EU Fulfilment from the UK
Amazon’s recent opening up of their European Fulfilment Network (“EFN”) to allow fulfilment of EU orders from the UK has created new opportunities for sellers to sell into the EU without having to deal with the complexities of cross-border transactions and potential VAT registrations in the EU.
What is the difference between FBA and EFN?
Fulfilment by Amazon (“FBA”) enables sellers to store inventory in an Amazon fulfilment centre from where orders can be fulfilled in that country. The EFN opens this up so that orders can be fulfilled from any FBA location across the EU. Until recently this service was restricted to orders fulfilled within the EU, but now EU orders can be fulfilled from the UK.
Requirements of the EFN
To sell between the UK and the EU using EFN, you must have the following:
- Access to both the UK and EU Seller Central accounts
- FBA offers your products in both the UK and the EU
- Inventory for eligible offers stored in local fulfilment centres
- Shipping programmes and export settings enabled. For EU to UK fulfilment, all EU stores must be enabled for export
- Each EU account (if you have more than one) must be managed separately.
What are the advantages of using EFN to fulfil EU orders?
Using EFN enables selling across the EU without having to deal with the complexities of cross-border transactions. In addition, if you store inventory in any EU country this will trigger a requirement to register for VAT in that country. This is despite the marketplace rules that require Amazon to account for VAT on your behalf. That said you may want a VAT registration in at least one EU country if you import your goods into the EU in order to reclaim any VAT paid on import. But you could fulfil all EU orders from the UK with no EU VAT registrations. The EFN could allow you to access new markets whilst keeping compliance and administrative burdens low.
What are the disadvantages of using EFN to fulfill orders?
Fulfilling orders from a limited number of locations across the EU is inevitably more expensive than local fulfilment. EFN fees vary from a storage location to product type and size and weight of the parcel.
How does VAT work?
The marketplace rules dictate that Amazon must account for the VAT on sales up to a value of €150 or £135 for B2C sales. The exception to this would be orders fulfilled on borders on behalf of a business that is established within that territory. For example, a UK seller selling to UK customers would still require a UK VAT registration and would account for VAT on their Amazon sales. The same would apply to, for instance, a German business, fulfilling and selling within Germany – a German registration would be required. When Amazon account for VAT you should still account for this in your pricing.
For instance, a UK sale for £120, would include £20 of UK and you will therefore only receive £100 in your Amazon settlement. For orders over €150 or £135 and all B2B orders the customer is the importer on record and pays any relevant import duties and VAT. Amazon will collect an estimate of the VAT and duties from the customer at checkout and remit these amounts on behalf of the customer.
Essentially there is therefore no difference from the seller’s perspective because you will still receive £100 (using the same example).
Elver E-Commerce Accountants is an approved Amazon accounting service provider. If you would like to discuss how our Amazon accounting services can help you scale and improve your business, please give us a call on 01942 725419.