Ella Walter
Amazon's Pan-European Fulfillment By Amazon (FBA) program allows sellers to expand their businesses by delivering their products to local fulfilment centres and warehouses at low costs. The program enables sellers to expand their reach by making their products eligible for Amazon Prime and accessible to customers across various Amazon European marketplaces. However, following Brexit, Amazon announced that Pan-European FBA inventory transfers between the UK and EU would cease, impacting the ability of UK sellers to utilize the program for cross-border inventory management. This has raised questions about the process for VAT registration, inventory planning, and stock transfers between the UK and EU.
| Characteristics | Values |
|---|---|
| Inventory transfers between UK and EU | Stopped as of January 1, 2021, due to Brexit |
| VAT registration | Required in all countries where Amazon ships goods |
| Inventory management | Recommended to maintain at least four weeks' worth of inventory to meet customer demands |
| ASIN eligibility | Can change; must be approved in all Amazon European marketplaces for selling limited items |
| Inventory distribution | Inventory is stored and distributed across EU fulfilment network in enabled countries |
| Inventory forecasting | Done separately for UK and EU |
| Cross-border fulfillment | Amazon does not transfer stock between EU and UK; separate shipment required |
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What You'll Learn
VAT registration obligations
If you are a UK seller selling in the UK, US, and EU countries like Germany, Italy, and France, you must register for VAT in each of these countries. This is because the PAN-EU program prior to Brexit allowed sellers to ship their goods to one Amazon FBA centre, usually in their local country. The goods would then be automatically distributed by Amazon to the 7 FBA warehouses located in Germany, Poland, the Czech Republic, France, Italy, Spain, and the UK. Due to this movement, it was considered that the seller who enrolled in the program was storing goods locally in each of these countries, which created a VAT obligation and the need to register for a VAT number in each of these countries.
VAT registration is triggered when you store goods in a country. Therefore, you should look to register in a country before you make your first taxable activity. If you are an online seller, you can register in one EU country for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers in the EU. The VAT threshold for distance sales for customers in the EU is EUR 10,000. Below this amount, telecommunications, broadcasting, and electronic services and distance sales of goods in the EU may be subject to VAT in the EU country where the taxable person is established.
If you are selling goods to a business and these goods are sent to another EU country, you do not charge VAT if the customer has a valid EU VAT number. If your customer does not have a valid EU VAT number, you should usually charge VAT on the sale at the rate applicable in your country. If you sell goods to an EU-VAT registered business operating in another EU country, you don't charge VAT on that sale. If the same product is sold to the final consumer within the EU, you may need to charge VAT at the rate applicable in their country.
If you are selling services to businesses based in another EU country, you do not usually need to charge your customers VAT. Your customers will pay VAT on the services received at the applicable rate in their country (using the reverse charge procedure). If you buy and receive goods or services for business purposes from another EU country, you must declare and pay VAT on the transaction as if you had sold the goods or services yourself, at the applicable rate in your country. You can usually deduct this amount later when you make your VAT declaration.
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Inventory management
One of the key benefits of the Pan-EU program is its ability to streamline inventory management across different European markets. Sellers can utilise Amazon's extensive logistics network to reach customers in Germany, France, Italy, Spain, and other European countries. This centralised system ensures that products are readily available to meet customer demand, improving overall efficiency.
To take advantage of the Pan-EU program, sellers need to create active FBA offers across all their Amazon European marketplaces. This can be done through the Pan-European FBA Manage Your Inventory page on the Amazon selling account. Each offer will be linked to the same inventory pool, making selling and managing inventory more accessible and efficient. It's important to note that ASINs enrolled in Pan-European FBA must follow specific guidelines to qualify for the program's benefits.
While the Pan-EU program simplifies inventory management, it's important to consider the impact of Brexit. As of January 1, 2021, due to Brexit, Pan-European FBA inventory transfers have stopped between the UK and EU. This change means that sellers will need to send inventory to fulfilment centres in both the UK and the EU to maintain stock levels. However, within the EU region, inventory transfers continue to support sales in Germany, France, Italy, and Spain.
To navigate this new dynamic, sellers can consider splitting their inventory between fulfilment centres in the UK and the EU. This approach ensures sufficient stock levels on both sides of the new customs border. Additionally, sellers should be prepared to provide additional information as part of customs declarations when shipping products across the UK-EU border.
In conclusion, Amazon's Pan-European program offers a streamlined approach to inventory management for UK sellers expanding into European markets. While Brexit has introduced some complexities, the program continues to support intra-EU inventory transfers and provides benefits such as centralised inventory management, expanded market reach, and potential cost savings. By leveraging the Pan-EU program and adapting to the post-Brexit landscape, sellers can effectively manage their inventory and capitalise on the opportunities presented by the European market.
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Amazon's role in stock transfers
Amazon provides a platform for sellers to sell their products in its stores and offers services like Fulfillment by Amazon (FBA) to help them manage their inventory and plan stock deliveries. Amazon also offers advertising services to sellers.
Sellers on Amazon have often sought clarity on stock transfers between the UK and the EU. Amazon does not transfer stock between the EU and the UK. The company does not own the products and would have to undertake a customs process, which can be complicated and time-consuming.
Amazon's Cross Border Fulfillment service allows sellers to fulfill their products across a border, for example, sending a product from the UK to a customer in the EU. However, this is a B2C process, and transferring stock between the UK and EU Amazon accounts would be a B2B customs process, which is more complex.
Amazon's lumping together of stock suggestions for the UK and Europe has caused confusion for some sellers regarding inventory management for Pan-EU stock. Amazon's "Restock Inventory" screen is used by sellers to plan their Amazon deliveries. However, sellers have expressed confusion about how to interpret sales data for different countries in Europe and make informed decisions about inventory forecasting.
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ASIN eligibility
To enrol in Amazon's Pan-European programme, ASIN eligibility is a key requirement. ASINs that are not mixed in one marketplace might be eligible for Pan-European FBA. However, ASIN eligibility is not set in stone and can change. To check the eligibility status of your products, you can refer to the Pan-European Eligible ASIN Report.
To ensure ASIN eligibility, you must meet specific criteria. Firstly, you must have a professional selling account on Amazon. Secondly, you must be registered for VAT in all countries where you have inventory. Lastly, you must meet Amazon's performance standards.
To enrol an eligible ASIN in the Pan-European FBA programme, you must register for VAT in seven countries and pay local fulfilment fees in all marketplaces. You will immediately trigger VAT liabilities in all these countries when you switch on PAN-EU.
To create an active FBA listing, you must have listings in all European stores required for Pan-European FBA inventory and register the Pan-European FBA ASIN. You can also have self-fulfilled offers and Pan-European FBA offers for the same items. However, you cannot have an FBA offer and a Pan-European FBA offer for the same items.
ASINs that are enrolled in FBA must be visible in all Amazon European marketplaces. FBA offerings for the same ASIN must be linked to the same inventory pool to qualify for the Pan-European FBA programme.
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The impact of Brexit
The UK's exit from the European Union, or Brexit, has had wide-ranging impacts on the country, from trade and the economy to higher education and agriculture.
One of the most significant effects of Brexit has been the reintroduction of barriers to trade between the UK and the EU, its largest trading partner. This has resulted in a considerable decline in the UK's trade performance, with goods trade being particularly affected. Smaller firms in manufacturing supply chains have struggled with new non-tariff barriers, and overall, the UK's 'trade intensity' (trade as a proportion of GDP) has fallen significantly.
Brexit has also impacted immigration, ending the free movement of people between the UK and the EU. Net immigration from the EU, which once peaked at over 200,000 a year, is now negative, restricting the labour supply. This has had a notable effect on the higher education sector, with a loss of students and academic staff from EU member states.
The UK economy has also felt the consequences of Brexit. While short-term macroeconomic forecasts immediately after the Brexit referendum were overly pessimistic, the consensus view is that Brexit has had a negative impact on the economy. The Office of Budget Responsibility estimates that Brexit will reduce productivity and GDP by about 4%, trade by about 15%, and investment, with a smaller impact on GDP losses stemming from lower net migration.
In addition, Brexit has had agricultural implications. The UK left the Common Fisheries Policy (CFP), which previously allowed all EU countries to fish within 12 nautical miles of the UK coast and set catch quotas. Farming unions warned that a "no-deal" Brexit would have severe impacts on farming, and the government has since committed to supporting farmers while enhancing the environment through initiatives like the Agriculture Bill.
Brexit has also had varying regional economic impacts, exacerbating inequality in the UK. Already struggling regions have been hardest hit, and a 2017 study predicted a significant negative impact on UK GDP per capita, with marginal positive impacts on wages in the low-skill service sector.
Despite these challenges, there may be opportunities for the UK to mitigate some of the negative consequences of Brexit. For example, joining the Pan-Euro-Mediterranean convention (PEM) could make it easier for the UK to trade with the 25 countries that are signatories, although the impact on exports may be limited as the share of ingredients in UK-made products sourced from PEM countries is relatively low.
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Frequently asked questions
Pan-European FBA is a fulfilment option provided by Amazon to various sellers using the FBA. It enables them to expand their businesses by delivering products to local fulfilment centres/warehouse locations at very low costs.
To enable the Pan-European program, you must first create international listings using the Build International Listings tool. Once you have created your international listings, you can enable the Pan-EU program from your account.
It is important to ensure that you maintain stock levels by having at least four weeks' worth of inventory to keep up with customer demands across Europe. You can view your inventory levels by going to the “Restock Inventory” option and clicking on the “Minimum Threshold Inventory” option.
VAT registration, regular returns, and payment are all required in the countries from which Amazon ships your goods. Registration is required in all Pan-European marketplaces. The seller must track and manage the volume of sales and the costs incurred due to reporting obligations in several countries.
No, Amazon will not transfer your stock between the EU and the UK. They would have to do a customs process for that, and they will not undertake such a burden.
