In a nutshell, compliance describes the process of acting, trading, and selling in accordance with the applicable law and regulations. The guidelines in question can concern a variety of fields – from taxes to customer protection to safety and environmental protection. Some are more important for Amazon FBA sellers, some are less so. 

Among the most crucial regulations to be compliant with for Amazon sellers are VAT and data privacy guidelines. These are topics in which specialised tools can help entrepreneurs to act in conformity with the law. The following article will show why compliance is so important and how to achieve it. 

What Is Legal Compliance and Why Is It Important?

If you are selling on Amazon Europe and fulfilling orders with Amazon’s Fulfilment Programs you are most likely serving customers in a variety of countries. The more countries you are selling in, the more local and specific laws and regulations you have to follow – ranging from environmental protection laws to packaging requirements. 

Of course, the specific pieces of legislation vary. However, if you are non-compliant with legal matters, you might not only face penalties but also exclusion from marketplaces or worse. In order to prevent fines and punishment and to make sure you follow the variety of guidelines in place across Europe, you can use Legal-Compliance-Management Tools like Libryo. 

These tools help online shop owners and Amazon sellers navigate complex regulations clearly and securely and introduce them to all laws that apply and have to be observed in the respective countries to which they sell by offering location-specific and industry-specific legal registers. 

Furthermore, all updates and changes to the laws and regulations are always prepared in simple, jargon-free language to also offer users without legal knowledge the opportunity to check compliance with local legal requirements.

What Is VAT Compliance and Why Is It Important?

VAT compliance describes the lawful fulfilment of duties concerning VAT – the Value Added Tax. These include – among other responsibilities – the obligation to register for VAT at a certain point, the task of collecting the right amount of VAT from end consumers, the obligation to turn in regular VAT returns once registered, and the task of paying the VAT debt to the authorities to which the VAT is owed. 

For example, if you establish a business in your home country you will need to immediately also register for VAT. Additionally, you need to register for VAT in foreign countries if your turnover through transactions with customers located abroad crosses a certain threshold or if you store products abroad, as is the case when using Amazon Fulfilment Programs. Once registered you need to submit regular VAT returns adhering to the local rules, formats, and deadlines. 

Customers from different countries need to be charged different VAT rates, which means you need to implement a corresponding system in your online shop or Amazon storefront to charge the correct VAT rates. Lastly, the debt needs to be paid on time and most probably to several different tax authorities individually.

Not taking care of VAT compliance will lead to difficulties. If you forget to turn in VAT returns or submit faulty returns, you will most likely face fines or late fees. Furthermore, if you forget to register for VAT in time and don’t charge customers VAT, you are still subject to VAT nonetheless. In this case, you will not only face fines but will also need to pay VAT debts even though you didn’t charge VAT, therefore reducing your profit. 

That’s why VAT compliance is so important and that is where tools like hellotax come in. Specialised in VAT for E-Commerce and Amazon selling in Europe, the Amazon FBA accountant hellotax can take care of all your VAT duties – from registration to the submission of returns. 

The hellotax VAT compliance software monitors all your transactions, receives your tax letters, alarms you if a deadline is approaching, and automatically compiles reports. 

The hellotax team files your returns and can also assist you in forging ahead with the One-Stop-Shop, the EU’s alternative to multiple foreign VAT returns, which enables you to declare all intra-European cross-border sales in a combined return in your home country. 

What Is Privacy Compliance and Why Is It Important?

Another important topic is data protection and privacy – especially if you’re an Amazon seller active in the European Union. That’s because the General Data Protection Regulation (GDPR), which was introduced in the EU in 2016, places maybe the highest demands ever on companies when it comes to data security. 

Any company that receives personal data from European customers must ensure that the data is stored safely, only used for certain purposes, and diligently deleted. The data protected includes names and website usage data, as well as addresses, account information, and transaction data of customers on online platforms such as Amazon. 

Privacy compliance in the European Union might be the most important topic for Amazon sellers, though the most often overlooked, as the penalties imposed by the European Union for non-compliance with the General Data Protection Regulation are very high and might easily ruin a self-managed Amazon business. 

Help comes in the form of tools like privIQ, formerly GDPR365. Data security compliance tools such as these offer a complete overview of requirements and tips on how to implement them, opportunities to monitor data management processes and security measures, the possibility to assign tasks to individual employees or the data protection officer, alarms to access requests and data security violations, and more.

How Can I Implement Compliance Measures?

If you are managing your Amazon FBA business by yourself, you only have to research regulations or use tools like the ones presented above to trade and sell compliantly across the European Union. However, if you have employees or business partners, you need to make sure everybody is aware of compliance measures you have implemented or steps that have to be followed. 

There are a variety of digital learning tools and platforms on the market that serve to create compliance awareness in your business. They offer everything from online course libraries with videos on important topics such as GDPR, information security, and tax law and functions to create bespoke training content to ratings, questionnaires, surveys, and other tools to engage employees. 

While compliance tools serve as the first step toward legal, VAT, and privacy compliance for Amazon’s sellers in Europe, digital learning platforms can ensure that your whole team acts in conformity with regulations when scaling your Amazon shop. This way, penalties are avoided and you can continue concentrating on your core business while trading and selling legally. 

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About the Author:

hellotax is a tech company that builds automated solutions for VAT compliance. Companies of every size use our software to ensure their VAT compliance while selling online in Europe.

However, tax obligations in Europe have been costly and complicated for Amazon EU sellers. As a way of helping Amazon sellers manage their European tax, Amazon invites sellers to join VAT Services on Amazon.

This latest solution offered by Amazon will make your business expansion to Europe less complicated. With a fee of €33.30 per month, tax obligations in Europe will be filed via a third-party tax service provider.

What is VAT Services on Amazon? 

Amazon Seller University – UK: A screenshot (cropped) of VAT Services on Amazon; Retrieved Date: Sept. 14, 2021  from https://youtu.be/9ctlFU14bLs

VAT Services on Amazon is a VAT compliance solution that accommodates your VAT registration and filing obligations when you expand to the EU marketplaces. 

The primary purpose of this Amazon solution is to help you deal with the European VAT landscape, particularly in the United Kingdom, Germany, France, Italy, Spain, Poland, and the Czech Republic. 

Addressing Value Added Tax obligations in Europe can be confusing for sellers, especially since European VAT rates vary between countries and the type of products sold on the EU marketplaces. 

Sellers can now deal with VAT compliance on the Amazon EU marketplaces efficiently and easily through VAT Services on Amazon. Amazon’s chosen third-party tax service provider will be the one to process VAT compliance for you. 

Consequently, this VAT compliance solution offered by Amazon inevitably enables sellers to spend more time on other areas of concern when expanding across Amazon EU marketplaces. 

What is Tax Representation?

If you are an Amazon seller not based in Europe, you will need to delegate Tax Representation to register for VAT in EU countries. 

Simply put, tax representation is the process where someone acts on your behalf as a non-domestic seller in the EU. This tax representative can be an individual or a business that will help you with your tax obligations in Europe.

When you join VAT Services on Amazon, you can disregard the tedious process of searching, assessing, and later on, hiring a third-party tax service provider since VAT Services on Amazon has it covered.

Apart from covering the aforementioned processes, this latest Amazon solution also covers the expenses incurred for the first six months of filing and tax representation. Once the promotion period is over, you will be charged the annual fee. 

Who is Eligible for VAT Services on Amazon?

When it comes to eligibility for the Amazon VAT service, the eCommerce giant stipulated that those with Amazon businesses based in an EU country are eligible to use VAT Services on Amazon without any constraints.

Furthermore, if your business is situated in a country outside of the European Union, such eligibility is limited only to the United Kingdom, Germany, and the Czech Republic.

It is also worth noting that VAT Services on Amazon do not support VAT registration or filings in the country where your business is based.

How do you Sign up for VAT Services on Amazon?

If you wish to Sign Up for VAT Services on Amazon, here is what you should do:

• Log into your Amazon Seller Central account. Once logged in, navigate to the Manage Your VAT section, under the Reports Tab. 
• Once redirected, you will be given a selection of EU countries. After choosing, you will have to confirm your business details.
• Once company information has been confirmed, you can click on Agree and Continue button to enroll.

Why Should you Expand to Amazon EU?

If you are still hesitant to expand your Amazon business to Europe, here are some reasons why more and more Amazon sellers are branching out to Amazon EU marketplaces. 

• Sales Diversification

Expanding to Amazon EU marketplaces means more sales opportunities and revenue. Sales fluctuation on a single market can be avoided when you join Amazon EU since it has various marketplaces with different peak sales and holiday seasons.

• Logistics Leverage

Similar to Amazon.com, Amazon EU marketplaces also offer sophisticated logistics and fulfillment services. This is especially true if you are an Amazon FBA seller.

• Sales Expansion

Needless to say that expanding the European market means potential sales increase. Amazon UK and Germany are the best starting points for your expansion as they represent some of the largest eCommerce countries in Europe. 

• Growing International Market

The expansion of Amazon in Europe is far from being over. There are still other avenues for expansion which means more sales opportunities and growth. As Amazon EU marketplaces grow, so will your business. 

Prepare Your Expansion

To help you with your pricing strategy, the use of an automatic AI repricer is recommended. An AI repricer can easily adjust your listing price to offer a competitive price across Amazon international marketplaces.