How to get on Amazon in UK and EU?

Thinking about entering the European Amazon? If you are already selling on Amazon.com, then you should pay special attention to the differences between the American and European marketplaces, as not understanding the differences can lead to negative business impact and financial losses.

Today we will analyze in detail the features of EU legislation and the changes that have affected the UK that occurred after Brexit.

When importing goods into the UK and EU countries, it is necessary to pay import VAT for amazon vat services in the country of importation of goods, as well as duties depending on the category of goods.

Taxation is one of the main differences between the EU and the US

According to EU law, no duty will be charged when sending orders up to 150 euros directly to the buyer. In the UK the rules are similar up to 135 pounds.

Here are some useful links:

  • UK VAT law
  • EU VAT legislation

In order for a company to be able to claim a refund of import VAT in the country of importation of goods, the company must be registered for VAT in that country, and also have an EORI number (company identifier in export-import transactions) for the company – one in the UK when importing goods to Great Britain and only one in one of the EU countries where there is VAT registration, only 2 numbers.

When storing, moving or selling goods in multiple EU countries, you may need to register for VAT in multiple EU countries.

Amazon’s European Fulfillment Network (EFN) gives FBA sellers the unique ability to store inventory in one of FBA’s warehouses in the EU and sell in multiple European markets at once. With EFN, you have access to customers on all Amazon marketplaces (before Brexit, this list included the UK).

It works like this: Your product, which is located in one of the FBA warehouses (for example, in Germany), will be sent to a customer in another country. Order management from all 4 trading platforms can be done from one seller account on the German Amazon.

As for the UK, according to the national legislation of the country, residents can either voluntarily register for VAT UK regardless of turnover, or register when the registration threshold of 85,000 pounds is reached.

An important nuance: if the director of a British company is a non-resident, then the registration threshold is zero and the company must be registered for VAT UK from the start of trading.

If you store goods in one of the European countries, including the UK, you must be registered there as a VAT payer and fulfill your tax obligations.

When selling on Amazon Europe, the seller must independently include VAT in the selling price for the buyer.

In the US, sales tax is much more complex as it is applied at the state level and varies according to the laws of each state. The applicable tax rate will be the sum of the state and local rates of the state in which your order was delivered or from which it was fulfilled. We recently wrote in detail about Sales Tax (an analogue of the European VAT) in a series of articles on our blog.

Product labeling requirements

The tax is not the only significant difference between the European Amazon and the American one that you need to pay attention to when entering the EU market.

Amazon requires all products sold on their platform to comply with product labeling regulations in each country in which they are listed.

Labeling laws in the US are not as strict as those in the EU and it is important to comply with the labeling requirements. Keep this requirement in mind as you expand your business.

The EU has strict labeling laws, including restrictions on certain ingredients, font size, CE marking, and a range of other product standards for compliance purposes. We wrote about the labeling of goods for the EU market here >>

Competition

There are currently about 1.5 million active sellers on the Amazon marketplace in the EU and about 2.5 million active sellers in the US, which is much more competitive compared to EU marketplaces, especially since Europe and the US are similar in size.

Entering the US market at this stage of marketplace development can be much more difficult and take longer than in the EU.

Let’s look at the question: How does an Amazon seller choose an EU country for company registration and what are the nuances when using a company registered in the UK, one of the EU countries, or outside the EU and the UK?

Choosing a country to enter the European Amazon

Option 1. Registering a company in the UK

For trading in the UK – you need to obtain an EORI UK number (for deliveries of goods from outside the UK) and VAT registration in the UK. For the supply of goods (import) to the EU, one EORI number is also required in one of the EU countries where there is a VAT registration, i.e. You must have a VAT registration in the country of import of the goods.

Thus, it is necessary, possible and sufficient to have 2 EORI numbers. If goods are shipped to the UK from outside the country and to the EU from outside the EU, or sales are made in both the UK and the EU from a third country, then a UK EORI is required for customs clearance in the UK. For customs clearance of goods in the EU, you will need to obtain an EORI in one of the EU countries – in the country where sales are carried out.

It is also necessary to have at least 2 VAT numbers – in the UK (non-residents are registered from the first sale, residents – after reaching a trade turnover of 85,000 GBP) and in the EU country where the goods are imported and where, respectively, the goods are stored.

When using sales channels other than marketplaces (for example, own websites) and using a warehouse in one of the EU countries, it is necessary to register VAT numbers in each country where sales are carried out, or register in the OSS system, which is designed to report sales in countries where there are no goods are stored, but sales are made.

To register with OSS, you must have an OSS registration in a country where there is a VAT registration.

For a British company, the marketplace will act as a tax agent for B2C sales to buyers in the EU – the marketplace will collect and transfer VAT to the tax office of the buyer’s country at the appropriate rate. It is important that along with this, the seller is required to have the above VAT registrations in accordance with the laws of the UK and EU countries, as well as submit periodic reports.

Option 2. Registration of a company in one of the EU countries

For trading in the UK – you need to obtain an EORI number (for deliveries of goods (imports) from outside the UK) and VAT registration in the UK.

For the supply of goods (import) to the EU, one EORI number is also required in the EU country where the company is registered. It is also necessary to have a VAT registration in each country where the goods are stored.

When selling from a warehouse in one EU country to other EU countries, upon reaching the annual threshold of 10,000 euros, you must either register VAT in each country where sales are carried out, or register in the OSS system, which is designed to report sales in countries where goods are not stored but sales are ongoing.

To register with OSS, you must have an OSS registration in the company’s country of incorporation.

For a company registered in the EU, the marketplace will act as a tax agent for B2C sales to buyers in the UK – the marketplace will collect and transfer VAT to the UK tax office at a rate of 20%. It is important that along with this, the seller is required to register for VAT UK under UK law, as well as submit periodic reports, the same applies to registrations in EU countries where the marketplace will not act as a tax agent.

Option 3. Company registration outside the UK and the EU

For trading in the UK – you need to obtain an EORI UK number (for deliveries of goods from outside the UK) and VAT registration in the UK. For the supply of goods (import) to the EU, one EORI number is also required in one of the EU countries where there is a VAT registration, i.e. it is necessary to have a VAT registration in the country of import of the goods.

Thus, it is necessary, possible and sufficient to have 2 EORI numbers. If goods are shipped to the UK from outside the country and to the EU from outside the EU, or sales are made in both the UK and the EU from a third country, then a UK EORI is required for customs clearance in the UK. For customs clearance of goods in the EU, you will need to obtain an EORI in one of the EU countries – in the country where sales are carried out.

It is also necessary to have at least 2 VAT numbers – in the UK (non-residents are registered from the first sale) and in the EU country where the goods are imported and where the goods are respectively stored.

When using sales channels other than marketplaces (for example, own websites) and using a warehouse in one of the EU countries, it is necessary to register VAT numbers in each country where sales are carried out, or register in the OSS system, which is designed to report sales in countries, where goods are not stored, but sales are made. To register with OSS, you must have an OSS registration in a country where there is a VAT registration.

For a company that is registered outside the UK and the EU, the marketplace will act as a tax agent for B2C sales to buyers in the UK and the EU – the marketplace will collect and transfer VAT to the tax office of the buyer’s country at the appropriate rate. It is important that along with this, the seller is required to have the above VAT registrations in accordance with the laws of the UK and EU countries, as well as submit periodic reports.

Regardless of the country of registration of the company, when sending orders worth up to 150 euros to the EU countries or 135 pounds to the UK directly, the buyer-seller only needs to know the marketplace IOSS number – the registration number in the special import VAT declaration system for each country in which the buyer is located and indicate this number in declarations so that the marketplace independently collects and transfers tax to the tax service of the buyer’s country.

Finally

Selling on Amazon US and EU has its pros and cons, but both marketplaces will allow you to build a brand and take your business to the next level. With market research, thoughtful planning, and an understanding of implementation options, both marketplaces can help expand your reach and increase sales.

And if you need a company for sales in the EU market, VAT registration or tax support, you can always contact us first for advice (the form below), and then for services.

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