European VAT Registration & Reporting Service for Amazon Sellers
Providing Financial Services Worldwide since 1988
Over the years, Amazon Prime has garnered a lot of popularity. As an Amazon Prime member, one of its benefits is its same-day delivery offer. Studies report that 85% of Amazon Prime members visit Amazon at least once a week and 46% purchase within the time frame. As an Amazon seller, if you don’t sell on Prime, you are surely missing out on good sales.
The PAN European Fulfillment owned by Amazon (FBA) is designed to make Prime irresistible for businesses. When you sign up on Prime as a seller, delivering your product to the international market automatically becomes easier. While this comes with numerous advantages, the major drawback remains the requirements for VAT registration.
What is Pan-European FBA?
The Pan-European FBA is designed by Amazon for sellers who wish to extend their sales to the international market. With the previous FBA system, sellers’ products are sent to a single Amazon fulfillment center where the seller is located, from there, the product gets shipped to international customers. But with the PAN-European FBA, your product gets redistributed to seven European fulfillment centers, which include: Germany, Italy, Czech Republic, France, Spain, UK and Poland. Distribution is usually handled by Amazon, which helps your products get to their customers faster.
Another advantage is that it is cost efficient compared to when you have to sell to each country outside FBA. You save on the cost of shipments across borders, and only get to pay local fulfillment fees after each sale.
My FBA VAT Obligation.
Online market stores have been compelled to make sure sellers register for VAT in each European country. This is to ensure sellers do not beat the sales tax system. Due to this, businesses looking to apply for the Pan-European FBA must register for VAT within the seven territories where your products will be distributed. Due to this:
Customers are charged VAT rates in line with their location.
VAT records are kept for each territory.
VAT returns are filed for each territory.
All of this differ for businesses that use a single fulfillment center or EFN as products are only contained and shipped from a single country. VAT registration will only be needed in that country. However, thresholds for distance selling still applies.
What are the Alternatives to Pan-European FBA?
If a seller wishes not to participate in the Pan-European FBA, they can continue to leverage the European Fulfillment Network (EFN) for across the border sales. Though fulfillment fees in the EFN are higher than FBA, you get to benefit and enjoy from the distance sales thresholds in each country. However, your business will not benefit from Amazon Prime for customers in EU.
Whichever path you decide on, don’t let the tax obligations for your Amazon sales ruin your business. If you need to learn more on Pan-European FBA, or just curious about how we can assist with VAT registration, compliance or consultancy, do not hesitate to contact us.
If your would like our registration & reporting fees, please request on our contact form.