Amazon PAN EU: What should be considered at Value Added Tax ?

With Amazon PAN-EU, traders of all sizes can open up a market of many hundreds of millions of inhabitants with shipping in the respective EU country at the push of a button. In addition to the advantages of PAN-EU, sellers should also be aware of the various Value Added Tax obligations at home and abroad.
  • Dr. Moritz Lukas

    Dr. Moritz Lukas

    Moritz is Vice President Sales and authorised signatory at Taxdoo. He studied business administration in Münster and Bergen, specialising in taxation and auditing, and earned his doctorate in Hamburg.

    More Posts from Dr. Moritz Lukas.

    Dr. Moritz Lukas

Dr. Moritz Lukas

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Amazon PAN EU: What should be considered at Value Added Tax ?

Sooner or later, almost every Amazon seller is confronted with the question of whether to activate “pan-European shipping” (PAN-EU for short) in Seller Central. The main idea behind this is that your stock is closer to your customers by storing it in other EU countries.

Behind the PAN-EU programme is a high-tech cross-border logistics structure that is spread across numerous other EU states besides Germany.

While many sellers will push this plan on their own initiative after successfully launching their Amazon business, in many cases it is Amazon itself that actively approaches sellers and encourages them to participate in the Pan-EU programme.

The benefits of the PAN-EU programme appear attractive:

  • Reduction of shipping costs
  • shortened delivery times
  • the marking of products with the Prime logo on the respective marketplace
  • better rankings in the Amazon product listings through the Prime logo

Until recently, this was the “PAN-EU 6” programme, which could be activated with a single tick in Seller Central. Here, storage in Amazon’s FBA warehouses in all the following countries was activated by default (FBA= Fulfillment by Amazon):

  • Italy
  • France
  • Spain
  • Great Britain
  • Poland
  • Czech

New 2021: PAN-EU storage countries now individually selectable

Amazon has most recently (summer 2021) made two significant changes to the PAN-EU settings:

  1. The individual countries can be selected flexibly; it is no longer necessary to activate all available PAN-EU countries in their entirety.
  2. Sweden and the Netherlands are now additionally available.


Amazon PAN-EU: Storage in various FBA warehouses in major EU markets

Amazon PAN-EU: Storage in various FBA warehouses in major EU markets
Amazon PAN-EU: Storage in various FBA warehouses in major EU markets

Participation in Amazon’s PAN-EU programme entails tax obligations abroad

Despite advice from Amazon when activating PAN-EU, many traders overlook the VAT requirements that must be met before (! ) the programme is activated.

The 3 most important requirements are in detail:

  1. VAT registrations in all EU countries where an FBA warehouse is used.
  2. Ensure regular – e.g. monthly or quarterly – VAT reporting in these countries.
  3. The correct reporting of distance sales via the One-Stop-Shop (OSS) in your country of residence.

What do these conditions mean in concrete terms?

1. Value Added Tax-Identification numbers in the PAN-EU storage countries

In each EU country in which you use an FBA warehouse, it is mandatory that you have a Value Added Tax identification number (VAT-ID) of the respective country. This also applies after the introduction of the OSS procedure on 01.07.2021.

Experience shows that registering for VAT in an EU country takes between eight and twelve weeks.

The decisive factor is that the VAT IDs must be available before storage begins.

If you activate storage in an EU country without being registered for VAT there, you risk great financial losses, as all deliveries to the respective warehouse would already be fully taxable without a single sale having taken place.

2. regular VAT declarations in the storage countries

In all of the countries listed in point 1, you must be able to regularly file the required local VAT returns according to the requirements of the respective country.

In principle, each EU country has its own requirements and individual reporting intervals in which the VAT returns must be submitted. Communication with the respective tax authorities is always carried out in the respective national language.

In principle, you need local tax advisors in the respective country who know the local peculiarities exactly and can contact the local tax authorities directly.

3. one-stop shop for reporting distance sales in the country of domicile

The OSS has made many things easier in cross-border online trade in the EU since 01.07.2021. However, the requirements mentioned under points 1 and 2 must still be met.

You report your distance sales to other EU countries via the OSS of your country of residence (i.e. as a German online trader in Germany). For this purpose, you must be able to decide for each individual transaction whether it must be reported within the scope of the local VAT reports in the country of storage (see point 2) or via the OSS in your country of residence.

Why is it all so complex?

By activating PAN-EU, you allow Amazon to deliver your stock to the respective countries via FBA and to store it there. The decisive factor here is that Amazon can transfer your stock independently.

As soon as a foreign FBA warehouse is used for storage and shipping, the obligation to register for VAT and to submit regular VAT returns arises in the respective country. This already applies from the first product.

If goods are transported between the different Amazon warehouses, the following transactions must be reported from a VAT perspective:

  • the tax-free intra-Community transfer in the country of departure of the goods
  • the intra-Community acquisition in the country of destination of the goods

You can read more about intra-Community shipments here. However, you do not need to deal with the complex details of all the above-mentioned VAT requirements if you integrate Taxdoo.

How well does Amazon support its PAN-EU traders in fulfilling their VAT obligations?

As described above, Amazon is trying to encourage sellers to participate in the Pan-EU programme — because more sales for sellers leads to more commissions for Amazon. In order to reduce the VAT hurdles for sellers described in this article, Amazon buys quotas from large tax consulting companies and offers the Amazon-Value Added Tax services free of charge at the beginning (currently for 6 months). In our view, two things in particular should be noted about the Amazon-Value Added Tax services:

Retroactive declarations or voluntary declarations often not possible

Many sellers mistakenly start the Pan-EU programme not at the deadline when all VAT registrations are completed, but often much earlier. As part of the Amazon-Value Added Tax services, most service providers often do not have an (automated) process for the required retroactive declarations, so many sellers simply start with the current declarations.

VAT registrations can drag on for years or are carried out incorrectly

Registration processes often stall without giving reasons or sometimes take many months or even years to complete. Most EU states require extensive documents as part of the registration process. In many EU states, for example, proof must also be provided that taxable services, which lead to tax and thus registration obligations, are actually provided locally. For this purpose receipts must be regularly generated and presented to the tax authorities for the shipment of goods or sales in these states. However, this is where the automated processes of Amazon’s Value Added Tax services seem to stop in many cases.

Taxdoo: We handle PAN-EU Value Added Tax obligations for you comprehensively and from a single source

As you can see, PAN-EU offers numerous advantages, but also some VAT challenges.

Taxdoo takes care of all the VAT issues described here with regard to a complete PAN-EU setup for you automatically and from a single source.

Through our network of local tax advisors in the individual EU countries, you do not have to worry about setting up an EU-wide tax advisor network yourself. For more than 5 years now, the VAT processing of PAN-EU for Amazon and multichannel traders has been one of our core products.

Through our interfaces to marketplaces (e.g. Amazon, eBay and C-Discount), shop systems (e.g. Shopify and PrestaShop) and ERP systems (e.g. Xentral, JTL, plentymarkets, Billbee) we can offer you an automated process without manual uploads or similar.

With a central contact person in our Hamburg office, you have a complete overview of all EU countries and do not have to deal with the individual requirements of each country.

Would you like to know more about how we at Taxdoo can support you? Then make your personal – free and non-binding – consultation appointment with our VAT experts now.

Do you already have an offer for the VAT processing of Pan-EU? Then contact us by phone (040 3688 1450) or by e-mail (info@taxdoo.com).
We will make you a better offer