July 10th, 2021
With every year that passes, the Amazon marketplace is rapidly growing and expanding to international markets such as Australia, Mexico, the United Kingdom, and more. While the US marketplace is still the bread and butter of most Amazon sellers, you can expand your reach and increase your sales numbers by reaching new customers in other markets.
Selling internationally does present its challenges, the investment can give your Amazon business a boost while helping you establish your brand in foreign markets. The payoff can be tremendously lucrative, especially if you expand your reach to a market or markets where your competitors are not present.
In this article, we will discuss the basics of VAT, otherwise known as the European equivalent of US sales tax, and how it is an essential part of any sales strategy geared toward the European marketplace.
What is the Difference Between VAT and US Sales Tax?
While there are multiple differences between VAT and US sales tax, we are going to be focusing on the two of the most important differences. If you are thinking about selling in the European marketplace, then stay tuned!
VAT is Always Included in the Sale Price
Sales tax in the US is added to the listing price, however, in Europe, VAT is built-in to the listing price.
VAT is Payable Upon Import
If you are a seller based in the US, whenever you send inventory to a fulfillment center in Europe (such as an FBA fulfillment center), you will be required to pay that country’s import VAT.
How and Where to Register for VAT
If you decide to keep inventory in Europe, then as a seller you are required to have a registered VAT to show where your inventory is stored. Many sellers choose to store goods and register for VAT in Germany and the UK first. Here are a few reasons why expanding to the UK or German markets first is a smart strategy for US sellers who want to test the international market:
- Outside of the US, Germany and the UK are Europe’s biggest and most viable opportunities for expanding your Amazon business. These markets are very well-connected and offer reliable transportation and speedy delivery services that other parts of the world might have trouble keeping up with. Amazon Europe’s fulfillment list to find the option that works best for you and your Amazon business.
- Focusing on the UK or German market might help counteract the risk of disruption with logistics caused by Brexit.
- UK and Germany VAT is less complicated and easier to navigate than other European countries.
Please note that as your Amazon business grows and expands to other markets, further registrations for VAT might be required as well. We recommend using Amazon’s VAT Services to help you navigate the international market. Interested in knowing more about Amazon’s VAT Services? Read on to learn more!
2021 Updates to Amazon’s VAT Services
As of 2021, sellers who take advantage of using the VAT Services on Amazon can expect a seamless transfer option (specifically for sellers who already have a valid VAT number). Another new feature that Amazon's VAT service offers is to transfer existing VAT numbers to their service from another service that you may be using.
For more information on VAT, download Amazon's European VAT handbook
More Exciting Updates!
In Seller Central news, Amazon now gives you the option to add a link to your newer model from the listing of your older model. Instead of being forced to create multiple listings for the different models or versions of a product, this new feature will allow you to link your existing product to the newer version so that when a customer is shopping, they can see that a newer model is available.
If you are looking to expand worldwide on Amazon, let's chat. Our team of experts can help guide your next move.