Automated Value Added Tax for online traders with JTL and Taxdoo
Online trade over several channels like e.g.Amazon, eBay and your own webshop is possible without an ERP system like JTL hardly possible.
However, one fundamentally important function is missing from this supposed all-rounder: the processing oValue Added Taxf – especially in cross-border sales.
This can lead to considerable financial risks and trouble with the tax office, which we will show in the following.
Risk I: JTL and tax obligations in other EU countries
Marketplaces like Amazon and eBay promote cross-border shipping. This can very quickly trigger tax obligations in other EU countries.
JTL does not yet have a foresighted and sufficient warning function to alert you to (impending) tax obligations in other EU countries.
This is risky, because in these cases the Value Added Tax mandatory payment has to be made in the foreign country of the EU. If this is not done, tax evasion is present – even if the Value Added Tax (erroneous) tax has been paid in Germany.
There are two common triggers for tax obligations in online trading in other EU countries.
Trigger number 1: Delivery thresholds
If certain thresholds are exceeded when selling to final consumers in other EU countries – the delivery thresholds – the tax liability for this and all subsequent deliveries is shifted to the respective EU country.
Exceeding the delivery threshold in France: from that date and throughout the following calendar year, French Value Added Tax invoicing is compulsory.
From this point on, you must adjust the tax settings in JTL and enter the tax rates for the destination country.
JTL currently does not offer a forward-looking and daily updated delivery threshold monitoring.
Trigger number 2: Use of foreign Amazon-warehouses
Amazon Incentives online retailers to use foreign warehouses in Poland and the Czech Republic – the so-called Central Eastern Europe Programme (CEE Programme).
If, on the other hand, goods are stored exclusively in German fulfilment centres, a penalty of 50 cents per parcel will be charged. In this respect, more and more retailers are participating in the CEE programme.
However, the use of foreign warehouses leads to direct tax liability in the respective EU states.
Amazon-CEE: You make VAT-relevant deliveries to yourself and become taxable in Poland and the Czech Republic.
If Amazon your goods are moved between different EU countries, there are so-called taxable intra-community movements according to the VAT law – these are legally fake deliveries from you and to yourself, as the upper chart shows.
You must declare these shipments in the Value Added Taxpre-notification and the summary declaration.
JTL does not record these shipments relevant for VAT purposes.
Risk II: JTL and incorrect control settings
JTL automatically creates an invoice for each sale, with a detailed descriptionValue Added Tax , and sends it to the buyer.
If you have stored the tax settings incorrectly, this can lead to the fact that you have to pay twice Value Added Tax for one turnover.
How is that possible?
Whenever you use foreign warehouses, this danger exists.
In the following graphic you can see a retailer who stores his goods in a Polish fulfillment center – e.g. within the framework of the Amazon Central Eastern Europe program.
If this trader now sells to final consumers in Germany or Austria, these sales must be taxed in Poland or in Austria or Germany.
This depends on whether the delivery thresholds were exceeded in Austria or Germany or whether the delivery threshold was not applied.
Risk of double taxation: Shipment from foreign warehouses, e.g. within the framework of Amazon CEE.
This is often ignored in practice. In many cases in this constellation, an invoice is simply Value Added Tax issued with German.
This leads to a high risk. Art. 203 of the VAT system directive applies in all EU states and stipulates that any VAT shown Value Added Tax on an invoice must also be paid to the tax office.
This means: If you show German Value Added Tax in an invoice although the turnover is taxable in Poland, for example, you owe 19 percent Value Added Tax in Germany and 23 percent Value Added Tax in Poland.
You must therefore pay for this delivery at least two times in total 42 percent Value Added Tax paybecause your control settings were incorrectly stored in JTL.
If this error remains unnoticed for several months or even years, it often leads to existential financial risks.
Risk III: JTL and Amazonbusiness
The turnover tax law in the EU is harmonised. However, in some places the EU states have certain options, which they exercise differently.
This is particularly relevant for traders on Amazon business.
Amazon Business is becoming more and more important, but it also leads to further complex VAT challenges.
For example, if you sell to a French or Italian entrepreneur from a French or Italian warehouse as part of a Amazon business transaction, it is not you but the buyer who owes the Value Added Tax.
Behind this is the so-called reverse charge procedure.
If you sell on Amazon business, you should therefore turn off the invoicing of these sales via JTL and Amazon leave this to the invoicing Value Added Taxservice of .
This service can also detect and properly bill deliveries that fall under the reverse charge procedure-unlike JTL.
How efficient Value Added Taxcompliance should look for JTL merchants
A secure and efficient compliance – Value Added Taxas well as the fulfillment of all obligations – Value Added Taxshould look like the following due to the risks mentioned so far.
Data should be obtained, monitored and processed on a single transaction basis from JTL, if possible in an automated way.
Ideally, this should be done on a daily basis in order to be able to counteract errors quickly.
Taxdoo has developed the first and only fully automated Value Added Taxinterface for JTL.
Efficient VAT-Compliance: Taxdoo can automatically obtain daily updated data from JTL and monitor and process them for VAT purposes.
This will become even more important from 2019 onwards.
Marketplaces such Amazon as eBay will be liable from 2019 for unpaid sales taxes of marketplace traders.
Late or false Value Added Taxdeclarations can then be reported to the marketplaces by the tax offices.
The marketplaces will then most likely block the respective trader, as they would otherwise be Value Added Tax liable for him.
With Taxdoo and JTL you can easily and automatically meet your VAT obligations
Taxdoo is the first cloud-based and fully automated VAT engine for online trading and helps to meet VAT obligations in due time and form.
Taxdoo can automatically and daily read out data from JTL, evaluate it and afterwards:
- Create accounting exports,
- Report sales abroad,
- monitor delivery thresholds on a daily basis,
- document shipments, and
- much more.
Just click here or on the button below and book a live demo in which we personally explain the advantages of our automated Value Added Taxcompliance in connection with JTL to you and/or your accountant via screen transmission.