EU: How the EU VAT reform impacted Amazon pan-EU FBA sellers?

July 15, 2021

Amazon’s pan-European FBA program (also referred to as pan-EU FBA) allows you to sell goods on the different European Amazon marketplaces by storing your inventory closer to where your buyers are. Amazon distributes your inventory across their FBA (Fulfillment by Amazon) network in Europe, to inventory locations you authorize, to ship your products to customers faster. 

The past year has been very successful for eCommerce businesses, as demand was further fueled by the pandemic. However, the EU VAT reform, which came into effect on July 1, 2021, has a profound impact on eCommerce in the EU, and the pan-EU FBA program and sellers who use it are also affected. Let’s see how.

How are Amazon pan-EU FBA sellers affected by the EU VAT reform? 

There are a number of things that are changing with the EU VAT reform, and that affect Amazon sellers. 

Amazon is responsible for VAT for some non-EU sellers

Amazon needs tocollect and remit VAT on B2C transactions in the following two cases:

  • On items imported into the EU (i.e. stored outside of the EU at the time of sale), of a value of €150 or less.
  • On items sold by non-EU sellers, regardless of the inventory’s location (EU or non-EU), and of the items’ value. 

As you can see, the second case covers some pan-European FBA sellers who are not established in the EU. 

For Amazon pan-EU FBA sellers who are established outside of the EU and who don’t have a local EU presence, this means that Amazon needs to charge and remit VAT on their sales. This reduces some of your administrative burden, but you need to make sure you’re always providing accurate information to Amazon, and updating it whenever there are any changes—or you might risk being banned from the platform.

There’s an important caveat, though: having inventory in an EU country means that you need to have (or maintain) your VAT registration in that member state. So, for each country in which you’re using Amazon’s fulfillment centers (warehouses), you need a VAT registration. 

EU sellers who sell via the pan-EU FBA program can use the OSS system

EU sellers remain responsible for VAT on their cross-border EU sales, regardless of the order’s value. To declare and pay VAT on your B2C sales in the EU, you can use the OSS (One-Stop-Shop) system. The OSS system allows you to declare VAT in a single EU country (the country where you’re established), via a single quarterly VAT return.

Again, for the countries in which you have stock, you need to maintain your local VAT registration. 

Distance selling thresholds no longer apply 

Distance selling thresholds defined by each country no longer apply. Instead, there’s a pan-EU threshold of €10,000, which depends on where you’re located.

  • If you’re located in the EU

If your annual sales are under €10,000, you need to apply your local VAT rate. In this case, you don’t need to register for OSS and can simply declare VAT in your VAT return in your home country.

If your annual sales are over €10,000, you need to apply the VAT rate of your customers’ country, and either declare via the OSS system, or use local VAT registrations in each country. 

  • If you’re not located in the EU

All your B2C sales transactions are subject to VAT. In this case, Amazon is be responsible for charging and remitting VAT.

What about the IOSS scheme?

There’s another system similar to the OSS scheme, called IOSS, which you have probably heard about. IOSS (Import-One-Stop-Shop) is for items imported into the EU and that are of a value of less than €150. 

If you’re only selling through Amazon, you do not need to sign up for the IOSS system, though, even if you have stock outside of the EU. In that case, Amazon is the deemed supplier and is responsible for VAT. Pan-EU FBA sellers who only have stock in the EU aren’t concerned either.