Fulfilment by Amazon, more commonly known as Amazon FBA, enables sellers to store their goods in Amazon fulfilment centres. When a sale is made via the platform, Amazon then packs those goods and ships them to customers. In other words, it’s a complete supply chain solution for e-commerce retailers who sell through Amazon.
From a sales and logistics perspective, Fulfilment By Amazon is simple and convenient. It’s no wonder that many retailers, especially smaller sellers, rely on the service to ensure timely and efficient delivery.
Simple supply chain, complex VAT
However, given the number of moving parts, you won’t be surprised to hear that using FBA entails some fairly subtle and potentially complex VAT issues. That’s because, broadly speaking, FBA involves two quite different aspects to which VAT is relevant.
First, there is the actual sale of goods. Distance selling in the EU is generally subject to VAT, under specified conditions. In this case, as you are selling through an online marketplace (i.e. Amazon) there are additional regulations governing precisely who is responsible for managing that VAT. In some cases, the seller must charge and account for the applicable VAT. In other cases, the platform itself is responsible for the VAT.
Second, the Amazon FBA service involves storing your goods in several Amazon fulfilment centres. That raises immediate VAT implications, even before you make your first sale. Specifically, you will be obliged to register for VAT in each country in which your goods are stored (currently there are FBA fulfillment centres in six EU member countries).
What does this mean in practice?
Practically speaking, if you use Fulfilment by Amazon you will invariably need to register for VAT in multiple countries. That’s because of the requirement to register for VAT in the locations in which your goods are stored (i.e. where the FBA fulfilment centres are located).
Once registered, you will be obliged to file regular VAT returns in each country in which you are registered. Note that the precise filing requirements and deadlines will vary from country to country.
What about VAT on sales?
New EU regulations take effect from 1 July 2021 that have far-reaching consequences for distance selling.
In some cases, the online platform itself will be responsible for collecting and accounting for VAT. There are two conditions under which the VAT liability falls on the online marketplace (OMP) itself. First, when the seller is not established in the EU and sells to customers in the EU via the OMP.
And second, in cases where goods valued at under €150 are sold through the OMP and are shipped from outside the EU to customers in the EU (i.e. the goods were outside the EU at the point that the sale was made via the online marketplace). Note that if your goods are dispatched from a European FBA fulfillment centre, then this condition will obviously not be met.
In other cases, the seller will be required to account for VAT themselves.
Keeping VAT simple when using Amazon FBA
Using a supply chain solution like Amazon FBA clearly has considerable benefits for e-commerce sellers. Notably, it’s a simple solution to the complexities of multinational distance selling. However, that very simplicity creates another potential layer of complexity: the challenge of cross-border VAT compliance.
Vatglobal’s one-stop VAT compliance solution makes global VAT compliance simple, no matter how complex your VAT obligations are. As VAT specialists, we have developed proprietary tools and skills to you’re always 100% VAT compliant, as simply and efficiently as possible.
Want to know more about VAT and Amazon? Read this Ultimate Guide to VAT as an Amazon Seller.