US Expansion to EU: Your Amazon EU VAT Compliance Guide

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12 September, 2022
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4 minute read
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For US sellers, expanding into the EU and UK may seem complex and unattainable. International businesses have faced tricky hurdles since Brexit and the EU VAT refresh. With Amazon Europe however, you don’t need to worry. Amazon's European Fulfilment Programs can help you reach EU customers with ease.

Understanding EU VAT compliance is essential if you're looking to expand your brand's network of services from the US to the EU. We know it’s complicated (and a bit boring), but EU VAT compliance is key when expanding into the EU. If done incorrectly you could land yourself a hefty fine and no one wants that. Plus, we love VAT, so you don’t have to! So, we’ll go over all the bits you need to know when using Amazon Europe as a US-based business. 

Importing stock

When using Amazon in the UK and EU, you will most likely be importing stock to hold in their warehouses. This way, your product can be nearer customers, improving shipping times and customer satisfaction.

Importing into the EU

If you’re importing stock into the EU to be closer to customers or have opted into Amazon’s FBA program, you will trigger a VAT registration obligation. 

If you are using a 3PL external from Amazon to hold your stock, you will need to VAT register in this EU country. With this, you can collect and account for VAT in this country. To sell cross-border from a single warehouse, you need to register in each EU country where you have customers. This could mean a lot of VAT registrations. 

The 2021 EU VAT changes introduced the One Stop Shop (OSS) scheme. OSS minimises the administrative burden many registrations can cause. If you sell through your own website rather than a marketplace, through OSS you can register in one EU country - typically where you hold stock. You can then account for the VAT due on intra-EU sales of goods this way. 

Or, if you want to use Amazon FBA, you’ll still need to VAT register where you hold stock. Amazon FBA enables users to hold stock in any of their EU Member State warehouses. Amazon FBA optimises your reach, placing your products in warehouses nearest your customers. To use FBA, you will need to register in all EU Member States where Amazon has warehouses before selling.

Our team at SimplyVAT.com can help you register in each FBA country. Our VAT experts can guide you on your VAT compliance journey, no matter how you choose to sell. 

Importing in the UK

Importing goods into the UK to be sold through Amazon is a lot like the EU. If you hold stock in the UK, you need to VAT register in the UK. If you want to sell to UK customers through FBA, you will need to register for VAT and hold goods in Amazon’s UK warehouse. To sell to EU customers you will need to use Amazon’s EFN or multi-country inventory to do so.

You could keep your UK VAT registration to reclaim import VAT on your VAT return. This is despite Amazon's obligation to collect VAT from your customers. You will still need to record these sales on your VAT return. When selling products on Amazon, the marketplace 'purchases' the goods from you, exempt from VAT. The marketplace is then considered as the seller and will collect and remit the VAT to the UK tax authorities. 

Getting an EORI number

If you’re ready to start importing goods into the UK or EU, you’ll now need to understand EORI numbers. If you are importing into the EU or UK, you need an Economic Operator Registration and Identification Number (EORI). This number is used to identify your business as an importer and allows you to reclaim your import VAT. 

You only need one EORI number to import into the European Union and a separate GB EORI number to import into the UK.

At SimplyVAT.com we are offering EORI registrations at a one-off fee of £100. Or, if you aren’t sure whether you need an EORI registration as a US business, get in touch with us and we can discuss this with you. 

Marketplace VAT collection

Since the EU VAT changes, marketplaces have been given more compliance responsibility. Now Amazon is required to charge and account for VAT in certain circumstances. This can be beneficial if you’re a small Amazon seller starting out. The scenarios where Amazon becomes liable to collect and report VAT are as follows:  

  • When non-EU sellers make distance sales of imported goods in consignments of EUR 150 or less.
  • When non-EU sellers make sales to EU customers from stock held within the EU, irrespective of consignment value.

Note that by holding stock in an EU country you will need to register for VAT in the country where your stock is held.  

The rules in the UK are slightly different. After January 2021, marketplaces are responsible for charging and collecting VAT from sales to UK consumers in certain scenarios. This applies to goods imported in consignments with a value up to £135. So, if you: 

  • Sell to UK consumers on a marketplace
  • Your goods are outside the UK at the point of sale
  • Consignments are less than £135

The marketplace will be responsible for charging and collecting UK VAT from customers on your behalf.   

If the consignment value of your imported goods rises above £135, the responsibility to charge, collect and remit UK VAT will remain with you. 

Selling on a marketplace can be the simplest way to sell and build your brand across the pond. But have you considered if selling on your own website could be more beneficial? Setting up your own website can give your brand the space to flourish and make its own mark. Our team at SimplyVAT.com specialises in helping businesses stay compliant as they sell cross-border. So, no matter what sales channel you choose, we can help you stay compliant as you expand your US business in the EU. Get in touch with SimplyVAT.com today to get started.

If you need help launching or growing your business on Amazon in Europe, or looking at alternative channels to sell, eCommerce Nurse is there to support you. We provide a variety of services to eCommerce businesses from account management and advertising to marketing projects and consulting. If you want to find out more, let’s talk.

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