The Complete guide to European VAT threshold for Amazon Sellers
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!
