Earlier this year, Amazon announced that in March 2022 it would be reinstating the European Fulfilment Network (EFN) between the United Kingdom and the European Union. This news was welcomed greatly by Amazon sellers as it streamlined inventory management significantly.
UK sellers now have a cost effective way of entering the EU market without incurring crazy VAT fees.
In light of these relatively recent changes, we wanted to familiarise you with the European Fulfilment Network – if you aren’t already – by exploring what it is and how it benefits ecommerce merchants selling on Amazon.
Here, we cover:
• What the European Fulfilment Network is
• What the difference is between the EFN and Fulfilment by Amazon (FBA)
• The benefits to ecommerce sellers of using the EFN
• The rules around VAT for EFN users
What is the European Fulfilment Network?
The European Fulfilment Network is supported by Amazon that enables merchants on the platform with an Amazon Europe Stores account, who are also registered for Fulfilment by Amazon (FBA) to store inventory in their local fulfilment centre. From this inventory pool, merchants can then fulfil orders coming from other European stores.
For example: a seller can send inventory to one country, such as the UK and then any orders going to UK or EU customers can then be fulfilled from the same pool of goods.
For an Amazon merchant to sell between the UK and the EU via the EFN, they must meet the following criteria:
Access to UK and EU Seller Central accounts
FBA offers in both the UK and the EU
Applicable inventory stored in local fulfilment centres
Shipping programmes and export settings enabled
It’s also worth noting here that for EU to UK fulfilment, all EU stores are required to be enabled for export.
What is the difference between the EFN and Fulfilment by Amazon?
Fulfilment by Amazon means that sellers can store their goods in Amazon’s fulfilment centres and when a sale is made, Amazon can then “pick, pack, ship, and provide customer service” for these orders.
The EFN means that sellers with an Amazon EU account who are already registered to use FBA can store inventory in one of Amazon’s local fulfilment centres. Sellers are then able to fulfil orders across EU marketplaces from one inventory pile.
Amazon then enables FBA inventory to be listed across all of its EU marketplaces from one single account. Any orders placed from these listings can then be fulfilled via the EFN.
The benefits of using the European Fulfilment Network for e-commerce sellers
There are a number of reasons why an Amazon merchant might look to take advantage of the EFN to support their ecommerce business, including:
Easier access to European customers – The EFN makes selling to European marketplaces far easier and more cost-effective, made even more efficient by the single inventory pool.
VAT-efficiency – Using Amazon’s fulfilment centres means that you can avoid the hassle of shipping inventory across borders because you only need to hold stock in one EU location. This means you’re only required to have one VAT registration.
Smart use of space – For Amazon merchants who want to sell their goods to EU customers but don’t have the physical space to hold inventory themselves, the fulfilment centres used as part of the EFN are invaluable.
More custom, less admin – The EFN enables you to get your brand and your products in front of more people, which means more sales and more exposure for minimal effort on your part.
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The rules around VAT for EFN users
Official guidance shared by Amazon around VAT for EFN users is as follows:
As a general rule, sellers aren’t obligated to register for VAT in the store destination when fulfilling between the UK and the EU.
For B2C sellers using EFN, any sales that aren’t over €150/£135 will be accounted for by Amazon, paid for by the customer in the sale transaction process. For any B2C sales over these respective amounts, the customer is required to become the importer of record and will need to pay any necessary import VAT and duties. An estimate of this amount will be shown to the customer during the checkout process. The same applies to all B2B sales.
It’s fair to say that EFN VAT rules aren’t always hard and fast. Goalposts can shift at any time depending on external variables or factors relating directly to your goods and their sales locations. To ensure that you remain tax-compliant at all times, we’d highly recommend seeking the support of a specialist e-commerce accountant.