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VAT Considerations for Selling on Amazon in Europe

Neil KokemullerNeil Kokemuller
July 27, 2018

Don’t overlook the significance of the European Value Added Tax (VAT) when selling on Amazon in Europe. Understanding the factors that impact your VAT helps eSellers make decisions that optimize profits.

The following is an introduction VAT and insights on strategies that impact your fees.

How Amazon Seller VAT is Calculated

VAT is a tax actually paid by consumers through sellers, which the sellers must then pay to European authorities. The first step in calculating VAT on a sale is to calculate the net price. VAT is derived from net price rather than the final selling price. Your net price equals production and shipping costs, plus Amazon fees and margin.

VAT percentages vary slightly by country. The UK VAT is 20 percent of the net price. For instance, a net price of €50 produces a VAT of €10. The consumer pays a total of €60, but the eSeller pays the €10 to the government.

Fulfillment by Amazon’s Influence on VAT

Amazon’s FBA program allows international sellers to easily manage inventory and distribution across five European Union marketplaces. With Pan-European FBA, you provide inventory to your local market fulfillment center, and Amazon uses smart technology to efficiently distribute goods throughout the EU. Taking these steps to reduce inventory management costs, also allows you to reduce the VAT amount.

Distance Selling Thresholds

Typically, when a company sells products to customers in foreign EU markets, it must collect local consumption taxes. However, EU VAT rules establish Distance Selling opportunities that may mitigate fees by allowing eSellers to collect taxes on home VAT rates of the seller. German eSellers for instance, which work with a 19 percent local VAT rate, can leverage Distance Selling with consumers in the UK and other markets that have a 20 percent rate.

There are certain thresholds sellers must meet to qualify for Distance Selling. These annual revenue thresholds are established independently by each EU member country. Germany and the Netherlands have minimum thresholds set at €100,000. However, several countries have lower minimums of €35,000,  including Greece, Spain, France, Italy and Austria.

Using a Fiscal Representative

Even with a basic understanding of VAT, FBA and Distance Selling, there are barriers to direct VAT registrations in a lot of EU countries. In some cases, tax offices (including France and Spain) are reluctant to provide compliance requirements and reporting procedures in non-domestic languages. Poland and Bulgaria are also among countries that require foreign sellers to formally appoint a local tax agent.

These challenges speak to the important benefits of appointing a fiscal representative. These advantages include:

  • Local representation from someone familiar with VAT and various registration requirements
  • Meeting registration requirements for those countries that require a local agent
  • Elimination of the requirement to immediately pay VAT at customers upon import of goods
  • Simpler, faster and less stressful submission of VAT documents and processing of payments


Amazon is working hard to make selling processes and costs as optimal as possible for eSellers in the European Union. Doing so boosts the activity on the company’s international marketplace. However, it is up to providers to recognize the implications of VAT and to take steps to manage VAT in EU countries.

For further profit optimization, utilize Payoneer’s effective and affordable online payment services!

Learn how Payoneer helps you sell anywhere in the world!

The content provided in this article including any information relating to pricing, fees, and other charges is accurate and valid only as of the date it was published. In addition, changes in applicable regulations, policies, market conditions, or other relevant factors may impact the accuracy of the mentioned pricing and fees and other associated details. Accordingly, it is further clarified that any information regarding pricing, fees and other charges is subject to changes, and it is your responsibility to ensure you are viewing the most up to date content applicable to you. Payoneer will provide the most up to date and accurate information relating to pricing and fees as part of the account registration process. Registered customers can view this information via their online account.

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