Preparing your Amazon business for Brexit

On 1 January 2021, the UK will formally leave the EU’s Single Market. Although UK-EU negotiations are ongoing, from that date there will be a customs border between the UK and EU. This border will affect businesses like Amazon sellers who transfer goods across it.

Amazon has recently announced changes to it’s fulfilment services (FBA) as a result of Brexit.

From 1 January 2021, Pan-EU FBA will no longer include the UK and inventory transfers between the UK and EU region will stop. However, it will be possible for traders to hold stock in an Amazon fulfilment centre in the EU, for example in Spain, Germany, France or Italy and transfers under the Pan-EU FBA service will continue within the EU region.

What is the European Fulfilment Network?

The European Fulfilment Network allows a trader to hold stock in one country, for example the UK, and then Amazon ship the goods from this one location all over Europe. The Network will cease fulfilment across the EU-UK border. Under this service if the UK is the chosen location, goods will only be shipped to within the UK. To fulfil EU orders you will be required to hold goods in, and therefore VAT register, in an EU country.

Minimal disruption or change is expected for goods sent by Selling Partners directly to the UK or EU from outside of Europe, as these goods already cross a customs border.

One possibility to mitigate the impact of these changes is to split inventory between the UK and EU fulfilment centres, to ensure sufficient stock is held either side of the new customs border. Post-Brexit this will require you to ship goods across the new UK-EU Customs border. The following information will be required as part of the customs declarations and therefore it’s worth ensuring these are in place as soon as possible:

VAT numbers

To move goods across a border and store them locally you will require a VAT number for the country in which goods are to be stored. You may need to get in touch with one of the various European VAT specialists or ensure you are registered in your chosen country via Amazon’s own VAT services team. It is worth noting that overseas registrations can take longer than domestic registrations.

EORI number (Economic Operators Registration and Identification number)

To move goods to and from the EU post-Brexit a business will need an EORI number. Many UK VAT-registered businesses should have been auto-enrolled and issued an EORI number. However, those who are not VAT registered or have not been auto-enrolled will need to apply themselves.

It should also be noted, businesses that have a presence in another EU member state, will also have to apply for an EU EORI. They should apply to the state they have a presence in, or the first Member State they lodge a customs declaration. 

Harmonised System (HS) codes

These codes determine the level of duty and import VAT that may be applied to your products. Understanding your products commodity codes in advance will ensure you are ready to prepare custom clearance declarations once required.

Providing custom clearance documents

From 1 January 2021, all imports and exports in and out of the UK will be subject to customs declarations and added controls. As a business you will need to decide if you will complete these declarations yourself or will instruct an agent to complete them on your behalf.

Fiscal Representative

As a UK business, you may require a fiscal representative when registering for VAT in the EU. A fiscal representative is a locally established entity that is jointly and severely liable for the VAT owed by a non-EU based business. Having this representative is required by some EU countries and is designed to ensure VAT compliance by businesses established outside the EU. These services add additional cost and should be taken account when considering market viability.

What next?

If you have any questions about international trade post-Brexit or any of the above, please contact our Business Tax team on 01903 234094.