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, sell to Prime customers and it's easier to maintain the buy box. 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 want to 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. To store inventory at the Amazon warehouse facilities you are required to have a domestic VAT registration.
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.
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 seller you could opt-in for Amazon VAT calculations service, Amazon will calculate your gross price (incl. VAT) for you.
As an Amazon seller, you’re responsible for making sure that you’re complying with all the relevant VAT regulations. In most cases Amazon will also not let you sell on the Amazon Marketplace if you do not have the right VAT registrations in place.
Setting up for VAT on Amazon
Before you start selling on Amazon, you’ll need to:
- Identify in which country you like to store your goods
- 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 VAT return
- Clarify VAT from incoming invoices for input tax deduction
If you’re selling in multiple European countries, you’ll need to:
- Use the EU OSS portal
- Register for VAT in each country where your business meets the criteria
- if thresholds (new EU-wide threshold of EUR 10.000) are met
- Your business wants to store inventory in that country.
- Comply with local VAT regulations, that includes filing your local returns.
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
As a seller on Amazon, you’re responsible for making sure that you’re VAT compliant, even if you currently have a small turnover. If you don’t manage your VAT, you could face harsh penalties.
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.