VAT challenges versus opportunities for Amazon retailers in Sweden
August 25, 2020
Amazon.com Inc started its business in Sweden and plans to establish a local presence here. What does it mean for the remote sellers? For EU and non-EU sellers who might use fulfillment centers in Sweden, it means the obligation to register as VAT payers in Sweden, for non-EU sellers it will be much more complicated – the fiscal representative will be a must. Will these news lead non-EU companies to think about the local establishments in the EU? Moreover, are the remote sellers already evaluated not only their new flow of buyers but also the forthcoming obligation for VAT compliance?
General challenges for the Amazon retailers in Sweden
A non-established taxable person (NETP) (which is any person who is not normally resident in Sweden, does not have a Sweden establishment and, in the case of a company, is not incorporated in Sweden) who is also a retailer and sells goods via any marketplace by using the fulfillment center or warehouse in Sweden, is obliged to register for the VAT before the trading even starts. It must be taken into account that registration takes about 4-5 weeks. However, the current pandemic situation has shown that these terms might be much longer – it can even take 8-10 weeks. As Sweden has not yet implemented the electronic application system or ability to apply via email, it makes the whole registration process complicated. Due to the upcoming changes in Sweden, the flow of the VAT registration applications might increase radically, and it as well might prolong the process.
Consequences and penalties for non-compliance in Sweden
In Sweden, penalties for late VAT return submission varies from SEK500 to SEK1000 (from 50 EUR to 100 EUR). It is crucial to declare correct amounts in Sweden, as the incorrectly declared returns may cause a penalty of 20% incorrectly reported tax amount. Interests of 15% are charged annually on the VAT due. As Sweden has strict VAT compliance requirements, it might be wise for online retailers to get assistance from the professionals.
Amazon might suspend the retailers’ account
Amazon, in countries like the UK, France is already encouraging retailers to take action since, for example, the French Tax Authority may assess the retailer‘s data and check if he is compliant. Once Tax Authorities assess that retailers are not meeting their tax requirements in specific countries, they may direct Amazon to suspend Amazon’s account and prevent retailers from selling to customers.
In Sweden situation might be similar – Swedish Tax Authorities may require Amazon to close any seller account if they are judged as non-compliant. It is already known that retailers in the United States, Britain, Germany, and France have adopted successful strategies to meet these challenges.
Retailers that are planning to expand their Amazon buyers list into Sweden should start to look for the VAT compliance services providing companies to be able to come hand in hand with the upcoming changes in the Scandinavian retail industry.