Set up an Avalara client as a merchant selling on a marketplace

From July 2021, marketplaces may become the deemed supplier when they facilitate certain cross-border B2C transactions of their third-party sellers. They will therefore be liable to collect, report, and remit the VAT due from the consumer. While the marketplace takes on the VAT rights and obligations of the sale, they do not take on other obligations, such as product liabilities. This new rule comes into force as part of the e-commerce package of reforms to help simplify VAT compliance and tackle online VAT fraud. For more information, refer to our 2021 EU marketplaces VAT deemed supplier rules and EU 2021 e-commerce VAT package blogs.

This section describes how to add an Avalara client as a merchant that sells products on a marketplace. These steps assume that you have already created and activated a default company.

Important: If this location will sell products within the US and/or Canada, be sure to understand how this location will handle sales tax.

As the seller, will you remit tax on sales?
Will the marketplace remit sales tax?

In AvaTax, navigate to Settings > Company Locations and Marketplaces.
Select Add a Location.
Add the location information:
1. Specify a Location Code. This location code will be specified in transactions in the locationCode and reportingLocationCode fields. If a code already exists for this location in your accounting system, then it's important to enter that same code here.
2. Specify a user-friendly name for what you call your location.
3. Select Marketplace under Type.
4. Specify whether the company sells exclusively outside of the US and Canada.
  - If you enable this checkbox, then skip to step 4.
  - If you do not enable this checkbox, then specify how this marketplace handles sales tax.
5. Enter the address for the location. If this is a US address, then validate the address.
6. Enter the date range for when you want transactions to start being calculated for this location and for when this marketplace should expire. Note: When running transactions against this location, be sure that the transaction date is within this date range.
7. Optionally enter additional attributes for your location.
8. Select Save this location.
You now have a location set up within your company profile. When creating transactions for this location, use the locationCode field in the address object and the reportingLocationCode field at the document level, and AvaTax will automatically pull in the attributes that you included in Step 6 above. In addition, using location codes allows you to create location-specific reports and filter by location code on the Transactions page.