Expanding to Amazon.ie: Complete VAT Guide For Sellers

The launch of Amazon.ie this year gives ecommerce sellers the opportunity to expand into one of Europe’s fastest growing online markets. However, with a new store comes new VAT responsibilities.

Before you rush to list your products, it’s important to understand your VAT obligations and plan on how to fulfil them. From charging the right VAT rate to getting registered and filing returns, there’s a lot to do. 

Why Expand to Amazon.ie?

At the moment, most Irish buyers are using Amazon.co.uk, which launched in 1998. It’s one of the oldest online marketplaces in Europe and therefore, packed with sellers. 

Once Amazon.ie launches, it will have fewer sellers than its British counterpart. If you list now, you’ll be getting in early, before things get more competitive. Your products will be more visible, and you’ll likely benefit from better rankings compared to the crowded UK marketplace.

Ireland also recently surpassed the Netherlands to be the EU country with the highest share of online shoppers. Plus, the launch of Amazon.ie is hotly anticipated, especially since the opening of a fulfilment centre in Dublin in 2023. This is a large pool of potential customers ready to buy your products.

Do I Need to Register For VAT in Ireland?

If your business isn’t based in Ireland, and your customers aren’t other businesses, you might only have one reason to register for VAT in Ireland. 

Storing your product close to your customer improves the customer experience by speeding up delivery. However, storing your goods in the EU will trigger a VAT liability. For example, you’ll have to register for VAT in Ireland if you decide to store your goods there. This is the case whether you’re using Amazon FBA or a 3PL.

In the EU, Amazon has the obligation to collect and report VAT on B2C sales of goods made on its marketplace. Amazon is considered the “deemed supplier” of your goods. This means that Irish customers will see their local VAT rate included in the price of your products when they’re browsing. 

When they make a purchase, Amazon will collect the VAT on that sale and pass it to the Irish tax authority on your behalf. So, if your goods are outside Ireland at the point of sale, and your customer is a private individual, you don’t need to register for VAT in Ireland.

How do I Register for VAT in Ireland?

You’ll need to be registered for VAT in Ireland before you make any taxable supplies, but you don’t need a fiscal representative to register. If your business isn’t established in Ireland, you’ll have to fill in a paper form and post it to the Office of the Revenue Commissioners. Otherwise, VAT registrations are done almost entirely online. 

You’ll need to gather some documents for your application:

• A copy of your business’ articles of association
• A trade register extract from the country where your business is based
• A VAT certificate showing you’re registered in the country where your business is based
• The power of attorney granted to your fiscal representative
• Proof that you’re doing business in Ireland – this could be invoices or a contract, for example
• Proof of your Identity, and proof of your business’ address

If you’ve got an Irish bank account or are setting one up for your business, you should also include its details on your application.

On average, registrations take five to seven weeks to complete once everything has been submitted. Once you’re registered, you’ll be given your Irish VAT number. It’s an 8 or 9-digit number that you need to show on your invoices and any commercial documents you make or receive while doing business in Ireland.

VAT Returns

A VAT return is a form you fill in to tell the tax authorities how much VAT you’ve collected and how much you’ve paid to other businesses in a set period. In Ireland, VAT returns are usually submitted every two months (bi-monthly). 

The timespan that the returns cover are called “taxable periods”. The taxable periods in Ireland start on the first of the month, every two months, starting in January (so your first return of the year would cover January and February).

Annual, bi-annual and quarterly returns are available, but they have to be authorised by the Revenue Commissioners first. They’re only allowed in certain circumstances:

• annual, if you are paying in equal instalments by direct debit
• quarterly, if the amount of VAT you owe in a year is between €3,001 and €14,400
• Bi-annual, if the amount of VAT you owe in a year is €3,000 or less.

Monthly returns are also available, but you’ll only be allowed to file monthly if you continuously reclaim more VAT than you owe. For example, you might sell goods with a low VAT rate, so the cost of your Import VAT always exceeds the amount of VAT you collect.

VAT Refunds

The VAT return is also where you can claim back VAT you’ve paid on purchases in or imports into Ireland. When your business buys goods from an Irish supplier, you’ll be charged VAT. 

If your business imports something, you’ll be charged VAT on the import. This is called Input VAT, and if you’re registered for VAT in Ireland, you can claim Input VAT back through your Irish VAT return.

VAT Mistakes to Avoid

VAT registrations and returns are legal obligations, so it’s important to handle them correctly. The best way to find out if you need to register is to ask an expert, ideally before you start trading.

Not registering when you need to can seriously harm your business plans. Registering late may trigger penalties from the tax authorities. If Amazon suspects you owe VAT, they may prevent you from withdrawing funds until you have paid the amount owed. 

The Revenue Commissioners may also require you to backdate the VAT you owe, which would damage your cash flow.

Once you’re registered, you’ll need to make sure you’re filing your VAT returns. Even if you don’t make any sales in a period, you still need to file a return. Not filing or missing the deadline will lead to late penalties.

Get the VAT Right Before Expanding to Amazon.ie

Amazon.ie presents a great opportunity to expand into a new market, with plenty of potential customers. However, making sure that you’ve sorted your VAT compliance will be key to doing so successfully. If you need support with your registration and returns, the team of experts at SimplyVAT are here to help.