A Complete Guide to EU Exports for Amazon FBA Sellers. Keep the Brexit Nightmare at Bay!
Well exactly as many of us feared, Brexit has caused a lot of problems for us UK-based FBA sellers and the horror stories have been pouring in all year…
Multiple fines, shipments delayed and even sent back completely – I’ve heard it all in the last few months.
It’s safe to say it’s been a real nightmare for Amazon sellers in particular, with couriers being completely confused themselves and giving out wrong information. (Even UPS and Amazon stopped their partnered carrier option for shipments to the EU).
Well to help put a stop to this Brexit madness for Amazon FBA sellers, I’ve put together a complete guide to exporting to the EU post Brexit.
Let’s get straight to it!
Exporting to EU: An FBA Refresher
First things first – there are 4 main “terms” when exporting goods to the EU and which one you use will have a big effect on the shipping process. They are:
- DDU (Delivered Duty Unpaid) Terms
You’re sending the shipment to the buyer’s door, and they will be responsible for any import duty / taxes.
- DAP (Delivered At Place) Terms
You’re sending the shipment to a named place but again, the buyer is responsible for any import duty / taxes.
- EXW (Ex Works) Terms
You’re leaving the entire shipping and customs process up to the buyer. You simply make the order available for collection and they take care of the rest. Obviously, this would only be feasible and applicable for B2B sales.
- DDP (Delivered Duty Paid) Terms
You’re completely responsible for the shipment and customs clearance process at its destination, including all import duty and taxes.
DDP Terms are the hardest to comply with as they carry the most requirements but unfortunately when you’re shipping to Amazon FBA centers it is always DDP. This is because you’re acting as the importer when you ship goods to Amazon.
Amazon are very clear about this, stating:
“It is important to note that Amazon, including the fulfilment centres, will not serve as the importer of record for any delivery of FBA inventory. Any FBA inventory delivery attempting to make entry with Amazon as the IOR will be refused and returned at the deliverer’s expense – no exceptions.”
But amazingly a lot of people still get this wrong, including some courier companies who have told Amazon Sharks members that Amazon are the importer!
It really is black and white. There shouldn’t be any confusion here. Shipments to Amazon FBA centers have to be sent DDP, so that’s what we’re going to focus on in today’s guide.
UK Sellers Shipping to the EU: What do I need to do?
So what exactly do you need to send shipments into the EU as an Amazon seller?
• UK EORI number (https://www.gov.uk/eori)
• EU EORI number
• EU Entity / Fiscal Representative
You need a representative in the EU to act as your Importer of Record – i.e. the business that you’re sending the goods to / transferring the stock to. And this Importer of Record cannot be your same UK business – you can’t send the stock to “yourself” in this way. It has to be either a separate EU business which you’ve set up and registered or a fiscal representative acting on your behalf.
A fiscal representative is a type of VAT agent for foreign businesses with VAT registration in the EU. They become responsible for the VAT calculations and reporting of their client (i.e. you) and are the designated point of contact for local customs in case of any issues, questions, or even audits.
For the vast majority of people, hiring a fiscal representative is the easier and more cost effective option, vs setting up a designated separate EU entity, and there are a number of companies that will provide this service.
• VAT numbers
• Commercial Invoice (for customs clearance)
The invoice needs to be completed by your UK business, showing your UK EORI against your registered address, and invoiced to your EU business or fiscal representative, showing your EU EORI and VAT number.
Your freight forwarder will use this commercial invoice for both the export declaration and import declaration at the destination country, and it will also be used to calculate applicable import duty and taxes.
If shipping multiple SKUs then the invoice must show the full HS Commodity codes with the value of each individual product, and then the total value as well. And it also needs to show the country of origin for all products.
This is important because if your goods are manufactured in the UK or Europe then there’ll be no import duty to pay. However, for the vast majority of Amazon FBA sellers this won’t be the case and your products will be manufactured in China, other Asian countries, the US etc.
VAT is of course payable regardless of the country of manufacture.
So there you have it! The 5 requirements to export your goods to the EU post-Brexit.
Now before somebody points out that you don’t need to be VAT registered to export your goods, that is technically true. But practically speaking that won’t work out as it’ll mean paying VAT on the original shipment into the UK and then paying it AGAIN as you import into the EU, so 40% in VAT… Not efficient to say the least!
Plus you will need to be VAT registered to store your stock in Amazon’s EU FBA centers anyway.
How does this all differ if you’re sending straight to your end customers in the EU rather than to Amazon…from a Shopify store for example?
Well in that case we go back to the different shipping terms which we covered earlier on but long story short is that you’ll most likely be sending items DDU – Delivered Duty Unpaid, which essentially means that the customer is taking on the responsibility of the import, including the customs clearance and any import duty and taxes.
Which means you DON’T need an EU EORI, VAT number, EU entity or fiscal representative.
Of course they’re not going to be dealing with that themselves and the courier company will clear the shipment and then bill them for it (with their added fee of course).
So just make sure your customers are fully aware of this before they place any orders.
Now I know what some of you may be thinking, and this is something that a lot of people have emailed me – “it’s just not worth the hassle!”
And I completely understand that it seems needlessly difficult BUT it really isn’t. The process itself is actually fairly simple but a lack of knowledge and expertise is exacerbating every problem.
Which brings me back to a point which I’ve been screaming about for years now. Get a good freight forwarder!
The role of a Freight Forwarder for Amazon FBA sellers
Seriously I can’t emphasise this enough. So many problems and headaches are taken away when you use a good freight forwarder who know exactly what they’re doing.
Now I’ve been recommending Woodland Global for years on my blog and nothing has changed there but today I’m happy to include another recommendation for you, one of our Amazon Sharks FB Group members – Westbound Global.
Ryan Clark, the Co-Owner and Director, is often seen on the Amazon Sharks Facebook group offering helpful advice to fellow members and he actually contributed a ton of information to help me put this entire guide together.
His knowledge is really second to none and it’s no exaggeration when they claim a “personalised” logistics service as Westbound Global really do take the time to look at your individual business and guide you through the entire import / export process.
I look forward to testing them fully soon with a full order but for now I’m more than happy to give my recommendation to Ryan and the team at Westbound. As well as all the info and requirements we’ve covered so far, Ryan has also offered some further insider tips and advice to ensure everything goes smoothly:
- We strongly advise to forward all paperwork to your forwarder to ask for a pre-check, including at destination customs partners to ensure no adhoc problems arise whilst the goods are sitting there on a trailer in Calais incurring waiting time charges. Whilst it seems frustrating and ‘you just want to get the goods on their way’, don’t send them without getting everything approved. It could cost you thousands if not.
- On your commercial invoices, detail as much info as possible to make it easy for the destination Customs Broker. If you send a long invoice with multiple HS codes, and multiple manufacturing origins, they will simply look at it and put it at the bottom of the pile or worst still, refuse to handle it. It’s like chucking an empty quality street jar of coins at your local Tesco checkout saying you’d like to pay for your £150 weekly shop.
a. Sub categorise by: HS code + Country of Origin = Value. Then a new HS code + Country of Origin = Value. Then Sub Total each Origin batch to EU/UK and Non EU/UK. This will show the workings quickly and easily to the customs broker so they know what value to use for the Zero rated Trade deal products, and what value to use for the non-qualifying trade deal products.
- Customs Problems – We mentioned above that you need a Fiscal Rep or EU Entity. The two options are different but, do have a different approach to how the European Forwarder or Customs broker acts in regards to customs clearance.
This is very different to the UK so it’s important advice. In the UK, we clear on behalf of an entity or person no matter where they reside or are registered as a business and this is called Direct Representation. It’s the importers responsibility to declare correct values, HS codes and info.
In Europe, the customs brokers can be an easy target by the local Customs authorities ‘if’ any of the information provided by you is incorrect, even at a later date.
If you were an EU entity, they would seek corrections, fines or repayments directly from you. If you are a UK business or other non EU entity, they will seek the customs broker for representing you, which could lead to fines/costs to them.
This means customs brokers in the EU are refusing to perform customs clearances for UK businesses unless they are actually setup as an EU business/entity and having a Fiscal Representation does not give you a real entity for customs to approach. This is why many are having problems right now where brokers are, behind the scenes, refusing to clear goods due to this EU customs stance towards them. It is worth considering whether you should seek to setup an EU company rather than use a Fiscal Rep.
Post Brexit, there are no more UK to EU pallet network operators due to severe customs problems. Imagine one customer not getting one part of the above correct, it would hold up the entire truckload.
Before Brexit, there were pallet operators (Pallex/Palletways/Palletline and many more) offering something like £170 per pallet to Europe. It’s unbelievable to understand that actually, in Europe they DO NOT have a pallet network at all. This was previously subsidised from UK to Europe on backload trucks which cost (in the old days) not a lot. The real bulk of that cost (£170) was a prorated figure from the local destination depot to the door delivery place.
The costs now for getting stock to Europe is much more than £170 a pallet due to the lack of drivers willing to come here (because they are scared, that they will get stuck – Covid tests/isolation possibilities, and their own customs procedures heading back) and also, the EU have introduced a permit requirement for UK Truckers to enter Europe, but only issued an initial 2,500 of them. There was near 12,000+ trucks previously heading into Europe + Republic of Ireland truckers, who now cannot due to a lack of permits. This has all driven the price high along with problems being caused in customs.
The method we are using to ease congestion is to avoid Calais and Rotterdam clearances at port, but to Transit Bond the goods to a nearby partner depot and customs clearing there. As long as the paperwork is correct, this is relatively straight forward although it does add another £75 fee (approximately) for the T1 bond document. Distribution is then carried out from the local depot or, Amazon SPD in Europe actually offers collections for LTL and FTL unlike UK or USA. Here, it’s just UPS pick ups for cartons where SPD is used but in Europe, it’s actually a good idea to utilise SPD from our destination depots in a way which we are used to releasing UPS cartons.
I hope you now really understand why I stress using a good freight forwarder. Just look at what a difference it makes!
And that’s pretty much it for today’s guide. I hope you’ve found it useful and it will help avoid some of the problems people have been having. It’s been a tough time for shipping with Covid-19 and then Brexit but hopefully everything will slowly get back to normal this year.
Once again, a big thank you to Ryan and the team at Westbound Global. Keep an eye on their website for any upcoming shipping changes and news.
As always if you have any questions get in touch with me and I’ll personally get back to you.
Otherwise, until next time!
All the best,