Amazon's warehouses in Europe are seriously overwhelmed! The latest response to the July tax reform

Europe has been quite unstable recently, warehouses have been bursting frequently, warehouses in France and Germany are in urgent need of help! Some logistics partners have even stopped delivering to FBA warehouses!

The first warehouses to be overwhelmed this time are France's LIL1 and CDG7. Due to the difficulty in delivery and the sharp increase in costs, some freight forwarders have stopped accepting goods from these warehouses. There are also some warehouses where the overwhelm is not so serious, and freight forwarders generally increase the price by 2 yuan/KG to 4 yuan/KG.

Recently, the German FBA warehouse DTM2 has also been reported to be overwhelmed. The warehouse's processing capacity has exceeded the upper limit . Not only is it difficult to enter the warehouse, but even the delivery is waiting in line, and the delivery time of the order has been greatly extended. Due to the serious situation, UPS and DPD are currently refusing to accept parcels from the German 44145 (DTM2) warehouse . However, the goods that have been sent to the UPS warehouse are not affected and can still be picked up.

With such a serious warehouse explosion, European sellers have more uncertainty about the next Prime Day. At this time, it is important to handle the basic issues of store security, otherwise it is easy to destroy the store. For example, after Prime Day, the new European tax reform policy will take effect on July 1st , and everyone must be prepared in advance. As July is getting closer, there are also some new methods that can be used to deal with the new tax reform to help sellers reasonably avoid costs. Below we asked European tax expert Sha Zhixing to give you a detailed introduction to these new tax reform processing techniques.

Facing the comprehensive tax reform in July, first of all, e-commerce sellers need to make corresponding adjustments to their sales strategies: for example, the pricing of goods sold on the platform needs to include value-added tax to avoid reducing the sellers' own profits. After the withholding policy is implemented, the import value-added tax paid when the goods are cleared through customs cannot be deducted, and a tax refund needs to be applied for from the tax bureau.

Tax refund is a complicated process. There are two ways to solve the tax refund problem:

1. When clearing customs for EU imported goods, you can defer customs clearance in the Netherlands or Belgium . No import VAT is paid for the time being, and each sales amount is directly deducted after the Amazon platform sells.

2. Choose to register an EU company to open an Amazon store . Because according to the new tax law, EU local companies will not implement the withholding policy, and sales tax will be declared and paid by the local EU sales country. Customs clearance bills can also be deducted.

Therefore, for sellers with overseas brands, registering an EU company as the main body of the Amazon store is the only way for the company to go global, develop multinational business and enhance its international image in order to enhance the brand's international image and increase the company's international influence.

Let’s briefly list the advantages of overseas companies registering Amazon stores :

1. For local people who shop on Amazon, local companies are more likely to be recognized by local people than foreign companies. Establishing an EU company can not only expand the localized sales channels of cross-border e-commerce more deeply and widely, but also be protected by EU countries and enjoy some local support policies. For example, during the epidemic last year, countries such as the United Kingdom and the European Union issued various tax exemption policies and economic subsidies for local companies.

2. By registering an overseas company, you can properly arrange your taxes and not be restricted by the withholding policies of platforms such as Amazon. You can have a certain degree of autonomy in tax compliance and no longer have to worry about paying value-added tax repeatedly due to the inconvenience of tax refunds.

3. Breaking through regional barriers, goods In the EU's single market (sometimes also called the internal market), people, goods, services and capital can flow freely within the EU as within a country.

With so many EU countries, which one has the most favorable tax policies and the most convenient registration process? We have selected the following EU countries that are more suitable based on the aspects that sellers are most interested in:

  In terms of registration time and tax convenience, using a Hungarian company to register an Amazon store is undoubtedly the best choice for e-commerce sellers. In the future, Hungarian company registration is likely to become the choice of many sellers.

Moreover, to register a limited liability company in Hungary, the registered capital is HUF3000,000 (approximately EUR10,000), which does not need to be paid in full.

Taxation: Hungary has a fast-growing economy. It has taken various measures to optimize the investment environment. It is one of the countries in Central and Eastern Europe that attracts the most foreign investment per capita. Large enterprises that employ employees do not need to pay worker taxes or other corporate subsidies for 5 years. The tax audit is also very friendly.

Germany is strategically located in the center of the European Union and is a transportation hub between Eastern and Western Europe. Water, land and air routes pass through Germany. As a member of the European Union and NATO, Germany is known as the "Corridor of Europe."

Taxation: Due to the rigorous management system of German companies, there is no concept of so-called shell companies. Once a company is established, it should operate formally and legally, and must submit annual audits and annual reports, renew chamber of commerce fees, and provide monthly tax filing services every year.

In order to attract overseas investment, the German government also grants long-term residence opportunities to some entrepreneurs who have actually invested in Germany for more than five years and have made certain contributions to the German economy. This creates better business opportunities and conditions for overseas investors.

Spain is the fourth largest economy in the Eurozone. The procedures for registering a company in Spain are relatively complicated. Shareholders and sponsors need to obtain a Spanish foreign number first. After the Spanish company obtains legal person status, it will be registered with the Spanish Company Registry. The whole process takes about one month.

Taxation: Spain has reduced corporate profit tax from 25% to 15% since 2018, and all companies, regardless of their type and size, are subject to a minimum corporate profit tax rate of 15%. VAT is calculated every three natural months. If IVA is negative, it will be accumulated to the next quarter; if the entire year is negative, you can choose to apply for a refund at the end of the year, or accumulate it to the next year.

The last recommendation is the United Kingdom, which is the European country with the simplest registration and the most convenient taxation. As one of the old capitalist countries, the United Kingdom has a pivotal position in the global market. Among the EU countries, the registration procedures for British companies are the simplest, and there is no requirement for registered legal persons in other European countries to provide passports.

A Chinese legal person can register a local company in the UK in two days by providing his ID card . After registering a company in the UK, the registered capital does not need to be in place, an offshore account can be opened, and there is no foreign exchange control.

Taxation: If you are not doing business in the UK, it is legal not to pay taxes; it is very convenient for the company to hibernate or restart, and the annual maintenance cost is also very low.