Article Overview
Title: (Value added) taxes for Amazon sellers in the EU: Pitfalls, regulations, reform 2021 and more
Author: Timo Mattana
Published: October 27, 2025
EU VAT Reform 2021 and What It Means for Amazon Sellers
Current VAT legislation in the EU was designed for traditional corporations from the 1980s-1990s, not modern online retailers. This creates rapid tax liability for e-commerce businesses, particularly when utilizing Amazon's fulfillment services across borders or exceeding delivery thresholds.
Effects of New Regulations Post-July 1, 2021
The EU VAT e-commerce package introduced the One-Stop-Shop (OSS), allowing online retailers to declare all B2C distance sales to other EU member states through their home country tax office. This eliminates the need for separate foreign tax registrations for cross-border distance sales.
Key change: A single €10,000 EU-wide threshold replaced country-specific delivery thresholds. Sellers generating over €10,000 yearly in combined B2C distance sales across Europe must report through OSS in their domicile country.
Implementation Timeline
Originally scheduled for January 1, 2021, the reform was delayed due to COVID-19. The OSS officially became operational on July 1, 2021, and remains fully operational today.
Important Limitation: FBA and Fixed Establishments
The OSS primarily covers B2C distance sales where goods ship directly between EU countries. However, it does not apply when:
- Goods are stored in other countries via Amazon FBA warehouses
- Goods are imported into the EU
- A fixed establishment is created through inventory storage
In these scenarios, sellers still require local VAT registrations in countries where they hold stock, regardless of the €10,000 threshold.
Emerging development: Italy introduced new rules for non-EU sellers in 2025, requiring a €50,000 financial guarantee and fiscal representative appointment to obtain VAT registration.
Tax Liability and Amazon's Central European Program (CEP)
What Is the Central European Program?
The CEP allows Amazon to store seller inventory in fulfillment centers in Poland and the Czech Republic (in addition to German facilities) and distribute from those locations.
Financial incentive: Participating sellers save 50 cents per article shipped, regardless of origin warehouse. This represents a cost penalty for non-participation.
Tax Consequences of CEP Participation
Storing or distributing goods in other countries creates immediate tax liability from the first transaction. This establishes a "fixed establishment," triggering local VAT registration requirements independent of the €10,000 OSS threshold.
Requirement: Sellers must already possess valid Polish and Czech VAT numbers before activating CEP in seller central.
Steps to Prepare for CEP
Timeline: Allow 2-3 months for tax authority approval in Poland and Czech Republic. During peak periods (like COVID-19), processing may extend further due to reduced staffing.
Processing steps:
- Apply for local VAT numbers in both countries
- Wait for tax authority approval
- Activate CEP in seller central
VAT Rate Considerations
When selling from Poland or Czech Republic to other countries:
- Sellers typically pay local VAT rates (Poland: 23%, Czech Republic: 21%)
- These rates apply until the €10,000 EU-wide threshold is exceeded
- After threshold exceedance, destination country VAT applies via OSS
Selling to Germany (19% VAT rate) from higher-rate countries reduces profitability initially.
Cost-Benefit Analysis
Industry guideline: CEP becomes worthwhile around 500-600 FBA sales monthly. Compare foreign tax compliance costs against the 50-cent per-unit savings.
Important: Tax Liability Doesn't End Easily
Once activated, CEP tax obligations continue through the calendar year. Deactivating in seller central doesn't eliminate reporting requirements—sellers must still file tax returns (potentially showing zero activity) in registered countries.
Deregistration: Tax liability only expires upon complete deregistration through the foreign tax authority, which involves comparable fees to initial registration.
VAT Liability: When and How Amazon Sellers Must Register
Warehousing Triggers VAT Registration
Storing goods in another country—even through returns-only facilities—generally creates a fixed establishment requiring VAT registration and reporting, regardless of direct sales from that location.
Example scenario: A Slovakia warehouse receives returns and forwards inventory to Polish, Czech, or German facilities for resale. Simply holding inventory triggers Slovak VAT liability.
Risk: Unintended Inventory Storage and Account Suspension
Amazon occasionally ships inventory to non-activated warehouses for returns or low-quantity items. Sellers must actively monitor warehouse locations, as this can create unintended tax liabilities and potential account suspension.
Amazon enforces strict compliance in countries with marketplace facilitator laws (now including most EU nations), and non-compliance with VAT obligations frequently results in account suspension.
Marketplace Facilitator Laws and Amazon's Role
Many countries impose marketplace facilitator laws making Amazon liable for collecting and remitting VAT on certain transactions rather than individual sellers. This financial exposure makes Amazon particularly vigilant about seller compliance.
Recent VAT Collection Changes
From mid-2021, Amazon began globally collecting VAT on low-value goods imports (under €150 for EU) when sold from outside the EU/UK to consumers within. This shifted VAT responsibility from seller to marketplace.
Compliance requirement: Amazon requires valid VAT IDs (not just general tax IDs) from sellers, particularly in countries with facilitator laws.
Penalties for VAT Non-Compliance
Types of Violations
Indirect consequences arise from non-compliance with fixed establishment requirements, resulting in:
- Incorrect VAT charging or declaration
- Account suspension
- Operational disruption
- Higher compliance costs
Direct penalties include unpaid tax amounts plus sanctions imposed by European tax authorities.
Penalty Amounts
Penalties vary by country and violation amount. Historical examples show extreme cases: "Italy charged 230% of VAT owed as penalties, separate from actual taxes due."
Current Developments
Additional reporting requirements continue expanding:
- Poland: Implemented SAF-T (Standard Audit File for Tax) with €100 per-transaction penalties for unreported sales
- EU SME relief: January 2025 introduced VAT simplification schemes for small sellers below certain thresholds
Remedying Unpaid Taxes
Most tax oversights are resolvable if sellers act properly:
Process:
- Apply for local tax registration with retroactive effective dates
- File back-dated tax returns
- Remit outstanding VAT amounts
- Claim refunds for unnecessarily paid taxes in home countries
Though time-intensive (revised invoices, documentation updates), rectification is feasible and necessary.
Amazon's Future Expansion and Tax Implications
European Market Expansion
Amazon continues launching new marketplaces (Netherlands, Sweden, Poland) and expanding fulfillment networks across Europe. New markets typically follow a pattern: marketplace launch precedes FBA facility establishment by several months.
Scandinavian Opportunities and Challenges
Scandinavian countries represent strong e-commerce markets with tech-savvy consumers. However, sellers must closely monitor fulfillment structure development and tax registration requirements as warehouses become operational.
New Market Pattern: Amazon.nl Example
The Netherlands marketplace launched in 2020 with FBA facilities following later. This pattern repeats with subsequent expansions (Sweden, future markets), meaning initial cross-border shipping from existing facilities precedes local warehouse establishment.
Seller Considerations for Expansion
Critical monitoring points:
- Track the €10,000 EU-wide distance-selling threshold across all sales channels
- Monitor all marketplace sales (not just Amazon) toward this threshold
- Verify inventory storage locations monthly—don't assume goods only ship from intended warehouses
- Activate local VAT registrations before goods arrive in new countries
Specific risk: Sellers not using CEP may find inventory unexpectedly stored in Poland due to Amazon's fulfillment optimization, creating unplanned Polish tax liability.
Recommendation: Use monitoring tools to track warehouse locations and tax liability status across jurisdictions.
Key Takeaways
- The €10,000 EU-wide B2C distance-selling threshold applies to OSS registrations
- Fixed establishment (warehousing) creates separate, immediate tax liability
- CEP participation requires advance Polish and Czech VAT registration
- Marketplace facilitator laws make Amazon particularly enforcement-focused
- Tax oversights are generally correctable through retroactive registration and payment
- Monitor inventory locations continuously to prevent unintended tax liabilities
- New market expansions require advance planning for tax compliance