Following the European Union's tax reforms, Amazon sellers continue to grapple with complex VAT compliance requirements. A common misconception is that registering for VAT in the country where inventory is stored fulfills all obligations. However, for sellers enrolled in Amazon's Pan-European FBA program, the reality is far more complicated.
The program allows Amazon to automatically redistribute inventory across FBA warehouses based on logistics needs, potentially transferring goods to EU countries including Slovakia. Once sales or transfer reports indicate inventory has arrived in Slovakia, sellers become obligated to register for a VAT number in that country. This significantly increases the tax burden and compliance complexity for Pan-European program participants.
Key Impacts of the EU Tax Reform on Sellers
First, sellers are only required to register for VAT in countries where inventory is physically stored. For example, if goods remain exclusively in Germany, only a German VAT registration is necessary. However, the automatic redistribution feature of the Pan-European program disrupts this simplified approach.
Second, for B2C orders shipped to the EU with a value of £150 or less, Amazon now collects and remits VAT on behalf of sellers. These sellers must provide IOSS information to enable EU customs to identify shipments where VAT has already been paid, preventing double taxation. This measure aims to streamline cross-border transactions for low-value goods.
Finally, orders shipped directly from outside the EU to France with a value exceeding €150 face sales restrictions. However, goods already within the EU - whether sold via FBA or FBM - remain exempt from this limitation. This highlights the strategic advantage of maintaining inventory within EU borders to circumvent certain trade barriers.
Navigating Compliance Requirements
For Amazon sellers, understanding and adhering to post-reform EU regulations is critical. Those participating in the Pan-European program must particularly monitor inventory movements and promptly register for VAT in relevant countries to avoid tax risks and compliance issues.
Regular review of sales and transfer reports helps identify potential tax obligations early. Professional tax advisory services can provide valuable support in navigating the complex EU tax environment, ensuring business operations remain fully compliant.