Selling in the EU: How to Navigate VAT, Brexit, and Logistics

Selling on Amazon in the European Union offers access to over 450 million customers and some of the world’s strongest e-commerce markets. However, success requires more than just listing your products—you must navigate VAT obligations, regulatory changes due to Brexit, and a complex logistics landscape.

This guide walks you through the essentials to stay compliant, minimize costs, and scale efficiently across Europe.

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Understand VAT in the EU: Your “License” to Enter the Market

For Amazon sellers, VAT is far more than a tax term—it is essentially your business license and safety lock in the European market. Because Amazon works closely with EU tax authorities and shares data, any compliance mistake can directly lead to account suspension.

The moment you store products in Germany or any other EU FBA warehouse, you are legally bonded to that country’s tax obligations. Amazon will require you to submit a valid VAT number within a deadline. This is not optional, but a mandatory condition to maintain your selling privileges.

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When Do You Need a VAT Number?

You must register for VAT if:

• You store inventory in an EU country (e.g., Amazon FBA)
• Your cross-border EU sales exceed the €10,000 distance selling threshold
• You import goods into the EU

Once VAT applies, you are responsible for collecting VAT from customers and submitting it to tax authorities.

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How the OSS Scheme Simplifies EU-Wide VAT Compliance

Before the introduction of the One-Stop Shop (OSS), sellers with inventory in one country but customers in multiple EU countries often had to register and file VAT separately in each market. This created a high administrative burden due to different languages, systems, and compliance rules.

The OSS scheme allows sellers to:

• File a single VAT return in one selected EU member state
  
  
• Cover all cross-border B2C sales within the EU under one report
  
  

This significantly reduces complexity and enables sellers to operate more easily across multiple European markets.

Important: OSS only applies to distance sales. If you store inventory in multiple EU countries (e.g., through Pan-EU FBA or Multi-Country Inventory), you still need separate VAT registrations in each storage location.

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Import VAT Deferral: Maximizing Cash Flow Efficiency

Traditionally, import VAT had to be paid at customs when goods entered the EU, placing a significant cash flow burden on sellers. Today, many EU countries offer import VAT deferral mechanisms, allowing sellers to postpone this payment and settle it in the periodic VAT return instead of paying upfront.

This effectively acts as an interest-free financial buffer, helping growth-focused sellers improve liquidity and allocate resources more efficiently.

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Brexit: New Rules for UK–EU Sellers

Brexit has fundamentally changed how Amazon sellers manage inventory and fulfillment between the United Kingdom and the European Union. What was once seamless cross-border inventory movement across the English Channel is now considered formal international trade, subject to customs declarations, duties, and VAT obligations.

Every shipment from the UK to an EU FBA warehouse—or vice versa—is treated as an import/export transaction. This means additional paperwork, potential delays, and compliance risks if not handled correctly.

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Pan-European FBA: Streamlining EU Fulfillment

The Amazon Pan-European FBA (Fulfillment by Amazon) program provides an effective solution for sellers navigating post-Brexit logistics challenges:

• Send inventory to a single EU entry warehouse, and Amazon automatically distributes stock across its EU fulfillment network.
  
  
• Orders are fulfilled from the nearest warehouse, reducing shipping time and cost. For example, a customer in the Netherlands may receive products from a nearby Dutch or Belgian fulfillment center.
  
  
• Faster delivery enhances customer satisfaction and increases your likelihood of winning the Buy Box.

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IOSS for Imported Goods Under €150

For goods shipped directly from China or other non-EU countries to European consumers, the Import One-Stop Shop (IOSS) number is essential for shipments valued under €150. This benefits both sellers and buyers by reducing customs delays and preventing unexpected fees.

IOSS centralizes VAT reporting for low-value imported goods, making cross-border e-commerce more streamlined.

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Separate UK and EU Fulfillment Strategies

For sellers who want to clearly separate UK and EU operations, a dual-warehouse model can be effective:

• Maintain inventory in the UK for domestic orders and a separate EU warehouse (e.g., in the Netherlands or Poland) for EU customers.
  
  
• Operate each location as an independent fulfillment system to avoid cross-border customs entirely.
  
  
• While this approach requires careful inventory planning and potentially higher storage costs, it eliminates the risks of delays, additional duties, and VAT errors on shipments crossing the UK–EU border.

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Choose the Right Amazon FBA Program for EU Sellers

Selecting the right Fulfillment by Amazon (FBA) program is critical for sellers who want to expand efficiently across Europe while managing VAT, logistics, and customer expectations. Each FBA program has unique benefits, tax implications, and operational requirements, and the wrong choice can lead to unnecessary costs, delays, or compliance issues.

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European Fulfillment Network (EFN)

The European Fulfillment Network (EFN) allows sellers to store inventory in a single EU country while shipping to customers across the EU:

• Inventory is stored in one country (e.g., Germany).
  
  
• Amazon fulfills orders to other EU countries from that single warehouse.
  
  
• VAT registration is required only in the country where inventory is stored.
  
  

Advantages:

• Lower administrative burden for sellers just starting in Europe.
  
  
• Simplified inventory management since stock is centralized.
  
  
• Useful for testing demand in multiple countries without opening new warehouses.
  
  

Limitations:

• Cross-border shipping fees can be higher.
  
  
• Delivery times may be longer for distant customers.
  
  
• Limited control over local delivery speed and Buy Box competitiveness in other countries.
  
  

Best for: New sellers or small-scale operations testing multiple EU markets.

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Multi-Country Inventory (MCI)

The Multi-Country Inventory (MCI) option allows sellers to proactively choose multiple storage locations across the EU:

• Inventory is allocated to specific warehouses in different countries.
  
  
• Amazon fulfills orders from the nearest warehouse to the customer.
  
  
• Requires VAT registration in each country where inventory is stored.
  
  

Advantages:

• Faster delivery times and improved customer satisfaction.
  
  
• Reduced shipping costs compared to EFN for cross-border orders.
  
  
• Better Buy Box performance in local markets.
  
  

Limitations:

• More complex inventory planning and management.
  
  
• Higher storage costs due to multiple warehouses.
  
  
• VAT and compliance responsibilities increase with each storage country.
  
  

Best for: Sellers with established European demand who want to optimize speed and cost efficiency.

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Pan-European FBA

The Pan-European FBA program gives Amazon full control over inventory placement across its EU fulfillment network:

• Sellers send stock to one designated warehouse, and Amazon distributes it automatically across the EU.
  
  
• Orders are fulfilled from the closest warehouse for each customer.
  
  
• VAT registration is required in all countries where inventory is stored, as Amazon may place goods in multiple locations.
  
  

Advantages:

• Maximizes delivery speed and minimizes shipping costs.
  
  
• Enhances Prime eligibility and increases Buy Box potential.
  
  
• Amazon manages inventory allocation based on predicted demand.
  
  

Limitations:

• Requires multiple VAT registrations for compliance.
  
  
• Less direct control over which countries inventory is stored in.
  
  
• Higher administrative complexity due to EU-wide distribution.
  
  

Best for: High-volume sellers targeting full EU market coverage with fast delivery and Prime eligibility.

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Conclusion

Selling on Amazon in the EU offers immense growth opportunities, but it requires careful planning and compliance. Understanding VAT obligations, adapting to post-Brexit logistics, and selecting the right FBA program are essential for smooth operations. Tools like OSS and IOSS simplify tax reporting, while Pan-European and multi-country fulfillment options optimize delivery speed and customer satisfaction. By combining strategic inventory management with regulatory compliance, sellers can expand efficiently, reduce risks, and achieve long-term success in the European marketplace.

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