Marketplace VAT Liability: Why Amazon and eBay Now Collect Tax for You
Introduction
If you sold a phone case to a customer in Lyon last year through a global marketplace, there is a good chance you never handled a cent of VAT on that sale. The customer paid the tax at checkout, the platform recorded it in its own ledger, and a tax authority received it directly from the marketplace rather than from you. Even the paperwork looked odd, because on paper you sold the goods to the platform and the platform sold them to the shopper. That is marketplace VAT liability in its simplest form, and it has quietly rewired how cross-border e-commerce is taxed across Europe, the United Kingdom, Switzerland, Australia and a growing list of other markets.
Governments did not design this system to make life easier for sellers. They designed it because auditing millions of small overseas merchants is close to impossible, while auditing a few dozen large platforms is realistic. Collection at the platform level is cheaper to enforce, harder to evade, and produces a stream of transaction data that tax authorities value enormously. In 2026 the model is still expanding. The European Union began applying a flat €3 customs duty to low-value parcels on 1 July 2026, the United Kingdom opened a consultation on 23 June 2026 about extending marketplace liability to domestic sellers, and the EU customs reform is steadily pushing platforms toward the role of deemed importer.
For freight forwarders, logistics managers and the sellers who rely on them, this is far more than a tax department topic. Who counts as the deemed supplier decides whose IOSS number appears on a customs declaration, which documents must travel with the cargo, how a parcel is classified at the border, and whether it makes more sense to ship by parcel, by air consolidation or by sea into an overseas warehouse. This guide explains how marketplace VAT liability works, where it stops, and how to design a supply chain that stays compliant without bleeding margin. Along the way we show where Topway Shipping fits into the picture.
What Marketplace VAT Liability Actually Means
The deemed supplier fiction
Tax lawyers call the mechanism the deemed supplier rule, and it is best understood as a legal fiction. For VAT purposes only, the marketplace is treated as if it had bought the goods from the seller and then resold them to the buyer. The physical goods still travel straight from the seller’s warehouse to the customer’s door, but the tax paperwork follows a different route. The seller makes a supply to the platform, normally without charging VAT, and the platform makes the taxable supply to the consumer, charging VAT at the rate that applies in the destination country.
Two consequences follow from this. First, the platform becomes the party that must charge, collect, report and pay the tax, and it carries the audit risk that comes with that role. Second, the seller is relieved of output VAT on that particular sale, although not necessarily of every other VAT or customs obligation connected to the goods. The European Commission’s own explanatory notes make the point that a deemed supplier holds the same rights and duties as a real supplier, so the platform keeps proper records, issues the right documents and may recover input VAT where the rules allow.
Why tax authorities shifted the burden to platforms
The background is a long period of weak compliance. Before the EU’s e-commerce VAT package took effect on 1 July 2021, parcels worth less than €22 entered the bloc free of VAT, and many overseas sellers never registered for VAT anywhere. Domestic merchants who dutifully charged tax on every sale were competing against foreign sellers who did not, and the gap in revenue grew with every year of marketplace growth.
Platforms offered a practical fix. They already process the payment, they already hold the seller’s identity and shipping data, and they can add tax at checkout with a few lines of code. Putting the legal duty on them turns a problem of millions of small taxpayers into a problem of a handful of large ones, and large ones are easy to audit, fine and negotiate with.
There is also a fairness argument that regulators repeat often. If a local retailer must charge 20 percent VAT while a distant seller on the same marketplace page charges nothing, the market is tilted. Marketplace liability is meant to level that field, and in the European Union it has been paired with the customs measures described later to make sure goods and tax data arrive together.
How the Rules Work in the European Union
The two situations that make a platform the deemed supplier
Under Article 14a of the EU VAT Directive, an online marketplace or platform becomes the deemed supplier in two main situations. The first covers distance sales of goods imported from outside the EU in consignments with an intrinsic value of €150 or less. The second covers supplies of goods already located inside the EU when the actual seller is not established in the EU and the buyer is a consumer rather than a business. In both cases the platform charges VAT at the destination country’s rate and the seller’s sale to the platform sits outside the VAT charge.
The second situation catches many sellers off guard. A Chinese merchant that stores inventory in a Polish fulfilment center and sells to a German consumer through a marketplace is not safe from the rules just because the goods are already inside the EU. As long as the merchant is established outside the bloc, the platform is the deemed supplier for that sale.
Table 1: Common EU scenarios and who accounts for consumer VAT
| Scenario | Platform is deemed supplier? | How VAT is handled |
| Non-EU seller ships a €60 parcel from China to a French consumer via a marketplace | Yes | Platform charges French VAT at checkout and normally reports it through IOSS |
| Same seller ships a €400 consignment to the same consumer | No | Ordinary import VAT is due at the border; IOSS is not available |
| US seller holds stock in a German warehouse and sells to a German consumer on a marketplace | Yes | Platform charges German VAT; seller invoices the platform without VAT |
| German seller ships from a German warehouse to a German consumer | No | Seller charges and reports German VAT itself |
| EU seller ships from France to an Italian consumer via a marketplace | No | Seller accounts for Italian VAT, usually through the OSS return |
There is one important safety valve. Article 5c of the Implementing Regulation limits a platform’s liability when it relied in good faith on wrong information supplied by the seller, such as a false claim about where the seller is established. Platforms therefore have strong reasons to verify sellers and to pass the cost of errors back to them through contract terms.
In day-to-day practice this shows up in seller onboarding. Large marketplaces now ask for proof of establishment, VAT numbers, warehouse addresses and sometimes the IOSS status of the sellers who ship directly from abroad. Terms and conditions increasingly allow the platform to withhold payouts, adjust fees or suspend listings if the information turns out to be wrong. Sellers who treat these forms as a formality are the ones who later find funds frozen while a tax question is resolved.
IOSS and the €150 line
The Import One-Stop Shop, known as IOSS, is the reporting scheme that goes with the first situation. The platform or the seller collects VAT at the point of sale, files a single monthly return for all EU destinations, and the parcel receives a fast lane at customs because import VAT has already been settled. Above €150 the scheme is not available, so the consignment goes through ordinary import procedures and VAT is collected at the border from the importer of record or the recipient.
For forwarders the practical consequence is that the IOSS identification number must appear correctly in the customs declaration and be linked to the right parcel. A missing or mismatched number is one of the most common reasons low-value parcels are held, taxed a second time or returned. Industry commentators have also warned about the misuse of other companies’ IOSS numbers by bad actors, which is one reason customs authorities are tightening the links between sellers, parcels and declarations.
The €3 customs duty that began on 1 July 2026
VAT is only half of the current story. Council Regulation (EU) 2026/382, adopted on 11 February 2026, removed the customs duty relief that used to apply to consignments under €150 and replaced it with a transitional flat duty of €3 per item in defined situations, notably for goods sold by IOSS-registered sellers or moved through postal channels. The measure applies from 1 July 2026 and is scheduled to run until 1 July 2028, when a permanent regime is expected to take over.
Many sellers assumed that using IOSS would shield them from this charge. It does not. IOSS handles VAT, while the new flat duty is a customs charge, and the two now travel together. IOSS covers roughly 93 percent of e-commerce flows into the EU, so the new duty reaches the great majority of low-value consumer parcels.
The word item matters here. Guidance published by customs advisers indicates that the €3 applies per tariff category rather than per parcel, which means a basket containing a t-shirt, a toy and a phone charger can trigger several charges in one box. Exact definitions have varied between commentators, so it is wise to confirm the treatment with your broker for each product line. The effect on cheap goods is dramatic: a €5 phone charger now carries a duty equal to 60 percent of its price.
Table 2: Key dates in the EU low-value parcel reform
| Date | Milestone |
| 1 July 2021 | EU e-commerce VAT package starts: the €22 VAT exemption ends, IOSS launches and marketplaces become deemed suppliers in defined cases |
| 11 February 2026 | Council Regulation (EU) 2026/382 adopted, removing the value-based customs duty relief and creating the transitional flat duty |
| 1 July 2026 | Flat €3 customs duty starts on low-value consignments, tied closely to IOSS and postal flows |
| November 2026 (proposed) | Union-wide handling fee on small parcels, according to current industry guidance |
| 2028 | Transitional duty ends, the duty-relief threshold disappears for good and the EU Customs Data Hub is expected to be in place; sources differ on the exact month |
What changes by 2028
The longer-term reform is more ambitious. Under the proposed customs overhaul, platforms that facilitate sales of imported goods would take on the status of deemed importer, with responsibility for duties, product compliance and restrictions. Law firm commentary also reports that from July 2028 vendors or platforms established outside the EU would become liable for import VAT in the destination Member State, so that the cost can no longer be pushed onto the consumer at the door. Timelines in this area have moved before, so treat 2028 as a planning horizon rather than a fixed date.
The United Kingdom: From Overseas Sellers to Everyone?
The UK adopted its own marketplace rules on 1 January 2021, shortly after Brexit. Online marketplaces became responsible for VAT on sales made by overseas sellers in two broad situations: where the goods are already in the UK when sold, and where they are imported in consignments worth up to £135. Sales by sellers established in the UK stayed outside the regime, and those sellers continued to charge and report VAT themselves.
That is the part now under review. On 23 June 2026 HMRC opened a consultation on making marketplaces responsible for VAT on many domestic business-to-consumer sales by UK-established sellers as well. The consultation closed on 18 August 2026. It names platforms such as Amazon, eBay and Etsy, and it also reaches online food delivery platforms, which shows how broadly the policy idea could spread. Commentators describe it as more ambitious than anything the EU has done so far, because the EU rules still leave domestic sellers to account for their own VAT.
It is important to be precise about status. This is a consultation, not legislation, and nothing changes for sellers until the government publishes a response and enacts rules. Amazon has publicly argued for the extension, saying it would close loopholes such as sellers who misstate where they are established, and that it would improve revenue. Critics expect platforms to raise fees to cover the new compliance risk, and they point out that sellers using several channels could end up with split VAT treatment between marketplace sales and direct sales.
A recent UK First-tier Tribunal case, reported in EY’s VAT news, shows how messy the current boundary can be. A UK seller whose goods were fulfilled from inside the UK found that Amazon had treated itself as the party responsible for VAT on certain sales, so the seller treated those sales as zero-rated. HMRC assessed the seller anyway, and the tribunal accepted that Amazon accounting for tax under a mistaken view did not discharge the seller’s own liability. The lesson is blunt: never assume that a platform is handling your VAT just because it deducted something from your payout.
For sellers and forwarders the sensible response is preparation without panic. UK-based sellers should check how their accounting systems record marketplace sales, whether their pricing can absorb a change in how payouts are calculated, and how a switch would affect reclaiming input VAT on stock and costs. Exporters shipping into the UK should keep an eye on the outcome too, because any extension of the rules would sit on top of the existing treatment of imports up to £135 and would influence how goods are routed through UK warehouses.
Beyond Europe: The Same Idea in Other Markets
The deemed supplier idea has spread well beyond the EU and the UK. Switzerland introduced EU-style rules under Article 20a of its VAT Act on 1 January 2025. Australia moved first in the Asia-Pacific region, making marketplaces responsible for GST on low-value imported goods in 2018, and New Zealand followed in 2019 with a similar model.
The United States uses a different tax, because it has state sales tax rather than VAT, but the logic is identical. After the Supreme Court’s Wayfair decision in 2018, states began passing marketplace facilitator laws, and today virtually every state with a sales tax requires large marketplaces to collect and remit it on behalf of third-party sellers. For anyone shipping from China to the US there is a customs twist as well, since the US suspended its de minimis duty exemption in August 2025, so low-value parcels now face duty just as they do in the EU.
Table 3: Marketplace tax collection around the world
| Market | Tax | Marketplace role | Status to watch |
| European Union | VAT | Deemed supplier for imports up to €150 and for non-EU sellers’ stock held in the EU | €3 duty since July 2026; customs reform toward 2028 |
| United Kingdom | VAT | Deemed supplier for overseas sellers (imports up to £135 and UK-located stock) | 2026 consultation on extending to UK-established sellers |
| Switzerland | VAT | EU-style deemed supplier rules under Article 20a | In force since 1 January 2025 |
| United States | State sales tax | Marketplace facilitators collect and remit for third-party sellers | State-by-state rules; de minimis suspended since August 2025 |
| Australia | GST | Marketplaces responsible for GST on low-value imported goods | In force since 2018 |
| New Zealand | GST | Similar low-value goods regime for marketplaces | In force since 2019 |
What Marketplace Collection Does Not Fix for Sellers
The most dangerous misunderstanding in cross-border e-commerce is the belief that the platform handles tax so the seller can relax. Marketplace collection removes one slice of the VAT workload, namely the consumer-facing sale, and leaves everything else in place.
Consider inventory. A non-EU seller that ships ten thousand units to a warehouse in Poland has imported goods into the EU, and that import is a separate event from the later consumer sale. Import VAT and ordinary customs duty are due on the bulk shipment, based on the commercial value of the goods, and the seller or its importer of record must pay them and recover the VAT if registered. Moving stock between EU countries, for example from Poland to Germany to serve German buyers faster, is generally treated as a transfer that may require VAT registration in the receiving country.
Then there is data accuracy. Because platforms act on what sellers declare, a wrong establishment status, a wrong product category or a wrong value can push liability back onto the seller. In some jurisdictions the seller also keeps a subsidiary liability alongside the platform, which means a tax authority may still look to the seller if the platform fails to account properly.
Finally, pricing and cash flow change. Some platforms deduct VAT, fees and now sometimes duty from the payout, which can leave sellers surprised by their margins. Sellers who also sell through their own websites will find that those sales follow different rules, so a single product can have two or three different tax treatments depending on the channel the customer used.
Record keeping is the quiet obligation that links all of this together. Even when a platform issues the consumer invoice, the seller still needs commercial invoices, packing lists, transport documents, proof of delivery and import declarations that match each other and match the marketplace order history. Tax authorities in several countries can request these records years later, and a seller who cannot reconstruct a shipment from the paperwork has little defense. A forwarder that stores shipping documents in an organized, searchable way provides real protection here, not just convenience.
Why This Is a Freight Forwarding Issue
The shipping model shapes the tax model
The deemed supplier rules depend on facts that logistics decisions create: where the goods are when the sale happens, what each consignment is worth, and how it enters the destination country. A seller who chooses direct parcels, bulk stock or high-value consignments is, whether they realize it or not, also choosing a tax and customs profile.
Table 4: How the shipping model changes the tax and customs profile
| Model | Typical freight | Consumer VAT collected by | Customs duty | Main risk |
| Direct small parcel under €150 | Air parcel, consolidated air, postal | Platform through IOSS | €3 flat duty (EU, since July 2026) | IOSS errors, undervaluation |
| Bulk stock to an overseas warehouse | LCL or FCL ocean, air freight | Platform for non-EU sellers | Standard tariff on commercial value | Import VAT cash flow, local registration |
| Consignment above €150 | Express or air cargo | No marketplace role; import VAT at border | Normal duty rates | Surprise charges for the buyer |
A direct parcel is fast to set up and works well for testing products, but its per-item duty and per-parcel handling costs scale badly. Bulk stock in a destination-country warehouse costs more upfront and ties up cash in inventory, yet it moves the import event to a single large declaration where ordinary duty rates apply and where the deemed supplier rule for non-EU sellers handles the consumer VAT.
Data quality is now a cost line
When duty is charged per tariff category, the quality of your classification stops being an administrative detail and becomes a direct cost. Vague descriptions such as accessories or gift items draw questions from customs and can lead to holds, while over-splitting a basket into many categories can multiply the flat duty. Accurate HS codes, clear product descriptions, consistent values on the commercial invoice and the checkout order, and a correct IOSS number are the four data points that decide whether a parcel moves smoothly.
Authorities are also matching declarations against platform data much more aggressively than before. If the value on the platform order differs from the value on the invoice, a flag is raised. This is why forwarders who review data before the cargo departs save their clients far more than they cost.
Incoterms and who really pays
When VAT is collected at checkout, the consumer has already paid it, so the shipment is effectively delivered duty paid from the buyer’s perspective. The freight quote and the service level must reflect that. If the forwarder quotes delivered at place terms while the platform has collected tax at checkout, duplicate charges can appear at the door, and the customer experience and the seller’s rating both suffer.
Returns and reverse logistics
Returns deserve more attention than they usually receive. When a consumer sends back an item that was sold under the deemed supplier model, the refund changes the VAT position of the platform, and the goods themselves may need to be handled as returned imports, re-exported goods or written-off stock. Each outcome has different documentation and potential duty consequences. Sellers with high return rates, which is common in apparel and consumer electronics, should decide in advance whether returned goods go back to China, to a local returns hub or to disposal, and should make sure their forwarder can document the route properly.
The new flat duty makes the question sharper. If the customer’s item was charged duty on the way in and then travels back out, the seller will want to know whether any relief can be claimed, and under what conditions. The answer depends on the destination country and on the evidence available, which is another reason to keep clean shipment data from the very first leg.
How Topway Shipping Supports Marketplace Sellers
Since 2010, Topway Shipping, headquartered in Shenzhen, China, has been a professional provider of cross-border e-commerce logistics solutions. The founding team has more than 15 years of experience in international logistics and customs clearance, with a strong focus on China–U.S. transportation. Its services span the entire logistics chain, from first-leg transportation and overseas warehousing to customs clearance and last-mile delivery, and it also offers flexible full-container-load and less-than-container-load ocean freight from China to major ports worldwide. That breadth is useful in a world where tax status depends on how and where goods move.
First-leg transportation from China
The first leg is where the choice between parcel and bulk is made. Topway Shipping consolidates cargo out of Shenzhen and other Chinese hubs and helps sellers decide which products belong in parcel flows and which belong in pallets or containers bound for a destination warehouse. Because the team understands both the platform side and the customs side, it can align packing lists, commercial invoices and marketplace order data before departure.
Overseas warehousing
Overseas warehousing is the structural answer to per-parcel duty and slow delivery. Stock held close to the customer can be picked, packed and shipped domestically, and the import event is a single declaration with ordinary commercial duty. Topway Shipping’s warehouse network supports receiving, inventory control, kitting, returns handling and marketplace fulfilment, with processes that keep the shipment data consistent with what the platform will later report.
Customs clearance
Clearance is where marketplace liability meets reality. Topway Shipping’s customs team prepares declarations with correct classification, valuation and, where relevant, IOSS details, and works with brokers at destination to resolve queries quickly. For sellers shipping bulk stock, the team also helps plan import VAT payment and recovery so that the cash flow effect does not catch finance teams by surprise.
Last-mile delivery
Last-mile delivery closes the loop. Whether parcels leave a destination warehouse or arrive through cross-border channels, Topway Shipping coordinates carriers and tracking so that the delivery promise made at checkout is kept and the buyer never faces a surprise bill at the door.
FCL and LCL ocean freight
Ocean freight is the workhorse of the bulk model. Full container loads suit sellers with steady volumes and predictable demand, while less-than-container loads let smaller sellers send consolidated pallets without waiting to fill a box. Topway Shipping offers both from China to major ports worldwide, and can advise on when the switch from LCL to FCL begins to pay off.
A worked example
Imagine a seller moving ten thousand units a month of a small household item with a customs value of €18 per unit, all in a single tariff category. Shipped as individual parcels into the EU, the flat duty comes to €3 per unit, or €30,000 a month. Shipped in bulk to an EU warehouse and cleared at a hypothetical ordinary duty rate of 4 percent, the duty would be about €0.72 per unit, or €7,200. The difference of €22,800 has to cover ocean freight, warehousing, pick-and-pack and domestic delivery, and for many fast-moving items that is more than enough room to work with.
Table 5: Illustrative duty comparison; VAT is handled separately and rates vary by product
| Illustrative monthly figures (10,000 units at €18) | Direct parcels | Bulk to EU warehouse |
| Customs duty per unit | €3.00 | €0.72 (assumed 4% rate) |
| Total customs duty | €30,000 | €7,200 |
| Budget left for freight, storage and local delivery | Not applicable | €22,800 before other costs |
These numbers are illustrative, because duty rates differ by product and the €3 rule has defined limits. The method, however, is the one a forwarder should use with each product line: compare the flat parcel duty against ordinary tariff duty on bulk, then add the real costs of freight and warehousing before deciding.
A Seller and Forwarder Readiness Plan
The following plan turns the rules above into work that can be scheduled. It is aimed at sellers who ship from China to Europe, the UK or the US through marketplaces, and at the forwarders who support them.
Table 6: Readiness plan for marketplace VAT and customs changes
| Step | What to do | Why it matters |
| Map your sales model | List every product by channel, origin, destination and typical consignment value | Tells you where the platform is deemed supplier and where you are |
| Confirm registrations | Check IOSS, OSS and local VAT registrations against where stock really sits | Avoids penalties and blocked sales |
| Clean up product data | Fix HS codes, descriptions and values, and keep them consistent across invoice and order | Reduces holds and avoids paying duty on wrong categories |
| Model parcel versus warehouse | Compare flat parcel duty with bulk duty plus storage and delivery for each product line | Finds the cheapest compliant route |
| Align pricing and Incoterms | Make sure checkout pricing, freight quotes and delivery terms agree | Prevents duplicate charges at the door |
| Watch the calendar | Track the EU handling fee, the 2028 customs reform and the UK consultation outcome | Gives time to react before costs change |
None of these steps is complicated on its own, but together they take time, and the quickest way to waste that time is to start after the rules have changed. Sellers that review their data and routes now will be able to pick the cheapest compliant route calmly, rather than react to a surcharge that appears on their next invoice.
Forwarders can add value by treating the review as a service rather than a favor. A short audit of a client’s top fifty products, covering classification, valuation, IOSS use and route choice, often uncovers savings that more than pay for the audit itself.
Conclusion
Marketplace VAT liability has moved from an experiment to a standard tool of tax administration. The platform becomes the deemed supplier, the consumer pays tax at checkout, and the authority receives it from a source it can audit. The EU applies the model to imports up to €150 and to non-EU sellers’ stock, the UK is debating extending it to its own sellers, and other markets from Switzerland to Australia and the US have built versions of their own.
The rules do not remove work from the supply chain, they relocate it. Sellers still need correct registrations, accurate product data and a plan for import VAT on bulk stock, and the new €3 EU duty has turned the choice between parcels and warehouses into a real financial decision. Forwarders that understand both tax and cargo are in a strong position to guide that choice.
If you ship from China and sell through Amazon, eBay or any other marketplace, now is a good time to review your routes and your data. Topway Shipping can help with first-leg transportation, overseas warehousing, customs clearance, last-mile delivery and FCL or LCL ocean freight, so that your goods and your tax data arrive together.
FAQs
Q: Does a marketplace collecting VAT mean I no longer need a VAT number?
A: Not necessarily. The platform covers VAT on the consumer sale in the cases the rules define, but you may still need registrations for stock held abroad, bulk imports, transfers between countries and sales through other channels.
Q: Does the EU €3 customs duty replace IOSS VAT?
A: No. IOSS deals with VAT and the €3 duty is a separate customs charge. Since 1 July 2026 both can apply to the same low-value parcel.
Q: Will the UK definitely make marketplaces collect VAT on domestic sellers’ sales?
A: Not yet. HMRC’s consultation opened on 23 June 2026 and closed on 18 August 2026, and it is a proposal until the government publishes a response and passes legislation.
Q: Is bulk shipping to an overseas warehouse always cheaper than direct parcels?
A: No. It often wins for fast-moving, low-value goods with low ordinary duty rates, but storage, freight and inventory risk must be included. Model each product line before deciding.
Q: What happens if a parcel carries a wrong IOSS number?
A: It may be held, checked or treated as a non-IOSS shipment, which can mean delays, a second collection of VAT or a return. Review the number before the cargo departs.
