June 7, 2023

Amazon’s PAN-EU Process – Massive VAT Headache for U.S. Companies!

Amazon is offering retailers opportunities to store goods at multiple warehouses in different European countries. In addition to a warehouse in Germany, there are seven Amazon warehouses in various European countries.

This pan-European shipping by Amazon (also referred to as PAN-EU process or procedure) means that Amazon takes care of the logistics, storage, shipping and returns. Amazon can lower their logistics costs dramatically and offer faster shipping from the closest local warehouse.

This sounds wonderful, however the EU VAT legislations clearly states that you need a separate VAT number for each country where you own goods in a warehouse. In other words, you must report taxes to the tax authorities in each of this countries where your goods are being stored.

It is very time consuming and complicated to follow VAT reporting schedules (monthly or quarterly reporting). Costs just to comply with the various VAT obligations in each of these countries might be higher than your revenue at least in the beginning.

In addition, if you sell to private people and some of your sales are under 150 EUR you need to be registered for One-Stop-Shop (OSS) and report your sales under that process as well to the Federal Central Tax Office.

Incorrect reporting of these complicate VAT rules result in heavy fines and late fees; and you still need to report VAT correctly to prevent even higher late fee interest and even more fines. It can quickly turn into a nightmare for U.S. companies. Amazon does not warn you - they are instead promoting the benefits of faster shipping! We are happy to hop on a call with you to help explain and answer VAT questions. Please email vat@eurovat.com to schedule a chat with one of our VAT experts here in Los Angeles.


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