Businesses selling goods through Amazon and other digital platforms should be aware that these platforms do more than simply facilitate sales. They are also subject to extensive reporting requirements and obligations to verify the sellers using their platforms.
This means that missing or incorrect company, tax or VAT information may result in more than just a request to update the relevant information. Ultimately, payments may be withheld, or the business may have access to the platform restricted or suspended altogether.
Platforms have their own verification obligations
Under the DAC7 rules, digital platform operators are subject to extensive due diligence and reporting obligations towards the tax authorities.
For reportable sellers, the platform must collect a range of information. For businesses, this includes, among other things, the company’s legal name, primary address, Tax Identification Number (TIN), VAT identification number, where available, as well as certain information relating to the transactions and consideration facilitated through the platform.
At the same time, the platform must verify the reliability of the information collected. If there is reason to believe that the information is inaccurate or no longer reliable, the seller may therefore be required to correct the information or provide supporting documentation.
60 days may result in account closure or withheld payments
The EU rules contain a significant enforcement mechanism.
If a seller fails to provide the required information following the initial request and two subsequent reminders – and at least 60 days have passed – the platform operator must either close the seller’s account and prevent the seller from re-registering on the platform or withhold payment of the consideration to the seller until the required information has been provided.
For a business that relies on Amazon or another marketplace as a significant sales channel, a compliance issue can therefore very quickly become a commercial issue.
Keep an eye on your Amazon Account Health
For businesses selling through Amazon, Account Health in Seller Central is therefore an important area to monitor.
Amazon describes Account Health as the place where sellers can monitor, among other things, alerts, notifications and compliance with Amazon’s policies. It should therefore not be regarded merely as an administrative dashboard, but as part of the business’s ongoing monitoring of its Amazon activities.
TIMEVAT recommends that businesses selling through Amazon regularly review their Account Health and respond promptly to requests concerning, for example, company information, VAT registrations or other documentation.
This is particularly relevant for businesses engaged in cross-border e-commerce, where changes in supply chains, inventory locations and VAT registrations may result in the information held by Amazon no longer corresponding to the business’s actual set-up.
TIMEVAT can assist when Amazon requests documentation
A request from Amazon may initially appear extensive – particularly where a business is asked to document its registrations or explain the VAT treatment of its transactions.
TIMEVAT can assist in identifying the reason behind Amazon’s request, reviewing the business’s VAT compliance and registrations, and determining the correct VAT treatment of its transactions.
The key is to act before an administrative compliance issue develops into a problem that affects the business’s ability to sell or receive payments through the platform.
