Welcome to the Evenstone blog

The place for e-commerce and online retail news.

Amazon Pan-European FBA – do you know the VAT implications?

Amazon Europe

Amazon’s Pan-European FBA service was introduced just over a year ago and has caught many retailers off guard with its ‘hidden’ VAT implications.

The way the service works is that Amazon seamlessly moves your inventory between its 7 fulfilment centres across the EU to allow for faster despatch to EU customers.  Sellers benefit from reduced fees (only the local fulfilment fee is charged), the ability to offer the Prime service to EU customers and a faster delivery time.

Amazon make it very easy to sign up – often just doing it over the phone.

What aren’t so well advertised are the VAT implications of using this service.

When stock is stored in a single country, a VAT registration is only needed for sales into another EU country if you exceed the distance selling thresholds.  These are currently either €35,000 or €100,000 depending on the country.  This means that you only need to worry about other VAT registrations as your business grows and then only on a country by country basis.

With Pan-European FBA there is the potential for stock to be stored in any of 7 different countries.  VAT rules dictate that as soon as stock is held in a country, the distance selling thresholds no longer apply and a VAT registration must be put in place.  This means that as soon as you sign up for Pan-European FBA, you must register for VAT in all 7 countries and must then submit VAT returns in all these countries too.

As an added complication, most accounting software isn’t able to cope with managing multiple VAT registrations.  It can normally deal with different tax rates, but then all sales still get consolidated onto one single VAT return in the home country.  Manual work rounds are needed to separate out the VAT liabilities for different countries and to ensure that VAT is not duplicated and overpaid.

If you need help understanding how EU VAT works, get in touch – we’d love to help.

Comments are closed.