states have introduced marketplace obligation to account for sales taxes and all are expected to do so by the end of 2020.
  • In 2021, the European Union will introduce new VAT reporting requirements for Digital Marketplaces and ther on line Sellers.
  • Australia, New Zealand and Norway introduced similar changes in 2018, 2019 and April 2020.
  • Other regions/jurisdictions are likely to implement similar obligations.

Taxamo Marketplace is a collaboration between Taxamo and Deloitte.

EU 2021- The impact for Marketplaces

An online marketplace, you could now be directly liable for calculating and collecting the tax on transactions to EU customers where:

  • Your sellers are outside the EU but the goods being sold are already within the EU
  • The goods are being imported from outside the EU and have a consignment value of less than €150

Sellers will also have new responsibilities and if they are non-compliant then your marketplace will become jointly and severally liable for their tax.

For example, sellers selling goods already within the EU will need to:

  • Register for a VAT number in the member state where their goods are held
  • File regular VAT returns in these jurisdictions.

Your Key Responsibilities

As part of the new regulation, marketplaces will soon need to:

1

Conduct thousands of VAT/GST checks on their sellers

  • Marketplaces will need to regularly check that their sellers have a valid VAT number for the correct EU member states
  • If asked by revenue authorities marketplaces will need to identify and remove non-compliant sellers from their platform or risk possible fines
2

Assign and calculate VAT/GST on transactions in real-time

  • As a transaction happens, marketplaces will need to be able to apply the new tax rules to:
  • Calculate who is liable to pay the tax for each line item in a basket
  • Calculate the correct tax amount due per product, in the correct currency
  • Transaction data will need to be stored as tax authorities may ask to see records of the details about each transaction linked to a specific seller
3

Issue invoices that comply with the complex new set of rules

  • As tax liability will now be assigned at a line item level, a basket of goods may require multiple invoices to be issued to the same buyer
  • In scenarios where the marketplace is a deemed reseller of goods, it will be legally required to issue a back-to-back invoice for each transaction

Key Factors to Determine Liability

There are four key factors for assignment of VAT/GST liability for online marketplaces. In addition, jurisdictions will have their own approaches to implementation.

Where is the customer?

Physical Goods

The physical location the goods are shipped to.

Digital Services

Digital evidence such as IP, billing etc.

Where are the goods at the time of sale?

What is the value of the goods?

Per consignment or per item.

Where is the underlying seller of the goods?

Business Areas Impacted: Invoicing

Across invoicing, under the new regulations four key implications have been identified, outlined below.

  • Chain of invoices from sellers to platform to customers
  • Self-billed invoice may be required
  • Potential to have 27 EU invoicing requirements to comply with
  • Potential to have multiple invoices per basket

What Taxamo Marketplace includes

Taxamo Marketplace is modular and customisable - choose either selected modules to work alongside your existing ERP or determination solutions or the full set complete with compliance checks, tax determination, invoicing and treasury.

Registration checker

Automated VAT/GST registration checks on sellers

Key features
  • Seller VAT/GST registration determination
  • Initial VAT/GST number checks 
  • Ongoing VAT/GST number checks

Transactions

A real-time tax determination engine

Key features
  • Product categorisation
  • Line item liability assignment (LILA)
  • VAT/GST calculation
  • Reporting dashboards

Invoicing

A compelling VAT/GST invoicing package

Key features
  • Buyer invoicing
  • Back-to-back invoicing

Deloitte and Taxamo are collaborating to launch a range of new tax compliance offerings

By combining our capabilities we are helping digital marketplaces and online sellers to fully comply with the new Global Marketplace regulations.

Get in touch

Talk to a Taxamo sales consultant about how we can help support your global tax management strategy

Contact Sales