VAT on Amazon Seller Fees

VAT short for Value Added Tax is the consumption tax in Europe and other places.  For the sake of the article, VAT will be focusing on the Amazon marketplaces. The big question: do you pay for VAT on Amazon fees as an Amazon seller? The answer really depends on a few things.

Are you VAT registered?  If you are not VAT registered, Amazon does not have a VAT number in seller central, they will automatically charge you VAT because there is no way for them to do a reverse-charge. So once you are VAT registered, you want to get your VAT number inside Seller Central right away.

Amazon has multiple entities

Amazon has offices in Luxembourg, the United Kingdom amongst other places. If you are VAT registered, most of the seller fees are billed by Amazon’s office in Luxembourg.  If you are a UK based entity (LTD, sole trader, etc) that is VAT registered, you will not be charged VAT for these services.
Amazon does bill for sponsored ads (PPC) from their UK office, so you will be charged VAT on these sales.  Don’t worry though, you can claim those back on your VAT return.  Just make sure you remember to calculate for that or any other VAT you have been charged in order to deduct them.

From a UK business perspective

Here you can see some examples from the perspective of UK businesses where you are not being charged VAT.

Seller fees:

Amazon Global Logistics:

FBA fees

Where you are charged VAT

Amazon Ads

If you look at each of these fees posted. The only one this UK seller has been charged VAT for is the Amazon marketing services aka PPC.   To double check for your specific business just go to https://sellercentral.amazon.co.uk/tax/seller-fee-invoices.  Here you can click on each invoice Amazon has for what they billed you.  You will be able to see if any VAT has been charged for the respective service.

This should give you clarity on the VAT that is and isn't being charged for different Amazon fees for sellers.  To make sure you are calculating your VAT to file correctly, sign up for paneurovat for a free trial now.

What is NIE?

NIE, which is short for Numero de Identidad de Extranjero in Spanish which translates to foreign identity number. This is your personal tax number for Spain.  This allows you to do a variety of legal processes in Spain, but since our focus is on getting you or your company a VAT number we won’t discuss outside this scope. There are several steps in getting a VAT number for Spain, getting an NIE number is one step in the process. This is your guide on how to get your NIE inside Spain.

Why do I need an NIE number?

The Spanish process to get a VAT number to sell on Amazon was by far the most arduous out of any of the Pan-European countries.  Why do you need the NIE number? I can’t really say it makes any logical sense, but it is required in order to register for VAT in Spain and we jumped through the hoops to get ours.  Fortunately there are a few options to get it.

Getting you NIE in Spain

This might not make a lot of sense for the majority of people, but if you fancy a trip to Spain or you happen to be going there already,  you can get your NIE number in Spain.

The first obstacle, a lot of service providers book up the appointments to get the NIE number and it can be difficult to get in the big cities of Barcelona or Madrid.  Fortunately, you can travel to another city if there is an appointment available and you can reserve your appointment there.

Make your appointment

To make your appointment go to the Official Spanish Government Site. Once you are on the page, you will see “Cita previa de extranjería” or in English “appointments for foreigners”.  You can scroll down to the red button that says “Acceder al Procedimiento”.

Choose the province you want to make the appointment in and then click “Aceptar”.  There will be two drop down windows, the first one you can leave at the default.  The second one scroll down to “POLICIA-CERTIFCADOS Y ASIGNACION NIE” and then click “Aceptar”. I noticed in different provinces the exact selection for the NIE was worded differently.  If the province of choice doesn’t have the exact wording above, just look for NIE and maybe use google translate for the correct selection.
On the next page you will accept some terms, e.g. you aren’t in the country illegally.  You can translate and read through these.  Click “Entrar”.

On the next page.  You will choose how you will reserve your appointment.  Select “pasaporte” and enter your passport number.

Below you will enter your first and last name. And again click “Aceptar”. On the next page you will verify your name and passport number and then click “Soliticar Cita”.

There is a strong possibility there are no appointments available and you will have to try again later or you can try a different city. When there is an appointment available, you will be brought to another page where you need to enter a phone number, this will need to be a Spanish number so pick up a sim card before you complete this. Enter your email and the reason for the NIE appointment.  I simply put “para hacer negocios” - “to do business”. Which is the point you are getting the NIE and VAT number, to do business in Spain.

On the next page, choose your appointment location and then the time.  Some cities have more than one office, choose which office is most convenient or has availability.  Once you continue you will get to confirm your details and the appointment details and you are all ready to get your NIE.  Click “Confirmar”.

Arriving for your appointment

Once you have your appointment , you will go to the office of Immigration or CNP at the address in your confirmation like the one in the image above. The finer details might vary from office to office and city to city, but you just need to choose the one related to getting your NIE. You will show the security guard your appointment confirmation, walk through the metal detector and your personal items will go through the X-ray machine. You will have a ticket number and proceed to the desk once your number is called. Once you are at the desk with the government clerk, they will verify a few details about your application.  To note, it is unlikely the clerk will speak English, but it shouldn’t get too complicated to do it without much knowledge of Spanish. They will ask you for a local address, you can use your hotel or where you are staying.
Once the clerk does his/her required due diligence they will give you a paper with your code and you will go to a nearby bank/atm to make the payment.

Paying for your NIE

At the time of writing this the fee is 9.84.  When you make the payment at the ATM, you should keep the receipt and return back to the office.  Once I showed my proof of payment I got the NIE number on the spot.  They give you a printed version with your NIE on it.  Congratulations, you are one step closer to obtaining your Spanish VAT number. You can watch a step by step video as well here .

Amazon Fulfillment fees just went up again as of March 2023. You can check out the latest fees according to your products dimensions and weight here.

The fulfillment fees are different depending on where you store your goods.

Keep in mind since, Brexit being implemented in 2020 the UK is no longer part of the free movement of goods in the EU. So we will discuss fulfillment fees in the EU and come back to the UK later.

Pan Eu program

We have touched on this before, but just in case you aren’t aware, the Pan EU FBA program reduces your fulfillment fees across all EU Amazon territories and also keeps your products stored closer to your customer.

The benefits of this are reduced FBA fees and faster delivery times. The latter should help your conversion sell through rate since most customers want their products asap.

The disadvantage of the Pan EU program is you need to register for and file VAT returns for each territory you store goods in, which adds an administrative and financial burden to your operations.

But the savings you make on fulfillment fees when selling higher volumes more than makes up for this. Let's dive deeper.

CEE

Central Eastern European country fulfillment is when Amazon stores seller goods in Poland and Czechia.

The reason Amazon has FBA centers there, is to be able to fulfill orders at a lower cost across the border into Germany, the biggest EU market.

What are the benefits of being registered there to your bottom line?

If we look at the latest rate card below and focus on the standard parcel size, you can see it costs €0.26 per unit more if you opt out of using fulfillment from Czechia and Poland.

Time for some quick math to illustrate the additional costs you incur if you choose to only store goods for sale only in Germany and not leverage the Poland and Czechia fulfillment options:

sell 100 units monthly; 100 x €0.26=€26

sell 1000 units monthly; 100 x €0.26=€260

sell 5000 units in a monthly; 1000 x €0.26=€1300

As you can see, savings on fulfillment quickly add up when you use Czechia and Poland storage options, and dwarf the additional tax compliance costs. If you are just starting out however, you can consider just using Germany as your EU FBA base and expand as your sales increase.

Other sellers prefer to jump right in and get their VAT registrations for all territories. The choice is ultimately up to the seller. With each territory comes more compliance and cost, so you can factor that into your decision. You can keep those costs to a minimum using paneurovat.com as a VAT partner for your business.

The next thing to consider is the fees when you only have one EU VAT registration. Let’s use Germany in this case.

As we discussed above, if you only VAT register and store goods in Germany your fulfilment charges in Germany will be €0.26 more per unit than if you stored and fulfulled orders from Czechia or Poland. This isn’t huge, but can add up quickly. But that is if you only VAT register in Germany and only sell in Germany.

Cross-border fulfillment

When we look at cross-border fulfillment, the fees really get high. Let’s give you an example. If you are selling on the Italian marketplace but are not VAT registered there and the product will be coming from Germany the fee for a standard parcel weighing 900 grams or less will be €9.19. If the same product was being fulfilled from within Italy (for which you need to be VAT registered) the fee would be  €5.78. That’s a difference of €3.41. That is just the difference in selling one unit. If we multiply that by 100 we are talking about €341.

You can really see the benefit of being in the Pan EU program if you are scaling your business. If you are testing the other EU markets besides Germany, and you are getting traction it would be wise to get VAT registered and store the goods locally via the Pan EU program.

UK and Pan EU

Since Brexit, goods being bought from the UK are considered imports into the EU and vice-versa. Amazon is running a promotion until the end of March 31, 2023 to keep using EFN, but overall this isn’t ideal for fast shipping to a customer.

It is best to be VAT registered and directly import your products into the UK. This way your customers get the product quickly and you pay the lowest fulfillment fees offered to you.

The VAT registry and filing process can be intimidating, but it doesn’t have to be. With paneurovat.com you can calculate your VAT liability in seconds and we can guide you or handle your VAT returns pain free. Get in touch today so we can help you scale up your Amazon business.

When your products make it to their destination port in the EU and UK, you will get a bill to pay from your freight forwarder.  You will most likely be anxious to pay for the import taxes and get your goods where they need to be.  You will usually pay this amount at once.  Some freight forwarders won’t even break down the details of what you are paying for. Just noting that it is import taxes.  But the details are very important.

Duty

The duty is a percentage of the cost of the products you paid for and the freight cost, insurance and other fees.  So if you paid £3000 for the products, another £1000 for freight and insurance, that brings the total landing cost for duty to be calculated at £4000 pounds. If the rate of your product is 3%, you will pay £120 in duty on your goods.  The percentage will depend on your HS code.  The duty is final and will also be considered an expense in your accounting for your product.

VAT

VAT is short for Value Added Tax. The VAT of the import tax will be 20% on standard goods in the UK.  This varies from country to country.  You will pay VAT on the product cost, freight and insurance and the duty.  So using the same example above, you will pay 20% of £4120 for a VAT amount of £824.  The good news is, as long as you are VAT registered you can claim this back on your VAT return. Just remember when you are bookkeeping, that the import VAT will not be an expense since you will be claiming it back.

You can see the importance of not having these two mixed up or bundled together. Hopefully this clarifies the difference between VAT and duty and you are claiming back money that you are entitled to. Just don’t forget that the duty you paid will not be claimed back.

Import VAT

Import VAT is one type of input VAT.  This is the VAT that you paid for products or services.  For many Amazon sellers you will pay input VAT when you import goods into a country.  Often people will interchangeably call this import or input vat.  For example, you have £3000 of goods arriving into Felixstowe, UK from China.  This amount includes the freight cost from China and other fees.  You will pay 20% VAT on these goods. That is, unless you have deferred the VAT.

Typical types of Input VAT for Amazon sellers

Other forms of input vat are from products or services you have purchased.  If you purchased a printer and paid any VAT or for warehousing services and you have paid VAT. Pay close attention to your invoices from Amazon to see if you have veen paying any VAT on different fees.

Why is it important to know about input VAT?

It is important to keep a record of all input VAT because you can claim it back!  Without claiming it back, you are losing money and cutting your profits.

What happens if I forget to claim back the input VAT?

You can claim back any input VAT for up to four years after the date of the invoice.  In case you left out some vat claims, you still have time to claim it back.

What about VAT paid in other Pan European countries?

You will need to claim back the VAT for products and services in the respective country.  For example, if you import goods into Germany to sell in the EU, you will pay VAT on the import and you can claim it back on your monthly German VAT return.

Now that you know a little more about Input VAT, don’t forget to include it when calculating your VAT return with PanEuroVat.  When you are logged into your account you will see the two boxes to put in your input and import VAT amounts to make sure you get your refund.

The European Union created a One Stop Shop to pay for your VAT when selling products in the EU.  This was supposed to simplify the VAT reporting and payments for sellers.  Unfortunately it has made it more complicated for some of those who chose to sign up for OSS.

Amazon Pan European Program

Amazon FBA sellers who are selling in the Pan European program will be registered for VAT in Germany, France, Italy, Spain, United Kingdom and you can elect to store goods in Poland and Czechia (Czech Republic).  So you will have these 7 filing applications.  You can choose to not store goods in Poland or Czechia but you will pay €0.25 more per fulfilment fee.

Since you are storing goods in these countries you will have to file a vat return in the respective countries.  There is also the option to store goods in Sweden, which will add another VAT filing but might not be worthwhile given the size of the market.

Outside of these 7 countries, you may have filing obligations if you cross certain thresholds in other EU countries.  Since the latest law implentation, the thresholds are €10,000.  So once you sell €10,000 worth of products in the territory of Austria, you will need to register for VAT, make returns and payments to the Austrian government.  As you can see, if you keep surpassing thresholds in the each EU country this will get expensive and cumbersome. This is where the OSS was to come in and help.

Does the OSS simplify VAT filings?

Whether the OSS is making your VAT filings simpler or more complicated will depend on where you make most of your sales.  Most Amazon FBA sellers are not selling so much in other countries to cross the threshold. Since many EU countries don’t have their own Amazon marketplace, as in amazon (dot) and their country code.  Customers use a local alternative to Amazon or shop on an Amazon marketplace in another country. So in this case, the previous structure of filings will suffice.  If you start crossing more than one other EU country you are not vat registered in, you can consider the OSS filling option.

If I am registered for OSS do I still need to file in all of the PAN EU countries?

Registering for OSS doesn’t remove your filing obligations for the seven countries of the PAN EU. As long as you store goods in a country and sell those goods from the respective country, you will need to file a return for that country. You can read more about it here. So, you will just be adding an additional return if you opt in for OSS filing.  

The best thing you can do is monitor your sales and if you see you are closing in on the thresholds of the EU countries that you are not vat registered in, and decide whether to do it or not.

Which country do you register in for OSS?

If you are operating an entity in the EU, you will register for OSS in that country.  If you are not in the EU, then you can select the country that you do the most transactions and store your products in. Possibly Germany, but you can decide this.

Can I file VAT myself or do I need a tax professional?

Value Added Tax filings is expensive, especially for Amazon FBA sellers who are selling through the Pan European program. They can spend anywhere from a couple hundred pounds to £600 a month for VAT filings.  Many companies and individuals would love to cut down on some of these costs. So the question is, can I file the VAT return by myself. The answer depends on the country.

Filing VAT in the United Kingdom

Since you are reading this article, you are most likely able to understand English which makes filing in the United Kingdom easier already.  It is a relatively simple process where you can register yourself and make quarterly filing through Government Gateway.  So in the UK, it is entirely possible to do it yourself.

Vat Filing in Germany

If you are unfamiliar with the European language of the countries it can be difficult to navigate but if you can get over the language barrier with Google translate. You can register for VAT in Germany and also make your monthly VAT returns without the need of a representative on Elster , there German tax portal.

France

France also has an online portal where you will need to navigate in French to file your VAT returns. The caveat is, you need to be an EU or UK entity to make your own return in France.

Other EU countries

At the time of writing this article, Spain, Italy, Poland and Czechia, it is not possible to file the return yourself unless you have an entity in the respective country. This may change and we will update you on the process if and when it is possible.

As you cross sales thresholds in other EU countries, you will need to register and file returns there as well.  Unless you opt for the OSS, which you can read about here.

Now you know you can file your VAT returns in the UK, France and Germany.  For those who are registered for VAT in these countries, You can take control of your own VAT filings.

Calculate your vat filings

You will just need to be able to calculate the VAT for your Amazon sales.  Set up your account today at PanEuroVAT for your vat calculations and submit your VAT filing with ease.

Does Amazon collect and pay the VAT to the government on the seller's behalf?

Many countries are looking to make sure they are getting the tax revenue from e-commerce platforms. New laws have came into effect to enforce the VAT collection.  One of them being Amazon or other marketplaces will have to collect and remit the VAT on the seller’s behalf depending on their entity’s country of registration.  In the case of the European Union, all non EU entities will have their vat collected from sales and remitted by Amazon to the respective country’s tax department.

This is great, so I don’t need to make returns anymore in the EU?

Unfortunately, even though you might not owe anything to the tax authorities, you will still have to file a return as you did before. The VAT filing reports get complicated but it is mandatory in order for the it tracks the goods from one country to another so each country can get their share of the VAT.

What about the United Kingdom?

The UK has also implemented a similar policy. Amazon collects and remits the VAT on behalf of non UK entities.  So, if you are selling on Amazon in the UK with a foreign entity, Amazon will handle the vat payments to HMRC but you still need to file.

If Amazon is collecting and remitting the money to the government, why is my accountant saying I still owe money on my VAT return?

Even though you don't have any VAT payment to make for regular sales, you may still owe something if you have any B2B sales.  These will still be your responsibility.

Another scenario where you will have to make a payment is if you liquidate any unsold inventory or returns.  You will have a VAT liability for this.

Don’t forget to file as you are only hurting yourself

If you fail to file, you will accumulate penalties and have the tax authorities coming after you and nobody wants that.

Another potential scenario will be Amazon suspending your account for not being VAT compliant due to pressure from the tax authorities.

Refund for your Input VAT!

Lastly, to make sure you file is to claim back your input vat. If you paid any input VAT, you will get a refund to your bank account. So not only are you obeying the law, you are making sure you get back the money that is yours!

When do Amazon sellers need to file VAT in Europe?

There are two circumstances that would obligate you to file VAT in Europe as an Amazon seller assuming you do not have a company in the respective country.

The first circumstance would be if you store goods in the country.  If you plan to sell in the United Kingdom and you are selling with an American LLC or a German GmbH you will need to register for VAT before you send your products into the country.

The same goes for joining the Pan European program that Amazon offers. This essentially means each country you plan to use Amazon FBA for fulfillment you will have to register for VAT and file returns.

Currently, if you sign up for Pan EU, you will have to register in Germany, France, Italy, Spain, Poland and Czechia (Czech Republic).

These are the countries Amazon has FBA centers to distribute your goods to customers.

Can I sell in one country and not in the others?

Certainly, you can register for VAT in Germany and only select the German marketplace to sell your products.

Can I sell in other EU countries and not VAT register for them?

Yes, this is another option as you are testing out these different markets.  You can register and store your products in Germany but list your products on the French, Italian, Spanish, Dutch, Swedish, Polish and Belgian marketplaces. They will be sent out from Germany.

The downside to sending products from one country to another are the higher fulfillment fee and the longer shipping time.  Another thing you need to look out for is the VAT threshold.

What is a VAT threshold?

This is the amount you can sell in a country before you are obligated to register for VAT and file returns.  Just remember, once you store goods (at FBA) in the country, you must register for VAT.

What are these threshold amounts for distant sellers with another EU VAT registered country?

Since July 1,2021 the One Stop Shop has been implemented. The distance VAT thresholds have changed. Each country now has a €10,000 threshold.  If you go over that amount in the respective country, you are liable to pay VAT to the country.

Example, you made €11,200 Euro worth of sales to customers in Spain, you do not store goods there, but you will now need to file a Spanish VAT return.

Germany- €10,000

France- €10,000

Italy- €10,000

Spain- €10,000

Poland - €10,000

Czechia- €10,000

United Kingdom - It's essentially nil now since the UK left the EU. A different scenario applies for UK sole traders and LTDs.

Why is Czechia (Czech Republic) coming up when I am looking to join the Pan European Program?

Amazon fulfills orders from Czechia to primarily Germany.  The same situation with Poland, often sellers who are making a large amount of sales in Germany will register for VAT in both Poland and Czechia because you get a cheaper fulfillment rate.  

What is One Stop Shop?

We touched on this in more detail here. But you can avoid numerous additional filings with an OSS return if you will cross the €10,000 threshold.  Just remember, if you will store goods in the country, you will need to file in that country.

Should you register for VAT in a country even if you haven’t crossed the threshold?

This depends, but let’s say you are selling in Spain but the goods are being sent from Germany because you haven’t registered for VAT in Spain yet.  The FBA fees will be higher, so if you are making substantial sales it is in your best interest to register in Spain so Amazon can store your goods in Spain. This will cut FBA fees and get your customer’s order to them in a much faster time.

Looking to expand your business to Europe and need to get VAT registered. We can get you registered and from there you can file your own returns to save you money!

Imagine you could register for VAT and file your own VAT return in Germany. How much money could you save each year on tax compliance? Anywhere from €900-€1500 depending on the agent you use. The idea of filing your own VAT return might seem complicated. But It needn't be that way. This article is part 1 of 2 of your step by step guide to registering for and filing your own VAT return in Germany.

Key takeaways

In order to file a VAT return in Germany you first need:

• a German tax number (Steuernummer).
• to register for and obtain a VAT number (Umsatzsteuer-Identifikationsnummer). This can be done at the same time as applying for the tax number.
• Once you have these numbers you will be able to register for an online Elster account through which you can file your regular VAT return and if need be, EC Sales list as well.
• If you are importing goods into Germany from outside the EU you will also need an EORI (Economic Operator's Registration and Identification number). https://www.zoll.de/EN/Businesses/Movement-of-goods/Import/Duties-and-taxes/EORI-number/eori-number_node.html

How do I get a German tax number (Steuernummer)?

You can get a German tax number by submitting a Questionnaire for Tax Collection (Fragebogen zur steuerlichen Erfassung) to the Federal Central Tax Office.

Email the tax office and request they send you the most up to date Questionaaire for Tax Collection. There are numerous versions of the questionnaire. The version you need depends on the type of business entity you use to apply.

Which version of the Questionaaire for Tax Collection do I need?

The variations of the questionnaire and their intended user are as follow:

• Unternehmen aus dem Ausland (Companies from abroad) - For foreign legal forms such as the Ltd., BV, Inc., or Partnership
  * this is the version most readers will need to request
• Einzelunternehmen (Sole proprietorship) - for small German businesses (solo entrepreneurs), eK and freelancers
• Personengesellschaften (Partnerships) - for German businesses founded as a GbR , OHG or KG

Which tax office do I need to contact to apply?

The tax office you need to contact is specific to the territory of your company, domicile, registered office, or head office.

If you are using a UK Ltd company you need to contact Hannover Nord tax office. Email them: Poststelle@fa-h-no.niedersachsen.de

If you are using a US entity contact Bonn-Innerstadt tax office. Email them: Service@FA-5205.fin-nrw.de

For all other entities see our handy list of German tax offices to determine which office need to contact for your business.

What supporting documents are required?

In addition to the Fragebogen zur steuerlichen Erfassung you also need to send the tax office a copy of the following:

• Photo ID of all shareholders.
• 501/160 Einlageblatt zum Fragebogen zur steuerlichen Erfassung - 501/160 Insert sheet for the questionnaire for tax registration... This states what type of products you are selling, method of commerce, and who the end consumer is.
• Fragebogen zur umsatzsteuerlichen Registrierung von Onlinehändlern mit Sitz im Ausland - Questionnaire for the VAT registration of Online retailers based abroad.
• Einwilligung in den Versand unverschlüsselter E-Mails durch Finanzbehörden gemäß § 87a Abs. 1 Satz 3 Halbsatz 2 der Abgabenordnung (AO) - Consent to the sending of unencrypted e-mails by tax authorities in accordance with Section 87a Paragraph 1 Clause 3 Clause 2 of the Fiscal Code (AO)
• Articles of Association/incorporation of your company. It will need to be in English or German. You will need a certified translation if the original document is not in either language.
• Entry into the commercial register (where this exists).
• State the estimated turnover of the business in the year for which you are applying and in the year that will follow.
• The tax number issued to your company when you incorporated it in the home country.

How long will it take to receive the tax number and DE VAT number?

The tax number has the format 00/000/00000.

You will receive the tax number in the post within four weeks after your application is accepted by the tax office.

Note there is something called a Tax ID (Identifikationsnummer). It is different and not to be confused with the tax number (Steuernummer). The Tax ID is for people who are intending to work in Germany. This article is assuming you are operating a non-resident business making online sales in Germany. In this case it is a tax number (Steuernummer)