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VAT and VAT-OSS in EU Guide
You are thinking about the future of your business and planning to expand to the German market. Due to the sales potential and simplified logistics in the FBA model, you opt for Amazon.de. You may have many questions: Do I need to speak German? Do I need to register for VAT? In this article, we will answer this and other questions and show you how to start selling on Amazon.de.
Do I need to set up a business in Germany to start selling on Amazon.de?
Let’s focus on the most common scenario, in which you only use Amazon to sell your products and you store them in Germany. In this case, opening a branch or setting up a business in Germany is not required to sell products on Amazon.de. All you need to do is register for VAT in a local tax office.
Registration for VAT should be completed before you start selling goods from a warehouse in Germany. It is worth knowing that the registration process takes about two months, so it is best to start it well in advance.
NOTE: If you decide only to store and sell goods in Germany, all you need to do is register for VAT in a local tax office. If you are planning to store or sell your goods in other EU countries, you need to check whether is it necessary to register for VAT in those countries and/or register for VAT OSS (a solution which makes it easier to pay VAT in the EU, to read more about it, go here).
How can you register for VAT in Germany?
If you store your goods in Germany, you need to register for VAT. How can you do it?
It is best to seek help from professionals, so that you avoid making mistakes and being late. At Taxology, the only thing you need to do is prepare incorporation documents and a power of attorney.. With these, we can fill out the relevant forms on your behalf and submit them to a German tax office along with other documents.
When your application is accepted, you will get two identification numbers:
- Steuernummer (the tax identification number and the equivalent of the Polish NIP) – required to identify the business owner in a tax office and to make transactions with German companies.
- USt-IdNr (the equivalent of Polish VAT UE, in this case VAT DE) – it appears on invoices and is required to make intra-Community transactions and use services provided by companies from other countries. NOTE: To obtain this number, you need to submit an additional application when you register for VAT. There is no extra charge.
When you are planning to sell products on Amazon.de, you need to think about the type of invoicing you would like to use. You have two options:
- Calculation VAT Services (CVS) – calculations are performed and invoices are issued by Amazon
- issuing invoices on your own.
Thanks to CVS, the customer gets an invoice straight away and you do not need to waste any time on issuing it. However, the correctness of the invoices depends on whether your account is properly configured. It may be easier to control it with our app called Taxology, which detects potential irregularities, for example invoices with an incorrect VAT rate.
What is the VAT compliance service an is it worth using it?
Simply put, VAT compliance is a specialised area of accounting that deals with all matters related to VAT in transactions carried out abroad.
This service includes, for example:
- Drawing up and submitting VAT, VAT UE (intra-Community supply/acquisition of goods) and VAT OSS returns to tax offices.
- Keeping VAT records.
Some of the above-mentioned processes are complex and require specialist knowledge. Seeking help from professionals allows you to avoid mistakes and penalties imposed by supervisory authorities.
When you decide to use accounting services, pay attention to whether a given accounting firm has experience in servicing e-commerce clients who sell their products abroad or use a VAT compliance service. To read more about the differences between these two services, go here.
What do you need to do in order to register on Amazon.de?
To start your adventure with the German website, you need to set up an account and then fill in the relevant information. Get ready to:
- provide your personal data
- provide your company information
- upload a transcript from the Polish National Court Register (KRS) or from the Polish Central Registration and Information on Business (CEiDG) if you are a sole proprietor
- enter a card number and link a bank account
- provide your German VAT number (Steuernummer)
- select the logistics model (FBA/FBM)*
- select the plan: individual or professional
When you set up an account and provide all of the required data, you can plan logistics and create listings (product information pages). At this stage, you also need to take care of identification codes (ASIN, SKU, EAN, etc.)*
To get to know how to start selling on Amazon step by step, gohere.
*these terms are explained and described below
FBM vs. FBA
When you start selling on Amazon.de, you need toselect a sales and logistics model:
Fulfillment by Merchant (FBM)– you handle packing, marking and shipping goods from your warehouse.
Fulfillment by Amazon (FBA) – Amazon stores, packs and ships goods from its warehouses. This model can be divided into several types:
- Amazon European Fulfillment Network (EFN) – you store your goods in one Amazon warehouse in one country, but you sell them across the EU.
- Amazon Multi-Country Inventory (MCI)– you store your goods in selected Amazon warehouses in several EU countries and sell them across the EU.
- Amazon Pan-European (Pan-EU) – you send goods to one Amazon warehouse and Amazon sends them to warehouses in the remaining 6 countries. Of course, in this model you also send goods across the EU. Pan-EU ensures the fastest delivery to your customers, but it generates higher tax costs.
You need to register for VAT in every country in which you store goods. In tax returns, you also need to report transfers of goods between warehouses. It means additional workload and higher VAT payments. However, when you use Pan-EU, Amazon significantly reduces the costs of sending packages.
In the case of selling goods in Germany, there is one more option. Instead of storing goods locally, you can allow Amazon to store goods in three countries: Germany, Poland and the Czech Republic. Of course, in this case you also need to register for VAT in the Czech Republic. In exchange for this, Amazon does not charge a fee amounting to EUR 0.5, which would otherwise apply to every transaction on Amazon.de.
Amazon promotes the FBA model and encourages users to choose it. When you opt for FBA, your products are automatically included in Prime. It means that they rank higher than other products in search results and users who buy from you do not need to pay for shipping. It is worth remembering that FBA is a good choice only if you send standard size packages, preferably small ones, because the fees charged by Amazon depend on the size of the package. So if you for example sell custom-made tables, the FBM model may be more beneficial for you.
Product codes, or what are ASIN, SKU and EAN?
To sell products on Amazon.de, you need to generate or apply for some important codes. Let’s briefly discuss each of them.
Amazon Standard Identification Number (ASIN) – this is the code of a product page on Amazon. It can be found for example in the URL address of a given listing. When the user knows this code, they can quickly find a specific product on the platform by entering the code into the internal search engine. It is worth remembering that the ASIN of the same product in Germany is different than in Poland because it does not identify the product, only its listing.
Stock Keeping Unit (SKU) – this code is needed to find the product in warehouses and to supervise its movements. You can generate this code on your own so that it includes information on the colour, production date, etc., which will make your work much easier.
European Article Number (EAN) – a code required to sell products on the European market.
Global Trade Item Number (GTIN) – this is the code which identifies the product and its manufacturer and is recognised globally. It is worth knowing that the GTIN is a component of the EAN code; it is encrypted in it.
There are also codes used only in the FBA logistics model, such as:
Fulfillment Network Stock Keeping Unit (FNSKU) – an internal Amazon code which identifies the product and a specific seller. Thanks to FNSKU markings on packages, they can be easily found in warehouses by Amazon employees.
If you own a brand whose products you sell on Amazon, you may need one more code to confirm the authenticity of your product. In this way, Amazon prevents the sale of counterfeit products.
For more information on specific codes, gohere.
Selling on Amazon.de to customers from Austria
You need to know that when you sell products on Amazon.de, a large percentage of your customers will be Austrian. Why is that so?
First of all, their native language is used on the platform, and secondly, these countries are very close to each other geographically. Moreover, Amazon does not have a local platform or warehouses in Austria.
So if you do not want to lose these customers, it is worth thinking about registering for VAT in Austria or registering for VAT OSS.
Business owners often decide to register for VAT OSS from the moment they start selling. It enables them to send goods to other EU countries without having to worry about registering for VAT.
Selling products on Amazon.de and speaking German
With today’s technology, you do not need to know the local language to sell products abroad – you can use machine translators. But what is the case with Amazon? You can start selling on Amazon.de even if you do not speak German, but you need to take into account that this adventure may end very quickly.
What matters the most for Amazon are customers and their opinions. Customers will definitely ask you about the details of a product or shipment many times. It is also likely that you will need to handle a customer accusing you of some mistake and demanding a refund. Unfortunately, overcoming such challenges requires not only finesse, but also very good language skills. If you do not manage to resolve such disputes amicably, Amazon may block your account.
Starting to sell products on Amazon.de is totally doable. However, it requires a lot of time and effort on your part. If you do not want to take care of all these formalities on your own, come to us!At Taxology, we help both sole proprietors and large e-commerce companies enter other EU markets. We also take over all obligations related to accounting for VAT and submitting VAT returns.