Many Amazon sellers operating in European markets have been frustrated by high advertising costs, particularly the additional VAT charges that seem to drain profits without delivering proportional returns. What most don't realize is that some of these VAT payments may be reclaimable.
Policy Analysis: Why Some Sellers Are Eligible for Refunds
Amazon's 2018 policy update regarding advertising VAT contains two crucial points:
- Key Point 1: Amazon transferred all sponsored ads services and agreements to its EU-based advertising entity.
- Key Point 2: This EU entity charges VAT on sponsored ads to sellers with VAT registration in relevant countries.
The official VAT charging conditions reveal that:
- When a seller's VAT address differs from their business country, the VAT rate should be 0%.
- When the VAT address matches the business country, local VAT rates apply.
This means most Chinese sellers with VAT addresses in China shouldn't be charged this tax. The issue primarily affects sellers whose accounts were mistakenly registered with EU addresses despite having Chinese VAT registration.
Step-by-Step Refund Process
Step 1: Verify Your VAT Address
Navigate to [Settings] → [Tax Settings] → [VAT Settings] in your Seller Central account. Ensure the listed address matches your official Chinese VAT registration exactly.
Step 2: Confirm Erroneous Charges
Check for incorrect VAT charges through either:
- Tax Document Library: [Reports] → [Tax Document Library] → "Product Ads VAT Invoice" files
- Billing Statements: [Advertising Campaign Manager] → [Manage] → [Billing]
Step 3: Submit Refund Request
Open a case via [Help] → [Get Support] → [Selling on Amazon] → [Other Issues], selecting "Request refund of VAT charged by Amazon." Include:
- Your VAT registration number
- Clear explanation of the error
- Willingness to cooperate with investigation
- Explicit refund request
Step 4: Follow Up
Allow time for processing, but follow up if responses are delayed.
Step 5: Receive Refund
Successful claims typically receive confirmation via case response and email notification.
Important Limitations
Refunds only apply to sellers meeting specific criteria. Amazon may reject claims if investigation finds no billing errors. The Digital Services Tax (DST) on advertisements remains non-refundable as it constitutes a separate levy from VAT.
For eligible sellers, this represents a significant opportunity to recover substantial sums accumulated over years of incorrect VAT charges. Those who suspect they've been affected should promptly verify their account details and initiate the refund process.