Why you still need to VAT register when using Amazon Pan-EU

What is Amazon Pan-EU? 

Amazon’s Pan-EU program is a network of EU fulfillment warehouses. It gives sellers better access to a streamlined logistics structure. Until recently, there were 6 EU Member States involved in the program. These were:  

  • Italy  
  • France 
  • Spain 
  • UK 
  • Poland 
  • Czech Republic 
  • Sweden and The Netherlands (as of 2021) 

By opting into Amazon Pan-EU FBA, you are agreeing to stock your products in any of Amazon’s warehouse locations. This is to keep your products as close as possible to customers and keep shipping estimates down.

What are the Benefits of the Pan-EU Program?  

Launching in the EU can be daunting. That’s why using Amazon Pan-EU is so appealing. To prevent the logistical nightmare you might have to go through alone, Pan-EU can: 

  • Reduce shipping costs  
  • Speed up delivery times 
  • Improve rankings on Amazon (as you receive the ‘Prime’ logo)  
  • 24-hour Amazon seller support 
  • Get your brand noticed by new customers 

Amazon Pan-EU opens your brand up to one of the world’s largest consumer markets. The European eCommerce market is going from strength to strength in 2022. It’s clear EU shoppers are primed (if you’ll pardon the pun) to buy online.

Feeling ready to get started with Pan-EU? Before you do, there are some important requirements you need to know before setting up.

VAT and Amazon Pan-EU

When selling through Amazon Pan-EU, you will need to register for VAT. Using Pan-EU is an exciting opportunity to reach European customers. You should not, however, ignore the EU VAT obligations that come with it.

Amazon emphasizes that sellers should not overlook VAT requirements when joining the Pan-EU FBA scheme. You must ensure you have registered for VAT before activating Pan-EU on your account.

holding stock

Holding Stock 

Amazon Pan-EU users will need to have a VAT registration at each location where they are holding stock. This may mean registering in all 8 destinations where Amazon has warehouses in the EU. In July 2021 there was a refresh on marketplace VAT obligations. This placed more responsibility on marketplaces to collect VAT on behalf of sellers. Marketplaces must now fulfill this role in certain scenarios. These scenarios are as follows: 

  • Distance sales of goods imported into the EU with a value up to EUR 150  
  • Supply of goods to EU consumers when the goods are already located within the EU and the seller is based outside of the EU, irrespective of the value of the goods.

Non-EU sellers using Pan-EU will be required to register for VAT in each warehouse country. The above means, however, that you will not need to charge and collect intra-EU VAT from your customers. Amazon will do this for you. You must then record these sales as ‘zero-rated supply to the marketplace.    

For EU sellers using Pan-EU, you will be responsible for collecting VAT on all eligible sales. You must VAT register in each country where you hold stock, plus each where you have customers. You can account for cross-border Amazon sales throughout Europe with the One Stop Shop scheme (OSS).

OSS 

Introduced in 2021, The One-Stop Shop (OSS) is split into two schemes, Union OSS and non-Union OSS. Union OSS can be used by EU-based businesses to report the VAT due on intra-EU sales of goods and services. It can also be used by non-EU established businesses to report the VAT due on the intra-EU sale of goods only. Non-Union OSS can be used by non-EU established businesses to report intra-EU B2C sales of services only. 

OSS can be useful for EU Amazon sellers to account for VAT due to cross-border PAN EU sales to customers outside the countries in which you hold stock. Or for sellers using Amazon alongside their own website. Since the 2021 EU VAT changes, VAT is due at the location of the customer. Opting in to OSS ensures that you stay compliant when expanding throughout Europe. 

If you hold stock and have a VAT registration in an EU country, domestic sales will not be eligible to report via OSS. You must report these sales through your domestic VAT return in this country. 

importing goods

Importing Goods 

Alongside VAT registering, you will need an EORI number to send your goods to Amazon’s warehouses. EORI stands for Economic Operator Registration Number. You need an EORI to access Pan-EU as you will need to import goods to their warehouses. 

You will also need to apply the correct HS code to classify your specific products. This will determine the import duty that will be due on importation. This will ensure you avoid delays at customs. You can reclaim this import VAT once your goods have been received by the fulfillment center.

Our team at SimplyVAT.com have helped hundreds of Amazon sellers get set up with Pan-EU. We can register you with any necessary VAT schemes to stay compliant. Our EU VAT experts can discuss your specific needs and determine which service is most suitable for your business model. Get in touch with us at SimplyVAT.com today and schedule a call to determine your Amazon Pan-EU VAT requirements. 

Checklist 

  1. Consider if Amazon Pan-EU makes sense for your business and your expansion plans 
  2. Plan well in advance and get your Pan-EU VAT registrations set up 
  3. For EU businesses, decide if the One Stop Shop (OSS) could streamline your VAT requirements 
  4. Ensure you have an EORI number before shipping goods to Amazon’s warehouses 
  5. Apply the correct HS codes to your consignments to avoid customs delays 
  6. Speak to an EU VAT expert at SimplyVAT.com to have any questions answered

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