The UK and EU separated on Jan 1st, 2021 when the Brexit transition period ended. However, online retailers from both channels started to raise serious issues very quickly after the split. If you are an Amazon seller or are considering Amazon advertising, we will discuss some of the main challenges that have been presented to brands on Amazon UK as a result of Brexit and how to resolve them and become successful on Amazon.
What are the legal requirements?
It is accurate to state that most Brands on Amazon were not aware of the new rules that would come into place due to Brexit. For instance, brands must be tax registered within the country that they operate. This was not a requirement before Brexit and has significantly affected most UK brands on Amazon. Even as duties now apply, they vary among products, so you must investigate how much duty you will be expected to pay.
After Brexit, to conduct business on Amazon, there is something known as the Economic Operator Registration and Identification (EORI) number, which you must have. To sell in EU countries, if you are based in the UK, you must have the EORI number for each market; otherwise, you won’t be able to sell in that country.
Sellers can get their EORI number from HMRC. The brands will then use the number to make the customs declarations. To sell in Northern Ireland (NI), you must have an NI EORI number as well.
What are the changes to VAT?
If you are a UK-based Amazon brand that sells in the EU, you will be required to charge VAT. Before you can do this, you must request a VAT registration number and then file VAT returns. From there, you will pay the VAT that you had collected from your customers to the relevant tax authorities.
Remember, the Value Added Tax is required for each nation to which you sell your products. In some cases, you might be required to pay the VAT to different member states. It is vital that you have a clear understanding of the EU VAT obligations. This is imperative since without doing this, you might be banned from selling to certain countries and the health of your Amazon seller account may be damaged.
According to EU law, the standard VAT rate must never be less than 15%, while the reduced rate should not be less than 5%. Do your research into the countries you want to sell products to, and you will find that these rates vary among European Countries and some product categories.
In case you sell products in Europe, or rather from one European country to another, the tax will vary from country to country. For instance, if you export products from one nation to another, or if Amazon FBA transfers the products from one of the fulfilment centres, the transfer might also be subject to VAT. These are also worth keeping in mind when doing business after Brexit.
These new changes mean there is a lot to research and correct for brands selling on Amazon, however, an Amazon account management agency that is part of Amazon’s Solution Provider Network agency will help you understand and implement the changes that are required.
Amazon’s pan-European model
Amazon has created a Pan-European model to help brands sell products across borders within the EU. The pan-European model comes in handy when brands want to sell across Amazon’s EU marketplaces by ensuring that their products are closer to the potential buyers.
To do so, you need to transport your inventory to an Amazon’s fulfilment centre within the EU. Amazon will then ensure that your products are allocated for storage across the country’s fulfilment networks for which you have enabled the inventory placement.
Amazon will then make sure that your inventory is distributed across the borders and into the countries for which you have enabled the inventory placement without additional cost. There are an array of tools and standard reports that you could use to track your Pan-European FBA.
Were Amazon sellers ready for Brexit?
Before Brexit was finalised, a large percentage of UK Amazon sellers were not compliant in other countries due to lack of understanding and late guidance provided by the government.
It is upon brands to ensure that they complete the required processes so that they operate smoothly and continue to make profits. These are strict rules that must be adhered to, so there is no shortcut. The EORI numbers and VAT must only be done by the companies themselves, and they need to act first.
Brands must also have proper product lists in each country in which they operate. Amazon has played an integral part in following up with brands and reminding them to complete the required steps so the process is smoother.
How to confidently sell on Amazon after Brexit
Due to VAT, it might be quite expensive to purchase products on Amazon UK in the short-term. This is also contributed to by increased handling/transport fees. Each product category also has unique duties that brands must be fully aware of. If this will be your first time selling on Amazon UK or you are a seasoned Amazon seller with confusion over the new rules, we can help. Our Amazon agency has a direct contact within Amazon to quickly answer all your questions, as well as years of experience setting up Amazon advertising campaigns to help boost your sales.
Although we can’t help you with registrations, you can count on us for listings and Amazon SEO optimisations across the UK and other EU markets. Once you are registered to sell in the countries of your choice, we can help set up enticing product listings to get your products seen and sold.
Melody’s Amazon marketing strategies are underpinned by a bespoke suite of analytics and reporting tools that can help your Amazon campaigns perform at the top of their game. Give our Amazon agency a call to discuss your project and find out how our services can help!
This article was written by Matthew Howes, Ecommerce Director at Melody.
Image courtesy of Unsplash.com.