Fulfillment by Amazon (FBA) is a popular option for Amazon sellers. Firstly, Amazon handles all the logistics when you sell with FBA, from storage to shipping. Secondly, your FBA inventory qualifies for all types of perks! For example, you can use Amazon’s leading customer service and sell to Prime customers. However, it’s your responsibility to make sure you comply with international VAT regulations. So, let’s take a closer look at Amazon FBA & VAT.
VAT for Amazon FBA
If you sell with FBA, you’ll need to make sure you comply with Value Added Tax (VAT) requirements. This is key to protect your business from financial risk.
VAT is charged on all orders that Amazon sells within the European Union. The VAT rates depend on the local legislation in each European destination country.
If you sell your products in multiple European countries, you’ll need to:
- Register for VAT in each country
- Comply with local VAT regulations
Once you’re registered for VAT, you add the VAT amount to the price of the products you sell. You pass on this tax to the national tax authorities when you file your regular tax returns.
As an Amazon seller, you’re responsible for making sure that you’re complying with all the relevant VAT regulations.
Setting up for VAT on Amazon
Before you start selling on Amazon, you’ll need to:
- Register your company at your relevant tax office
Once you’ve started selling on Amazon, you’ll need to:
- Present your incoming and outgoing sales to the tax office
- Declare your sales tax
- Clarify VAT from incoming invoices for input tax deduction
If you’re selling in multiple European countries, you’ll need to:
- Register for VAT in each destination country
- Comply with local VAT regulations
Amazon FBA & VAT: what can you do with a VAT number?
Automate your Amazon invoicing: You can issue VAT invoices that you collect from your customers.
Claim money back: You can claim money back on your business expenses. You can also claim money back on import VAT. Import VAT is paid at the time that your goods are imported into the European Union.
File VAT tax returns: You can let the tax authorities know how much VAT you’ve collected. You can also claim any VAT credit that you’re due.
You can find more information in Amazon’s VAT Knowledge Center.
Low-fee inventory storage in Poland and the Czech Republic
If you want to benefit from the lowest FBA fees, it’s wise to store your products in Amazon’s warehouses in Poland and the Czech Republic.
In order to do this, you’ll need to:
- Register for VAT in Poland and the Czech Republic
- Submit VAT advance returns as needed
- Submit other taxation and product reports as required
Different countries, different distance sales thresholds
Each European country has its own VAT registration threshold. Once your sales reach this threshold, you need to register for and pay taxes abroad.
Even if you don’t reach the delivery country threshold, you’ll still pay taxes as usual in your country of origin.
Delivery thresholds refer to your annual net sales. This includes packaging costs and only applies to selling products to end customers. That means that your deliveries to companies in other European countries aren’t affected.
You can read more about Amazon’s VAT FAQs here.
Amazon VAT: tax office checks on goods and sales
As a seller on Amazon, you’re responsible for making sure that you’re VAT compliant. If you don’t manage your VAT, you could face harsh penalties.
You’ll need to comply with VAT regulations even if you currently have a small turnover.
As a result, you’ll need to submit proof that you’re VAT registered to Amazon (in Germany, with an F22 certificate; in the UK, with a VAT Certificate).
Sawa partners with hellotax, an all-in-one solution for VAT in e-commerce.
hellotax’s FBA tax software helps you or your accountant take care of all your FBA tax filings, fuss-free.
Got questions about your VAT compliance? Talk to the Sawa team.