Amazon FBM & FBA | VAT for Irish Businesses

  • By: Walter Dunphy ACCA
  • Date: December 4, 2023
  • Time to read: 3 min.

Often the easiest way to launch your e-commerce business into other markets is by using marketplaces such as Amazon to list your products. What can get very confusing for sellers, is how to account and report for VAT when your stock is stored in other countries and you are selling across multiple markets in the EU.

In this blog post, we will give you the guidance you need to get set up correctly to meet your tax obligations whether you are fulfilling orders yourself or if Amazon is filling orders for you.

What is the difference between Amazon FBM and FBA

Amazon FBA and FBM are two different fulfillment methods that sellers can use to sell their products on Amazon.

Fulfillment by Amazon (FBA) is a service that allows sellers to send their inventory to Amazon’s fulfillment centers. Amazon will then store, pack, ship, and handle customer service for all of the seller’s orders. This can be a great option for sellers who want to save time and effort, and who want to take advantage of Amazon’s Prime shipping program.

Fulfillment by Merchant (FBM) is a method in which the seller is responsible for storing, packing, shipping, and handling customer service for all of their orders. This can be a good option for sellers who have more control over their inventory and who want to save money on fulfillment fees.

Do you sell to the US and are you worried about whether or not you should be collecting US sale tax on your sales? Then you may be interested in our this post.

VAT registration Thresholds

If you make B2C (Business to Consumer) cross border sales to customers in other EU countries, and your annual sales exceed €10,000, it would make a lot of sense to register for the VAT OSS scheme (Union Scheme).

This scheme was introduced to reduce the administrative burden of having to submit multiple VAT returns in each country that you are selling to. With this scheme you submit one single VAT return for all of your sales in EU countries (other than your home country).

Amazon FBM and VAT

If you manage the fulfillment of your Amazon orders yourself and store your stock in Ireland your situation is relatively straight forward.

  • Sales to Irish customers can be included on your Irish VAT return
  • For intra community sales to customers in other EU countries you can register for the VAT OSS (Union) Scheme and do one single return for all sales.

Amazon FBA and VAT

If Amazon is looking after the fulfillment of your orders from one of their fulfillment centres, then you will need to register for VAT in each country where your inventory is stored. Therefore, you can still use the OSS Scheme, but you will not be able to utilise it fully.

This can add a lot of complexity, if you are utilising their Pan European FBA service where you could have inventory stored in multiple countries.

If we take an example for an Irish business, who uses Amazon’s FBA services and has stock stored in Amazon’s distribution facilities in Germany, France, and the Netherlands.

  • This business will need to be to registered for VAT in Ireland, Germany, France and the Netherlands.
  • Intra-community distance sale of goods from either Ireland, Germany, France, or Netherlands to any other EU country can be included on your VAT OSS return.
  • Movement of stock between fulfillment centres will need to be recorded on the each VAT return ( e.g stock moved from Ireland to France will be an intra community dispatch on your Irish VAT return and an intra community arrival on your French VAT return.
  • Local sales must also be included on the VAT return (e.g Sales from a German Amazon fulfillment centre to a German customer must be included on the German VAT return and not your VAT OSS return.)

Outsource it all to Amazon

If that all seems like a bit of a headache, Amazon do offer services to enable you to completely outsource your VAT related tasks, Amazon currently offer VAT services in the UK, Germany, France, Italy, Spain, Poland and the Czech Republic.

At time to time, there are also promotions such as this, that will give you a years free services.

Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.

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