Pan-EU program from Amazon: All important information 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 via 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 of storage. What should you pay attention to, and when is it actually worth using the service?
What is Pan-EU?
First, a brief insight into the definition: What is the pan-European shipping from Amazon? Pan-EU means selling, shipping, distributing, and storing in Amazon’s logistics centers across Europe beyond national borders. For example, the storage of items of a product can take place in both Germany and France. This allows Amazon, and consequently you as an online retailer, to save high storage and shipping costs when orders come in from various European marketplaces.
In order for the calculation to work, the items are distributed among the respective European warehouses according to a sales forecast. Where the most sales occur, more is stored. 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 significantly 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 certain guidelines. 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 certificates do you need to possess in order to sell in the respective countries? Generally, by following German regulations, you already comply with the provisions of other EU countries. Nevertheless, we recommend that you also familiarize yourself with the respective 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 “forbidden” in the other five, through Pan-EU? No, however, you must create different FNSKUs for the corresponding ASINs.
Here you will find more requirements for pan-European shipping by Amazon.
Amazon Pan-EU: Value-added tax in the storage countries? Yes!
Amazon describes the use of pan-European shipping as extremely uncomplicated – with just a few clicks you are registered and off you go! Millions of Amazon customers worldwide are waiting for you! But it is not that simple. As we mentioned above, you need to be familiar with the legal situation in each country. This also includes the value-added tax obligation.
Good news in advance: The individual storage countries can be selected flexibly since 2021. You are no longer required to activate all offered storage countries.
However, you must be tax registered in each country where you want to store your goods. Because which value-added tax is ultimately shown 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:
Due to Brexit, Amazon can no longer ship orders with shipping by Amazon across the borders between the United Kingdom and the EU as of January 1, 2021, and also cannot transfer inventory cross-border. To sell with shipping by Amazon in both the United Kingdom and the EU, you must send inventory to logistics centers in the United Kingdom and the EU. Click here for more information.
Amazon: This is how the program works
At the moment you register for Pan-EU, you will automatically be subject to tax in these countries.
Important: So before you set the switch to “On,” take care of the value-added tax registration. Because from then on, you will have to pay your taxes and submit a tax return in the respective national language. It is even worth it to hire a tax advisor in each storage country who is well acquainted with the specifics of each country.
Determination of value-added tax when issuing invoices
What about the display of value-added tax on invoices? As we mentioned above, the value-added tax shown depends on which country the goods are stored in. Although the costs for pan-European shipping are lower, the value-added tax can be significantly higher.
Here is an example:
You as an online retailer in Germany 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 use the so-called option.
This is about the service provider and the service recipient being located in one country. The service provider uses the option (opts) to charge the German value-added tax to the service recipient and reports this to the tax authority of the storage country with the higher value-added tax.
If you want to be on the safe side, we recommend using the services of a tax advisor. This saves time, money, and nerves.
The following tax rates in the storage 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 % |
| Italian | 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 it. 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. For returns management, Amazon has developed a solution – returns are processed in specially established return centers, where they are collected and handled by qualified personnel.
When a package is returned, the reason for the return is checked. If an item is still in new condition, it will be 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.
The disposal of shipments and the return process costs money. Here you can find more information about the Amazon fees and terms for returns and the disposal of items.
Amazon Pan-EU and OSS: Examples and Procedure
On July 1, 2021, the One-Stop-Shop, or OSS, was introduced in the European Union.
OSS serves as an interface between merchants selling 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 of all VAT reporting and payment obligations of goods trade in 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. You can do this, for example, in Germany at the Federal Central Tax Office.
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 storage countries, there are the following three scenarios for you:
Activate / deactivate Amazon Pan-EU shipping: Here’s how!
After you have clarified the questions regarding VAT registration in the desired storage countries, it’s time to get to the point. 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 even 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, that is, in the German Amazon fulfillment centers. From these centers, all orders are processed and can be shipped across Europe. The European fulfillment network is interesting for online sellers who want to take the step into internationalization without being registered for tax in another EU country. However, using the service is associated with higher shipping fees than is the case with 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 fulfillment 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 is still required in the storage countries.
Inventory in the Marketplace Country (MCI)
Another option is the Inventory in the Marketplace Country, or MCI for short. This means you determine how much stock you want to store in the fulfillment centers of each country. This way, you maintain full control over the inventory and can respond yourself if a country needs to be prioritized. With Pan-EU, Amazon would take care of this for you or have control over it. In this program as well, a VAT number must be obtained in the respective storage countries.
Amazon Pan-EU experiences: advantages and disadvantages
Shipping through Pan-EU certainly brings many advantages and is simply indispensable for experienced sellers above a certain sales volume.
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 sales. However, the effort should not be underestimated. Due to storage, shipping, and selling products in different European countries, there are certain tax obligations. You must be aware of and implement these before activating the Pan-EU switch. It is worthwhile to hire a tax advisor for each country where you store through Amazon Pan-EU. Only in this way can you ensure that all tax peculiarities of the respective country are taken into account. This fact alone can cost several hundred euros per month and means that the step must be well thought out and requires precise cost calculation.
However, if you believe that your business in Germany has been fully tapped and you want to conquer the other 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 across national borders. This saves Amazon and you as an online seller high storage and shipping costs when orders come in from different European marketplaces.
Currently, Amazon offers storage in seven countries: Germany, Poland, Czech Republic, France, Spain, Italy, and the United Kingdom. As for the United Kingdom, there are some factors to consider in the shipping process since its exit from the European Union.
The activation of Pan-EU shipping takes place in Seller Central. In the “Fulfilled 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
