We will look at the specifics of taxation when declaring services provided through a platform such as Amazon under the VAT Act. Imagine that we have a Bulgarian company that operates online trading through a platform such as Amazon and other similar online trading platforms.
The current trend for such cooperation is to take place through the so-called “dropshipping” model. The dropshipping business is a way to trade in goods that have not been purchased in advance by the manufacturer. The dropshipping trader advertises the product and when it is sold online, the trader buys it from the manufacturer and sends it to the customer.
Therefore, dropshipping does not require the goods to be available. The dropshipper (Amazon) contacts a wholesale supplier by providing information on the delivery of a specific quantity of goods. The goods are delivered by courier directly from the customer’s supplier. The dropshipper can be defined as an intermediary in the sale of goods from the online store to the customer. Most often he concludes a contract for mediation with the supplier. Its activity is to find clients and receive orders from them against prepayment. After paying the full amount by the client, the dropshiper transfers it to the supplier, deducting a commission for mediation.
In terms of the tax burden of treating this type of trade, it is different for intra-EU supplies and deliveries to non-EU countries.
I. Delivery of goods to third countries (outside the EU) – this category includes:
A) Delivery of goods transported from Bulgaria to a third country;
B) Supply of goods acquired in an EU country and subsequently transported from the Member State to a third country;
C) Delivery of goods that are acquired in a third country and subsequently transported to a customer from a third country outside the EU.
The sales of goods made by online stores, can be categorized as distance sales.
II. Delivery of goods within the EU
The sales of goods made by online stores, can be categorized as distance sales.
Distance selling is the delivery of goods for which the following conditions are simultaneously met:
1. the goods are dispatched or transported by or on behalf of the supplier from the territory of a Member State different than the one the goods are received;
2. the supplier of the goods is registered for VAT purposes in a Member State different than the one the goods are received;
3. consignee of the supply is a person who is not obliged to charge VAT on intra-Community acquisition of the goods in the Member State where the goods are received;
4. the goods:
(a) are not new vehicles, or
(b) are not assembled and / or installed by or on behalf of the supplier, or
(c) are not subject to a special price margin procedure for second-hand goods, works of art, collectors’ items and antiques.