The Pan-European FBA model offered by Amazon provides sellers with the opportunity to hold stock in Amazon fulfilment centers across Europe in order to meet customer demand as quickly as possible. With this multi-location inventory comes VAT considerations around the movement of the goods.
When goods are imported into an EU member state, sellers must generally register for VAT/EORI numbers in order to complete the required formalities. If goods are then sold locally, sales are shown on the local VAT return and the reporting is straightforward. Where the seller moves stock to another EU Amazon location, the movement must be reported as an intra-community dispatch on the local VAT return and EC sales list, and potentially on the intrastate filing too. VAT registration in the country of arrival will also be required to account for acquisition tax (which can be recovered as input tax).
Once in-country, sales to local customers are shown on the VAT return (again, straightforward reporting). Sales to customers in nearby EU countries are also declared locally until such a time that the distance selling threshold is passed (€35,000 or €100,000), at which time registration in the member state of the customer is required. Further intrastat declarations may also be necessary depending on the value of goods arriving.
Caution must be exercised however. Whilst sales to customers in certain locations are expected to be made from stock in a pre-determined location (i.e. stock in Germany to fulfil a sale to an Austrian customer), there may be instances where stock is sent from another Amazon location, other than Germany as stock is not available.
Sellers will need to closely monitor their sales and stock movement reports as such sales require reporting in the country from which the stock is dispatched. Such sales are subject to local VAT in the country of dispatch and once more, distance selling thresholds must be considered, as VAT in the customer’s location must be charged once passed. Again, there may also be intrastat declarations required.
As the digital economy continues to grow at a frantic pace, tax authorities are scrutinizing activities much more closely, and so full compliance is essential for sellers.
Action to take now:
- Review all stock locations, and how stock is moved
- Ensure this reconciles with previous declarations
- Consider any retrospective issues and regularize these
- Implement processes to ensure full compliance going forward, particularly for new markets
VATGlobal is an indirect taxation specialist firm Responsible for managing multi-jurisdictional VAT and GST registrations, compliance and reporting, with expertise and ability to assist on tax matters in all 28 European Union member states, as well as over 20 other jurisdictions around the world.
Please contact VATGlobal for a complementary assessment around your business and the VAT implications thereof.