So, your brand is booming in the US market, you want to stick with an e-commerce platform that works well and you’re considering expanding into Europe, where do you start?
The European market is rapidly expanding, with the e-commerce industry turning over a recorded €534 billion in 2017 - and you could be a part of it!
As experienced European tax advisors and accountants, AVASK are here to discuss 5 simple things to ensure the best start when breaking into the European market.
Ensure you are compliant with the local VAT (Value Added Tax) legislation
It may seem like we’re jumping straight into the nitty gritty part of your expansion, however there is definitely something to be said about getting your taxes in order before moving full steam ahead with everything else.
European VAT is nothing to be afraid of (unless your plan is to ignore it completely) and can be navigated easily enough with the right tax advisor completing your registrations and filings.
If you do not have a European company, you will need to immediately register for VAT in the country (or countries) you plan to fulfill your sales from.
A common misconception is that there is a sales threshold where you do not have to apply for VAT until you hit this specific turnover. As an “overseas Amazon brand” there is no threshold and VAT registration is required immediately, along with the regular filings and charging your customers VAT at the applicable rate.
Do your market research
What can you do to make your products stand out and be competitive in a quickly growing Amazon market? Make sure you adjust everything your brand is representing to match the cultural and market differences- in language, seasons, regulations and customs.
Do not assume that you can copy and paste your US business strategy, even for your English-speaking friends across the pond.
Be aware of your fulfilment options
Although Amazon fulfilment is the e-commerce dream, with the processing of your orders being completing taken off your hands… there are a variety of options to consider before making a final decision.
Amazon fulfilment can be completed from one European country or multiple (sneak peek to point 4) or by an independent warehousing/fulfilment provider or even by yourself.
The Amazon EFN (European fulfilment network) allows you to choose where your stock is held and enables fulfilment of sales across the whole of Europe from just one country.
All sales will then be subject to VAT to that country until certain distance selling threshold are met.
When starting out in Europe, most brands begin here, so that only one VAT account is initially required.
Consider the PAN-European program
Amazon have (not-so-recently) launched a PAN-European fulfillment program that enables e-commerce brands to reach more customers with ease.
With the Pan-European program, brands can ship their inventory to UK fulfilment centres and then sit and wait for Amazon to distribute it throughout their fulfilment centres in Europe based on anticipated demand.
Amazon has more than 25 fulfilment centres distributed across 7 European countries: UK, Germany, France, Spain, Italy, Poland and Czech Republic.
The fluidity of your stock will lead to faster shipping times and lower delivery costs. However, there is also an additional VAT obligation as your products will be stored in multiple countries, therefore changing the place of supply at Amazons discretion. This means you will require multiple VAT accounts.
Yes, it may seem like a lot of additional administration and headache, but PAN-European fulfilment should be considered by your growing business at one point or another.
Engage a local expert to do the “tax bit”
Taxes in your home country can be hard enough without taking on further responsibility of filing in another continent and in another language. European legislation is regularly changing and will continue to change, especially in the anticipation of BREXIT (although this may quickly be turning into a myth).
Staying on top of the legislation and ensuring your business is compliant is essential in maintaining your European Amazon account.
Contact Avask at: 213-256-0537, 213-330-4904 [for US]