Frequently Asked Questions on VAT Reduction in Germany from July 1, 2020

The German Government decided to temporarily reduce the value added tax (VAT) from July 1, 2020 until December 31, 2020. The German tax rates will change from

• 19% to 16% (regular VAT rate)
• 7% to 5% (reduced VAT rate)

It is the aim of the German Government that retailers pass on the reduction to customers through lower prices. VAT reduction will not be automatically applied for your prices on Amazon, since uploaded prices are gross prices (tax inclusive). To lower your prices, you can use various tools in Seller Central*:

• Use the Manage Inventory or Manage Pricing page to update prices manually
• In your catalog using Inventory Files for bulk uploads
• If you are using an API, update prices through Feed Files or your integrator solution

*Please note that for Books, the Fixed Books Price (FBP) still applies.

Fees

Will the VAT charged on current fees be automatically adjusted or do I need to do a reimbursement?

In case German VAT is charged on any of your Amazon fees, the German VAT rate applied will be reduced from July 1, 2020 onwards automatically and there is no action required from your side.

Current Selling On Amazon fee (referral fee) is charged on a price inclusive of VAT, will there be any change to the logic?

No, the logic for Selling On Amazon fee (referral fee) will remain the same. You will pay this fee as a percentage of your selling price inclusive of VAT. However, you can reduce the absolute amount you pay for referral fee by reducing the selling price of your product and passing on the VAT reduction to the customers.

Pricing Tools

Do I have to make changes to my Pricing Rules when using Build International Listing (BIL) to reflect the temporary change of VAT rates in Germany?

No. The VAT rate change in Germany will automatically be updated if you use the Build International Listings (BIL) price rule ‘Same as the source marketplace, adjust for taxes and fees.’ You can additionally manually modify prices at any time through Manage Inventory or Manage Pricing pages in Seller Central.

Will the German VAT rate change impact my prices in Automate Pricing?

No, Automate Pricing will not adjust your prices due to the reduction in VAT. Your SKUs will continue to be repriced in accordance to the parameters of the pricing rule you have configured. In order to pass the VAT reduction on to customers you can update the Minimum Price associated with your Automate Pricing- (MARS-) enrolled SKUs by using the tools outlined above.

VAT Calculation Service

Will the VAT Calculation Service reflect the temporary change in VAT rates in Germany, scheduled for July 1, 2020?

Yes. Sellers do not have to make changes to their VAT Calculation Service settings. Amazon has updated the new German VAT rates (16% and 5%) which went live on the July 1, 2020 as per the legislative requirement and will be valid until December 31, 2020. There are circumstances where customers and sellers using the VAT Calculation Service will see pre-July 1, 2020 German VAT rates present on invoices dated July 1 or shortly after. This can occur where the processing of a delivery commences before July 1 but only completes on the July 1 or shortly after. When this happens, business customers will still be able to deduct the full input VAT (see explanatory notes from Ministry of Finance, No 46).

Will the VAT Calculation Service adjust the VAT-inclusive list price to reflect the reduced VAT rate

No. Amazon’s VAT Calculation Service does not re-calculate the VAT-inclusive list price and the VAT Calculation Service methodology is not changing due to lower VAT rate. Amazon will calculate the VAT-exclusive amount from VAT-inclusive list price uploaded by sellers. Please see an example below. For more details, you can refer to the VAT Calculation Service FAQs.

Example:

		DE 19%
pre-VAT rate reduction	List Price (VAT-inclusive)	€119.00
	VAT (@19%)	€19.00
	NET (VAT-exclusive)	€100.00

		DE 16%
post-VAT rate reduction	List Price (VAT-inclusive)	€119.00
	VAT (@16%)	€16.41
	NET (VAT-exclusive)	€102.59

How does VAT Calculation Service handle customer returns after the 1st of July (16% / 5% VAT) for orders placed before the 1st of July (19% / 7% VAT)?

All refunds will follow the VAT calculation treatment of the original sales transaction to which they relate. Therefore, if the original sale was subject to 19% DE VAT (respectively 7% if reduced VAT rate applies), the customer refund for a return that occurs on/after 1 July will also be subject to 19% (respectively 7% if reduced VAT rate applies).

VAT Services on Amazon

When will VAT Services on Amazon reflect the temporary VAT rate changes in Germany, scheduled for July 1, 2020?

The VAT rate changes will be reflected in your VAT reporting from August onwards where filings from July will be processed.

Relevant links:

Manage Inventory Page

Manage Pricing Page

Inventory File Templates