In an era of increasing automation of accounting processes, more and more e-commerce sellers are opting for tools that automatically pull sales data from platforms such as Amazon and generate VAT returns. While such solutions offer convenience and time savings, they also carry significant risks that should not be overlooked.
In our practice, we have encountered several issues that can lead to serious problems.
Amazon automation tools – issues
One of these issues—and likely the root cause of many others—is the limited or nonexistent periodic verification of reports on which the VAT returns are based.
In general, the idea is that the tool should be automatic, and this is undoubtedly the greatest advantage of such solutions. However, in our view, automation should be continuously monitored.
The quality of data pulled into reports and subsequently decoded by automatic tools is extremely important from a tax perspective.
Changes in report structures
First, changes may occur in the structure of reports within a single sales platform. Automatic systems rely on data retrieved from the sales platform. If the data is incomplete, incorrect, or unsynchronized (e.g., discrepancies between the sale date and the shipping date), incorrect settlements may occur, such as applying the wrong exchange rate to determine the tax value.
Sales models and rew requirements?
Sales platforms offer several sales models as part of their operations, and these models are also subject to change in order to adapt to economic and legal conditions. Such changes may, for example, necessitate VAT registration in countries where such registration was not previously required.
Data
In addition to data from reports generated by sales platforms, VAT returns must include data from purchase transactions of goods, across various types, such as: import of goods, intra-Community acquisition of goods, local purchases, as well as purchases of services. Sellers may also conduct sales outside sales platforms, and these transactions will not be included in the reports—thus they must also be settled in the VAT return. Beyond simply providing this data to the entity operating the automatic VAT settlement tool, the seller must also indicate how it should be included in the return.
Transactions are not always recorded on only one side of the VAT (input/output); sometimes they appear on both sides. In extreme cases, a purchase may be recorded on both sides, but with different VAT values. When choosing a tool, we should consider whether the provider has adequate human resources to offer support in this regard, rather than merely requesting data in the correct format.
The e-commerce sector is particularly sensitive to changes and prone to errors in tax reporting.
Beyond data aggregation, it is especially vulnerable to changes in the legal environment—not only at the local level but also across Europe and even globally. Let’s not forget that outside the EU, other countries have also recognized the abuses in distance selling and have tightened their tax systems. Some have introduced simplifications similar to OSS, such as the VOEC procedure in Norway. Adapting all procedures to multiple legal frameworks can be challenging and can generate many risks. Based on our experience, reporting errors can reach very large amounts, resulting in exposure to high interest charges and penalties.
Although automation tools can significantly simplify accounting processes, the seller remains fully responsible for the accuracy of the data and compliance with regulations.
Our opinion
Recommendations for Sellers:
- Regularly audit the data generated by the tool—preferably with the help of a tax advisor.
- Monitor changes in tax regulations in the countries where you operate.
- Keep copies of source documents, even if the system processes them automatically.
- Do not rely solely on automation—implement manual checks at key points in the process.
- Choose tools with local support and experience in servicing e-commerce within the EU.
