Funds of European Amazon sellers wrongly frozen

Amazon has recently frozen funds of legitimate sales partners. The company has now acknowledged that mistakes were made. The blockade is being lifted, but sellers continue to face problems.

According to European regulations, Amazon is obligated to ensure that there are no unfair traders active on its websites. Other marketplace providers also have the obligation to prevent sellers, for example, from evading value-added tax (VAT).

Dragnet investigation

Amazon appears to have conducted a kind of dragnet investigation on its European marketplaces. In this process, the American company identified many non-VAT-compliant retailers and froze their funds. This prevents Amazon in Europe from having to pay the taxes for sellers from its own resources; if a seller is not correctly registered, the tax authorities demand the lost VAT from the marketplace operator.

Unjustified blockades

However, the dragnet investigation was flawed. As a result, credits of numerous honest European traders were unjustly blocked, as reported by German media. Without admitting fault, Amazon has sent messages to affected sellers since Tuesday evening. The main message:

‘We have decided to lift the disbursement hold put on the funds available on your seller account.’

This is said to be the first time that Amazon has lifted such a blockade on its own. For many affected sellers, the message brought an end to a week of uncertainty. They complain mainly about Amazon’s inadequate communication during that period. However, some sellers on forums indicate that the blockade has still not been lifted.

European VAT rules

The liability of marketplaces for unpaid value-added tax has previously led to Amazon and other platforms rightfully removing many retailers without a valid VAT number from the market. On the other hand, the implementation of VAT rules for European ecommerce has led to practical problems, even for a tech giant like Amazon. Indirectly, sales partners become the victims of the strict requirements from Brussels.