Planning for Amazon’s Pan European ProgrammeJuly 2, 2018 in Amazon, Ecommerce Tips, European VAT, VAT
According to the Amazon user study in 2018, 85% of Prime shoppers visit Amazon at least once a week. As of 2018, Amazon has over 100 million Prime subscribers across the globe providing an enticing proposition for online sellers looking to grow their business.
Sellers signed up to Fulfilment By Amazon (FBA) benefit from the ability to promote their goods to Prime customers thus providing fast and efficient delivery for shoppers.
The Pan EU programme has become a go-to option for online sellers looking to grow their presence in Europe.
What is the Pan-European FBA?
Amazon’s PAN EU is a solid option for those looking to expand into new markets. Fulfilment by Amazon allows you access to European clients by storing your goods in fulfilment centres across Europe. This makes your products eligible for Prime which is likely to make your product more likely to sell.
Which Countries does it apply to?
Currently, the PAN EU fulfilment centres are in the following countries:
The most important thing you need to know is that when you join the PAN EU programme is that you will be holding stock in another country and must register for VAT in each country. You are liable as soon as your goods are moved into each country.
This means registering for VAT in seven countries and filing, submitting VAT returns according to the frequency of the country.
It is key to remember that the movement of goods automatically creates a taxable supply within the EU
Depending on whether you are a non-EU based business or an EU based business there are slightly different VAT rules that may apply.
Situation 1) When your business is based outside of the European Union:
- If you are keeping your stock in the US and selling into Europe you must decide who is paying the import VAT, is it you or your customer?
- If you choose to pay the import fee – then voluntarily VAT register in that country and you can claim the import VAT back.
Situation 2) If you are keeping your stock in Europe and selling to Europe.
- Then you will need to register for VAT in the country where your stock is held and follow the distance selling rules,
- You will then need to add the applicable VAT rate to your products.
- The other option is to register your business in an EU country and then you won’t need to register for VAT until you hit the threshold in the respective country.
- As a NON-EU Seller, you may need Fiscal Representation in France, Italy and Poland. If your business is registered in Europe the need for Fiscal Representation is negated.
Don’t panic! If you are already signed up for the PAN-EU programme, we can backdate your returns.
What happens if I don’t register?
– Amazon may suspend your account
– You may face an Audit by HMRC or any other tax authority
– You may face fines and backdated payments which could wipe out your business
Prepare for PAN EU
Registering for VAT in multiple countries takes time. The process can take anywhere from 2-12 weeks to receive the registration.
You are responsible not Amazon for being compliant when it comes to VAT
You will then need to create ASIN’s for all your products.
Ensure you factor in the cost of compliance in your margins. When you move your stock into a different country you need to consider complying with that countries specific VAT rate.
Life after registering for VAT
Before you get your VAT number you cannot charge or show VAT on your invoices.
-You will have to pay the tax authorities from the VAT registration (effective) date and file VAT returns from the registration date
-Increase your prices to accommodate the VAT
-Paying your VAT in other countries
-You will save money by using a payment solution such as Payoneer or World First allowing you to pay your VAT in the local currency. This is often cheaper than Amazon.
Paying your VAT
It can be very difficult to get a European bank account unless you are a resident there. I would suggest using a service such as World First or Payoneer to ensure you don’t pay the high fees Amazon charges for currency exchange.
- Ensure you budget for currency fluctuations
Not ready for the PAN-EU – there are other options!
If you just want to test out a few countries before activating Amazons Pan European FBA programme then I would suggest Amazons Multi-Country Inventory (MCI) feature – where you can select between 5 countries where you want your stock to be held.
-This will be a much lower cost option and allow you to test the market and see where your products sell well.
The EFN allows merchants to sell from one country within the European Union in all other EU countries.
e.g Holding stock in the UK and selling in other countries such as Germany. When you use the EFN you are only required to VAT register in the country you are selling from until you have hit the distance selling thresholds of the country you are selling into.
-VAT and EORI registration
-Preparation and filing of VAT returns
-Issuing timely reminders of payments
-Monitoring and managing your distance selling thresholds
-Source of knowledge for key e-commerce solutions
-Provide you with a dedicated account manager who can support you with all your needs
Are you considering Amazons Pan-EU programme or looking to expand your e-commerce business? Get in touch today!