VAT Guides Industry-specific

Selling on Amazon - Fulfilment options explained

Selling on Amazon is a programme that enables sellers to sell their products on all the European Amazon marketplaces (amazon.co.uk. amazon.de, etc)

Once your goods are listed on the marketplace, the seller must obviously decide how the orders will be fulfilled, i.e. how will the goods be delivered to the customers around Europe. The obvious solution is to arrange your own transport and delivery directly to your customers around Europe. Whilst this can have some benefits, most sellers prefer to take advantage of one of the 3 "Fulfilment by Amazon" (FBA) options that are available. FBA is a group of fulfilment solutions designed to empower sellers to trade faster and easier across Europe. Amazon sellers opt for FBA when they want to generate more sales without investing in logistics.

In order to sell with FBA, a seller will need at least 1 European VAT registration, but possibly up to 7 registrations depending on the solution chosen. The below article briefly summarises the options and the VAT compliance implications thereof.

1. Pan-European FBA

Pan-European FBA enables you to sell across Europe by helping you place inventory closer to your European customers. opting for this model means you must allow Amazon to store your goods in and fulfill orders from their 7 main distribution centres (UK, Germany, Spain, France, Italy, Poland & Czech Republic). Whilst the benefits to sellers are enormous, using Pan-European FBA immediately makes the seller obligated to be registered for VAT in all 7 countries.

Therefore, the seller must outweigh the cost of VAT registration and compliance in 7 jurisdictions against fulfilling and delivering 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. In addition to significantly lower costs and better delivery times, you also get access to 24/7 Amazon support

VATGlobal has created a bespoke solution for Pan-European sellers to remove the burden of VAT compliance at a very reasonable cost. If you decide to sell Pan-European FBA, contact us today to learn how we can help you.

2. Multi-country Inventory ("MCI")

An alternative to the pan-European option is MCI. Here, the seller can choose the countries into which you ship and store your inventory, and fulfill orders from any of Amazon's European marketplaces. In this scenario, the seller is only obligated to register in the countries where inventory is stored (instead of all 7 in the Pan-European option).

Therefore, you save on the VAT compliance costs, but you still pay local fulfilment fees when selling in the marketplaces for which you store your inventory locally, and cross-border fees when selling on other Amazon European marketplaces. Not only does this require you to arrange your own logistics to ensure your goods get to each Amazon warehouse, it also results in a much higher cost of delivery. With Pan-European FBA, when a product is sold in one Amazon European marketplace, you will only pay the local fulfillment fee from that marketplace.

3. European Fulfilment Network ("EFN")

The EFN is the simplest of the 3: the seller gets his products to just one of Amazon's warehouses, and ALL orders are fulfilled from that country. This can drastically impact the customer experience (as delivery times will be much longer) and in most cases you will not have access to Prime customers. Also, the delivery costs are much higher - when you sell to customers of other marketplaces via EFN, you will pay a cross-border fee for each order shipped.

However, in terms of VAT compliance, you will only immediately need a VAT registration in the country where the goods are shipped from. Having said that, if your sales to customers around the EU increases, you will also need to consider the Distance Selling thresholds. if the net sales (excluding VAT) to customers in other EU countries breaches the states threshold (usually €35,000), you will then also need to register in that country.

VATGlobal has developed a customised service solution for FBA sellers, including sales data extraction from the Amazon sellers' portal, information packs and a dedicated account manager who is an expert in VAT and selling via Amazon.

Contact us today to speak to one of our experienced advisors.

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