PAN EUROPEAN FBA – THE UNFORESEEN VAT TRAP
Pan European FBA allows you to sell across Europe by placing inventory closer to your European customers, and this enables Amazon to fulfill and deliver orders at lower costs and in less time. Selling with Pan-European FBA makes your products eligible for Prime and visible to millions of customers across Amazon’s European marketplaces.
IMPORTANCE OF AMAZON PAN-EUROPEAN FBA
Amazon manages inventory for you: Send products to Amazon Fulfillment Centers in your country of choice and let Amazon distribute them to meet the expected demand.
Low fulfillment costs: Amazon distributes your products across Europe at no additional cost. Pay the local fulfillment fee of the marketplace where the order is placed.
Reach More Prime customers: With Pan-European FBA, you can sell your products in all five Amazon European marketplaces with Prime eligibility.
Faster Deliveries: With your products stored close to customers, you can trust Amazon to fulfill and deliver orders to customers quickly.
Amazon Handles all The Customer Support: Amazon provides customer support in the local language of the five European Amazon marketplaces, facilitating customer inquiries, returns, and refunds for you.
Now, this sounds like a remarkable idea, right? All your European customers get faster shipping, while Amazon feeds your inventory to different fulfilments centers for free, and you have to pay less for local deliveries!
WHAT YOU SHOULD KNOW BEFORE SIGNING UP FOR PAN EUROPEAN FBA
The number one thing you should know before hitting the signup button is the unforeseen VAT Registration and Compliance. You must be completely sure that it is the right decision for your business and know the implications of numerous VATs that follows when you sign up with Amazon Pan-European FBA.
I urge you to read this post to the end because everything you need to know about Amazon Pan-European FBA is broken down into details. At the end of this post, you will able to choose to go with Pan-European FBA or without Pan-European FBA.
VAT REGISTRATION AND COMPLIANCES WHEN USING REGIONAL AMAZON FBA
If you are an established company in the EU, you must register for VAT as soon as your sales exceed the sales threshold for the EU country in which you have an inventory.
If you sell to other Amazon users in other European countries, when you store stocks in the UK via FBA or other means, you must immediately register for VAT in the UK, before your inventory arrives in the UK. In Europe, there is no sales threshold if you store your stocks in another country aside your company origin country. Storing an inventory in a European country immediately creates a VAT registration requirement in the country in which you store the inventory.
If you store your inventory in the Amazon FBA Centers in the United Kingdom, Amazon will ship the orders made in the other EU countries from the UK Fulfillment Center, and you only need to register for VAT in each EU country when you cross the thresholds of individual sales of each country. View the ever-changing Distance Sales Thresholds here
When using Amazon FBA in the European country, VAT is very simple. Simply charge the VAT on each order and send a quarterly report to the VAT authority in the European country where the VAT is registered, for example, HMRC in the United Kingdom. As you increase your sales and meet the various VAT thresholds in each European country, you must register as VAT in these European countries and meet your VAT declaration requirements, but you should only do so after exceeding the limit of the VAT Sales Thresholds for each country.
VAT REGISTRATION AND COMPLIANCE WHEN USING PAN EUROPEAN FBA
Some Amazon Sellers never get to know how complicated VAT REGISTRATION AND COMPLIANCE is with PAN-EUROPEAN FBA until they sign up.
Before now, we were distance selling to other European Countries from an Amazon UK Fulfillment Center. The inventory was never stored in other countries which is why there was no need for VAT registration in each country until we exceeded their threshold.
The VAT rule States that as soon as your inventory is imported and stored in a European country, you must register immediately for VAT in that European country.
The Pan-European FBA ships your stock to several fulfillment centers in 5 different European countries. This means that you must register and comply with VAT in 5 different European countries, charge 7 different VAT rates to customers, send 5 different VAT declarations several times during the year and you must answer the tax of 5 countries’ tax/revenue departments to conform with their individual VAT policies.
This sounds like a nightmare for me. I don’t know about you though.
The only way you can do that is by hiring a dedicated team to administer it for you. Think about it, all European countries speak a different language. There are companies that Amazon recommends that they take care of this, but they will not be cheap. See them here
When registering for a Pan-European FBA, Amazon will send batches of your inventory to several fulfillment centers in all European countries. This means that you must register to obtain the VAT in each country in which Amazon decides to store your inventory.
In short, that depends on you. However, the final result is the following. It will take a lot of work on your part just to start with Pan-European FBA and fully comply with the requirements of each country.
I strongly believe that with this little write-up, you’d understand all the VAT liabilities that you will assume as a result of registering with Pan-European FBA. Do not register until you are sure that you can meet the additional VAT requirements because you can continue selling to the EU from the UK for the time being without registering with the Pan-European FBA.
Of course, Amazon will not mention these responsibilities. It is known that they put these tax traps for unpretentious sellers: take the promises of Amazon with a grain of salt in regards to the “easy” European sales.