here’s no question that educating yourself about how Value Added Tax (VAT) works is probably the least exciting aspect of setting up your private label on Amazon EU.
As dry as it may be, it’s important to know how to get registered and what you can expect to pay on each product you sell as this will ultimately affect your profit margin.
That’s why we’ve decided to simplify the information you should know in this handy guide.
If you’re just getting started in Europe, you’ve probably read about a few different Amazon fulfillment options. They are:
European Fulfillment Network(EFN)
The option you select will affect how you set up VAT.
Not only will starting with EFN save you time, but you’ll only need to register for one VAT number and start selling much faster than you would with the other options. In the UK, you’ll also only have to worry about submitting returns every 3 months, rather than monthly in many EU countries.
Pan-European FBA is an option to think about once you’re already hitting distance thresholds and have a particularly high demand in some areas, but this would entail applying to at least 7 different VAT numbers. So, for right now, let’s assume you’ll start with EFN.
In most cases, VAT applications will be in the local language of the country in which you’re registering to avoid any miscommunication, so this is another reason why starting in the UK will be faster for most sellers outside of the EU.
The good news about selling on Amazon EU is that you don’t need to set up a UK company to register for a VAT number.
Furthermore, it will actually be easier and cheaper for you to keep your status as a non-EU seller because you’ll only be responsible for paying taxes in your home country, which will most likely be cheaper than European corporate taxes.
You can register for your VAT number on your own or hire a Fiscal Representative such as an accountant or FBA service like VAT Global to do all the work for you.
Visit HERE to find links to apply for your VAT number.
Documents you may need submit:
– Proof of tax registration or VAT in your business’ home country
– An original copy of the Certificate of Incorporation for your company
– A copy of your company’s Articles of Association
– An official document proving the legal existence of your company
(possibly) Contracts or invoices to show proof on the planned trade
– A Letter of Authority or Power of Attorney if you have appointed a local tax agent or Fiscal Representative
– Personal Identification
If you register for a VAT number in other countries, some may have different documentation requests. For example, if you register for a VAT in Spain, you will be required to prove f that your company isn’t established in Spain, and have your documents notarized..
It typically takes 2 – 8 weeks to receive your VAT number.
Once you have registered and your VAT number from the country where your inventory will be shipped (let’s say, the U.K., where the current VAT rate stands at 20%), you do not have to set up a VAT number for countries where you’re sending your products to customers just yet.
Only once you surpass an annual thresholds in a particular company will you need to register for a separate VAT number for that country.
So, for example – if you’ve selected your home base country via EFN (where you’ll store your inventory) as the the UK, you’ll only need to apply for a VAT number in the UK.
If you sell your product to a customer in France, you’ll only need to pay the UK VAT, not the French VAT (unless you surpass the €35,000 per annum threshold in France).
VAT is paid by your customers at the applicable rate on the total sales price. As a VAT-registered seller, you are essentially collecting this VAT on behalf of HMRC (HM Revenue & Customs). You must declare this VAT quarterly returns.
As a non-EU Seller, you’ll also need to apply for and obtain your Economic Operator Registration and Identification Number (EORI). You will need this number each time you deal with customs, as it is required on all pre-arrival goods entering Europe.
To apply, you’ll need to fill in the EORI online application and submit it to HMRC. If you applied for VAT online there is a simple tick-box in the application process to also apply for your EROI number. Otherwise, just follow the link below to start the process.
· For your VAT number go HERE :
Applications can take up to 3 working days to process. After you obtain your number, you can use it 24 hours after receiving your notification from HMRC.