The “Deemed Seller” Rule: When Marketplaces Take the VAT Hit
Under the EU’s “deemed seller” rules, marketplaces are treated as if they bought your goods and then resold them to the end customer—for VAT purposes. This means the marketplace is responsible for collecting and remitting VAT to the tax authorities in certain scenarios, including:
- Sales of goods by non-EU sellers via an EU marketplace
- Goods imported into the EU with a shipment value below €150, sold to EU customers via a marketplace
- Digital services sold through a marketplace
If the marketplace sets the terms of sale, authorizes payment, or is involved in delivery, it’s likely considered “involved in the supply” and becomes liable for VAT.
Example:
A U.S. seller lists headphones on Amazon.de. The headphones are shipped from the U.S. to a customer in Germany for €120. Amazon is responsible for charging and remitting the correct German VAT, not the U.S. seller.
How Does This Work in Practice?
When the deemed seller rule applies, the transaction is split into two for VAT purposes:
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The seller makes an exempt (zero-rated) sale to the marketplace.
- No VAT is due from the seller to the marketplace.
- In some cases, no invoice is needed; in others, self-billing arrangements may apply
- The marketplace sells to the final customer and collects VAT.
- The marketplace charges the correct VAT rate based on the customer’s country.
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The marketplace is responsible for VAT reporting and payment to the tax authority
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The marketplace is responsible for VAT reporting and payment to the tax authority
Joint and Several Liability: When the Marketplace Pays for Your Mistakes
EU member states are tightening enforcement with joint and several liability rules. This means that if a seller is non-compliant—such as failing to register for VAT or providing false information—the marketplace may be held liable for the unpaid VAT and any associated fines.
- Due diligence: Marketplaces must verify sellers’ VAT status, especially for non-EU sellers or those shipping goods into the EU.
- Ongoing checks: Platforms are expected to periodically reassess sellers and respond promptly to tax authority requests
- Negligence: If a marketplace fails to perform adequate checks or ignores warnings, it can be deemed negligent and become liable for the seller’s VAT debts
Case in point:
Belgium’s draft law (2024) would require marketplaces to actively verify seller VAT registration and exclude non-compliant sellers. If they don’t, they risk being held jointly liable for all VAT due on those sales.
What Does This Mean for Sellers?
- In many cases, marketplaces now collect and remit VAT for you. This reduces your direct VAT compliance burden for those transactions.
- You must still provide accurate, up-to-date information to the marketplace. Incorrect or missing VAT details can lead to account suspension or delayed payouts.
- For transactions not covered by the deemed seller rule (e.g., some intra-EU sales by EU sellers), you may still be responsible for VAT. Always check your specific obligations.
Best Practices for Sellers
- Double-check your VAT registration and information in every marketplace account.
- Keep clear records of all transactions, including which party (you or the marketplace) is responsible for VAT.
- Stay updated on changing rules, especially as the EU’s “VAT in the Digital Age” (ViDA) reforms expand deemed supplier and joint liability rules into new sectors like accommodation and transport by 2028
In Summary
The EU’s evolving VAT rules are designed to close tax gaps and simplify cross-border e-commerce. For many sellers, this means less direct VAT admin—but only if you keep your marketplace data accurate and stay compliant. Remember: while marketplaces may pay your VAT fines in some scenarios, they’ll also expect you to play by the rules—or risk losing your selling privileges.
#EUCompliance #Marketplaces #VAT #Ecommerce #DigitalAge
Sources: Stripe, Marosa VAT, Deloitte Legal, Avalara, EU VAT Directives, Vertex, and official EU guidance.