Pan-EU Program by Amazon: Everything You Need to Know About Shipping in the EU!
With the Pan-EU shipping, Amazon allows goods to be shipped and stored within the European Union under more favorable FBA delivery conditions. This shipping method is an extension of the traditional FBA program. But what does it really mean to ship using Pan-EU? To use the pan-European shipping offered by Amazon, you must pay VAT to the respective country by registering for tax purposes in the country where the warehouse is located. So, what should you pay attention to, and when is it worthwhile to use the service?
What is Pan-EU?
First, a brief insight into the definition: What is Amazon’s pan-European shipping? Pan-EU refers to the sale, shipping, distribution, and storage in Amazon’s logistics centers across Europe beyond national borders. For example, the storage of items for a product can occur in both Germany and France. This allows Amazon, and consequently you as an online seller, to save on high storage and shipping costs when orders come in from various European marketplaces.
To ensure the calculations work out, the items are distributed among the respective European warehouses according to a sales forecast. More stock is kept where the most sales occur. For example, if your customer is located in Chemnitz and your goods are stored at the German-Czech border, Amazon will ship from that warehouse. This results in lower costs and the customer receives their order much faster – which is one of Amazon’s most important service conditions.
Currently, Amazon offers storage of goods in seven and sales in 17 European countries.
What should you pay attention to before starting with Pan-EU?
The sale and storage of goods in individual countries are subject to specific guidelines. So what should you consider before venturing into Pan-EU shipping?
Legal Regulations in Different Countries
If you want to sell internationally on Amazon, you must first deal with the legal situation. What patents and certifications do you need to possess to sell in the respective countries? Generally, by following German regulations, you will already comply with the requirements of other EU states. Nevertheless, we recommend that you also familiarize yourself with the specific guidelines for your products.
Here are some requirements that, according to Amazon, are necessary for sales eligibility via Pan-EU:
Does this mean that you cannot offer an electronic device that can be sold on twelve EU marketplaces but is “prohibited” in the other five through Pan-EU? No, you can still offer it; however, you will need to create different FNSKUs for the corresponding ASINs.
Here you can find more requirements for pan-European shipping by Amazon.
Amazon Pan-EU: VAT in the Warehouse Countries? Yes!
Amazon describes the use of pan-European shipping as extremely straightforward – with just a few clicks, you are registered and ready to go! Millions of Amazon customers worldwide are waiting for you! However, it is not that simple. As mentioned above, you need to be familiar with the legal situation in each country. This also includes VAT obligations.
Good news in advance: The individual warehouse countries can be selected flexibly since 2021. You are no longer required to activate all available warehouse countries.
However, you must be tax registered in each country where you wish to store your goods. The VAT that is ultimately displayed on the invoice depends on which country the goods are shipped from.
Pan-EU Countries: Here Your Goods Are Stored
Currently, Amazon offers storage in seven countries: Germany, Poland, Czech Republic, France, Spain, Italy, and the United Kingdom. Regarding storage in the United Kingdom, Amazon states the following:
Amazon: How the Program Works
At the moment you register for Pan-EU, you will automatically be liable for taxes in these countries.
Important: Before you switch the toggle to “On,” make sure to register for VAT. From then on, you will need to pay your taxes and submit a tax return in the respective country’s language. It is even worthwhile to hire a tax advisor in each warehouse country who is well-versed in the specifics of that country.
Determining VAT When Issuing Invoices
What about the display of VAT on invoices? As mentioned above, the VAT displayed depends on the country where the goods are stored. Although the costs for pan-European shipping are lower, the VAT can be significantly higher.
Here is an example:
As an online seller in Germany, you sell an item to a customer in Germany. However, this item is shipped from an Amazon warehouse in Poland. If you are not careful, you will pay higher tax rates, such as the example with Poland at 23%.
However, if you are knowledgeable and work with a tax advisor, you will utilize the so-called option.
This refers to the situation where the service provider and the service recipient are located in the same country. The service provider uses the option (opts) to charge the German VAT to the service recipient and reports this to the tax authority of the warehouse country with the higher VAT.
If you want to be on the safe side, we recommend utilizing the services of a tax advisor. This saves time, money, and nerves.
The following tax rates in the warehouse countries apply in 2022:
| Country | Standard Rate | Reduced Rate | Super Reduced Rate |
| Germany | 19 % | 7 % | |
| Poland | 23 % | 7 % | 5 % |
| Czech Republic | 21 % | 15 % | 10 % |
| France | 20 % | 7 % | 5,5 % |
| Spain | 21 % | 10 % | 4 % |
| Italy | 22 % | 10 % | 4 % |
| United Kingdom | 20 % | 5 % | 0 % |
Returns Management in Pan-EU Shipping
Returns are nothing unusual in online retail and are simply part of the process. The reasons for returns can be very diverse. If there are returns with Pan-EU shipments, it is similar to the conventional returns of an FBA item. Amazon has developed a solution for returns management – returns are processed in specially designated return centers, where they are collected and handled by trained staff.
When a package is returned, the reason for the return is checked. If an item is still in new condition, it is released for sale. Products with minor damages are reintroduced into the cycle for Amazon Warehouse Deals. Those that can no longer be sold are donated or destroyed.
Disposing of shipments and handling returns costs money. Here you can find more information about the Amazon fees and terms for returns and disposal of items.
Amazon Pan-EU and OSS: Examples and Procedures
On July 1, 2021, the One-Stop-Shop, or OSS, was introduced in the European Union.
OSS serves as an interface between sellers who sell in the EU and the EU countries themselves, which want to record the VAT payments for these sales in their accounts. Thus, OSS represents a central processing system for all VAT reporting and payment obligations in goods trade across all 27 EU member states.
Once a delivery threshold of €10,000, which applies cumulatively to all EU countries, is reached, VAT processing can occur quarterly. To use OSS as an online seller, you must register for this procedure. In Germany, for example, you can do this at the Federal Central Tax Office (Bundeszentralamt für Steuern).
What do you need to consider as a user of the Amazon Pan-EU program regarding OSS?
If you have activated Pan-EU shipping and thus have a VAT registration in the warehouse countries, there are the following three scenarios for you:
Activating/Deactivating Amazon Pan-EU Shipping: Here’s How!
Once you have clarified the questions regarding VAT registration in the desired warehouse countries, it’s time to get to the core. The activation of Pan-EU shipping takes place directly in Seller Central.
For this, click on Settings > Fulfillment by Amazon in the menu.
In this window, you can see whether the Pan-EU service is activated or deactivated for you.
Then click on Edit to change the status.
Now you will see several options that you can select. In this step, activate the pan-European shipping by Amazon. Then, specify in which countries your goods should be stored.
Fees for Amazon Pan-EU
Amazon’s shipping costs and storage fees are regularly updated. The current costs are from November 2021. Here you will find a detailed breakdown of the storage fees and shipping costs for all European Amazon marketplaces in their respective languages:
Another adjustment will take place on March 31, 2022. You can find this update of the costs here.
How to Ship in Europe Without Pan-EU
If you are still unsure whether the pan-European shipping program is right for you, Amazon offers additional options for shipping within the European Union.
Amazon European Fulfillment Network (EFN)
With EFN, your goods are stored locally, meaning in the German Amazon logistics centers. All orders are processed from these centers and can be shipped across Europe. The European Fulfillment Network is of interest to online sellers who want to take the step towards internationalization without being registered for tax purposes in EU countries. However, using this service is associated with higher shipping fees than those of Pan-EU.
Amazon Central Europe Program (CEP)
The Central Europe Program allows Amazon sellers to store their goods not only in Germany but also in the shipping centers in Poland and the Czech Republic. This can be seen as an intermediate step and is also cheaper than shipping exclusively from Germany. However, tax registration in the warehouse countries is still necessary.
Inventory in the Marketplace Country (MCI)
Another option is the Inventory in the Marketplace Country, or MCI for short. This means you determine the quantities you want to store in the logistics centers of each country. This way, you maintain full control over the inventory and can respond yourself when a country needs to be prioritized. With Pan-EU, Amazon would take care of this for you and have control over it. Additionally, a VAT number must be obtained in the respective warehouse countries for this program as well.
Amazon Pan-EU Experiences: Advantages and Disadvantages
Shipping through Pan-EU certainly offers many advantages and is simply indispensable for experienced sellers once a certain revenue size is reached.
Advantages
Disadvantages
Pan-EU also has its downsides. The main disadvantages are:
Conclusion
The pan-European shipping offered by Amazon is an extension of the FBA program and aims to simplify logistics and boost sales in Europe. With the help of Pan-EU, shipping costs within the European Amazon marketplaces are at a lower level than if shipping were to occur exclusively from Germany.
Selling and shipping to Europe thus brings higher revenues. However, the effort should not be underestimated. Storing, shipping, and selling products in different European countries creates certain tax obligations. You need to be aware of and implement these before activating the Pan-EU toggle. It is worthwhile to hire a tax advisor for each country where you store goods through Amazon Pan-EU. This is the only way to ensure that all tax specifics of the respective country are taken into account. This fact can cost several hundred euros per month and means that this step must be well thought out and require precise cost calculations.
However, if you believe that your business in Germany has been fully tapped and you want to conquer additional marketplaces, you have several options to tentatively enter sales in the EU.
Pan-EU for Amazon sellers means that sales, shipping, distribution, and storage take place in Amazon’s logistics centers across Europe, crossing national borders. This allows Amazon, and you as an online seller, to save on high storage and shipping costs when orders come in from various European marketplaces.
Currently, Amazon offers storage in seven countries: Germany, Poland, Czech Republic, France, Spain, Italy, and the United Kingdom. Regarding the United Kingdom, since its exit from the European Union, there are several factors to consider in the shipping process.
The activation of Pan-EU shipping takes place in Seller Central. In the “Fulfillment by Amazon” window, you can see whether the Pan-EU service is activated or deactivated for you.
Image credits in the order of the images: © Travel mania – stock.adobe.com / Amazon Seller Central
