Amazon PAN EU - Sales: Mastering tax hurdles

Those who have successfully placed their Amazon products on the e-commerce platform and generate stable sales in Germany often face the next step: expansion to European marketplaces, so-called PAN EU sales. Although the high sales potential of the EU-wide sales space may seem tempting at first glance, hurdles in terms of tax guidelines must also be considered in order to avoid serious mistakes when entering the market. We have summarised for you which different models there are for selling goods across Europe and which tax hurdles a seller should consider in advance.

What do Amazon PAN EU sales mean?

Amazon offers a pan-European shipping program (PAN EU) for Amazon sellers who want to sell their goods outside of Germany. If a seller participates in this program, he allows Amazon to store his goods in the following seven countries and to deliver them from there to customers in the corresponding countries: Spain, (Germany), Italy, France, Czech Republic, Poland and Great Britain. Essentially, this has three advantages for the seller: 

1. By storing the products in the destination country, Prime shipping can be used and customers will receive their products faster. 
2. Since PAN EU only charges national shipping costs, the profit margin for the seller increases. 
3. The entire European stock can be clearly displayed in the seller's central office instead of several individual stock displays.

The PAN EU function can be activated within the Amazon seller centre in the settings. However, anyone who activates the function must be aware that as soon as the box in the seller centre is ticked and thus Europe-wide shipping is activated, Amazon will start storing the goods throughout Europe. Therefore, the seller should be aware of all consequences before activating.

Other ways of selling goods across Europe

1. European Fulfillment Network (EFN)
2. Central Europe Programme

The difference between Amazon PAN EU and EFN

If you want to sell goods across Europe, you can also use Amazon's European Fulfillment Network (EFN) in addition to the PAN EU function. Just as with PAN EU sales, sellers only have one stock for the whole of Europe with EFN. The difference between the two programs is the storage location. While with PAN EU the goods are stored in the country of sale and shipped from there, with the EFN model the goods are shipped from the country of origin to the end customer. This means on the one hand a longer shipping time for the customer and on the other hand higher shipping costs for the seller.

The difference between Amazon PAN EU and Central Europe Programme

If you use the Amazon service "Central Europe Programme", the goods are stored in the shipping centres in Germany, the Czech Republic and Poland. The use of the Central Europe Programme is recommended from the sale of 500 units per month. Due to the storage in 3 shipping centers (PAN EU 7 shipping centers), the advantage of lower shipping costs is also effective here.

Pan-European shipping: overcoming tax hurdles

VAT registration at all storage locations

Anyone who stores goods in a European country becomes liable to VAT. Who therefore once the PAN EU function has activated in his seller account, becomes liable to VAT for the entire calendar year in each country where goods are stored - from the first day of storage. Therefore, it is imperative that sellers using pan-European shipping take care of a VAT number and, if necessary, other (country-specific) tax numbers in good time (4-8 weeks lead time) - for all of the seven countries mentioned above. Registration is very easy in some of these countries, such as the UK. However, in some countries, such as the Czech Republic and Poland, the necessary personal and business documents must be translated and notarized. In Spain, in addition to the VAT number, a normal tax number must also be applied for separately. Depending on the country, the effort as well as the time required to receive all the necessary documents varies (4-8 weeks). Just as with the PAN EU function, a seller is also required for the Central Europe Programme subject to turnover tax. A VAT number must be applied for in both the Czech Republic and Poland, and advance turnover declarations and Intrastat declarations (intra-Community trade statistics declarations) must be made on a continuous basis. 
If the EFN model on the other hand, goods are not stored in the destination country but in the country of origin and shipped from there to the destination country as soon as a customer orders a product. The aforementioned tax obligations in other EU countries are then not relevant. 

Amount and deduction of turnover tax

While the aim of VAT within the EU is to make intra-European trade as fair as possible and to simplify tax payments within the EU, the tax rules as well as regulations vary from country to country. For example, each Member State has its own VAT rates - The standard VAT rate is at least 15% and the reduced VAT rate is at least 5%. So if you store goods in an EU member state because, for example, using Amazon PAN EU or Central Europe Programme Goods sold, must file advance sales tax returns in all countries where goods are stored and pay sales tax at the applicable rate. Only in the case of EFN model VAT only has to be paid in the country of origin due to the central storage location.

Conclusion

Even if pan-European sales models are at first glance associated with some hurdles in terms of tax guidelines, pan-European sales are worthwhile for most sellers as soon as they generate stable domestic sales (over 500 units per month). In most cases, the additional time required is made up for by increased order volumes and profits can be sustainably increased. Nevertheless, the tax tasks should be taken seriously and changes in the tax law should always be closely monitored in order to avoid any serious mistakes. Those who feel unsure themselves can outsource various processes to third-party service providers. SPACEGOATS for example, helps sellers to expand on all European marketplaces. This reduces the seller's workload and avoids errors.