3% of Sales Coming from the EU? Say Hello to the EU VAT Bomb

If your business has been happily taking orders from around the EU and even if this is as low as 3% to one EU country hot-spot for a £1M turn over business, then you could be sat on an awkward issue regarding VAT.

This was another one of those ‘ah-ha moments’, although quickly followed with ‘wtf’ and ‘omg’ that’s going to be fun. In this article I do my best (as I’m not an accountant) to bring this topic into plain English.

This is certainly an issue that hasn’t been highlighted to businesses from either Amazon or eBay to my knowledge and is quite concerning eBay has been in such a push for Cross Board Trade (CBT) in recent months with statements that it fuels half a billion export boom and pushing the international site visibility upgrades and featuring eBay UK listings on the EU sites.


Firstly lets clear a few points:

  • #1 I’m not an accountant
  • #2 I’m not a VAT expert
  • #3 I’ll never be #1 or #2.
  • #4 If you are #1 or #2 or have experience of this topic with your business, then fell free to comment and I’ll amend this article accordingly as needed.

That said let’s dig in and take a look a potentially nasty issue for medium to larger eCommerce businesses, because its really easy to go past the VAT limits, as they’re sooo low!

The UK VAT System

Starting from the beginning, VAT in the UK is pretty much a given. At around £73K of gross turnover or if expected to exceed this, a business is pretty much required to register to become a VAT tax collector and give the HMRC 20% of sales (and to be able to claim back the VAT on purchases and on expenses). This may not be technically correct, as there are deviants of this, but that’s the crux of it for most product based businesses.

So if you exceed or ‘expect to’ exceed ~ £73,000 of sales in one year, you normally need to register for VAT in the UK. Relatively straight forward so far. Yay!

The EU VAT Thresholds

Now this is where it can get nasty. As that expectation to exceed the threshold in the UK, also applies to business delivering products from the UK into the EU member states (called distant selling), but these states don’t all have such high thresholds when compared to the UK. In fact some of them are really low at around £30,000!

Let’s say you’ve been happily running a £1M p/a business that uses the marketplaces and also a couple of other sales channels. As you’ve been processing your orders from the UK, in most circumstances you’ve also bee taking orders from a wide variety of countries outside of the UK too.

The shocking reality is that if as little as 3% of these orders have come from one of the EU countries such as Austria, Belgium, Cyprus, Estonia, Finland, Greece, Ireland, Malta, Portugal or Sweden. You have an issue.

Each of these countries have a VAT threshold of €35,000 (approximately £30K), when you hit this threshold then apparently you’re then required to register for VAT in those countries locally.

VAT Thresholds For European Countries (Sept 2011)

Doing some homework prior to writing this article, I found this document on the European Commissions website under Taxation & Customs Union. The middle section shows the thresholds for each of the member states in this document and I’ve extracted this to form the table below and highlighted the thresholds in bold.

Member StateThreshold for application of the special scheme for distance selling
Bulgaria70.000 BGN (€35.791)
Czech Republic1.140.000 CZ (€46.570)
Denmark280.000 DKK (€37.557 )
Latvia24.000 LVL (€34.052)
Lithuania125.000 LTL (€36.203)
Hungary8.800.000 HUF (€32.257)
Poland160.000 PLN (€40.293)
Romania118.000 RON (€28.012)
Sweden320.000 SEK (€36.232)
United Kingdom70.000 GBP (€81.843)

Even with the approximation that €35,000 is £30,000, for a £1M p/a business, this is only 3% of sales and actually very easy to achieve by sheer accident into one or more of these countries.

It’s reassuring to know that the more likely culprits to top the £30K limit such as Germany, France & Italy have a much higher threshold of €100,000 or approximately £83,000, although in some circumstances, this could also be easily achieved without a second thought.


The aim of this article was purely to highlight and bring this topic into a ‘plain English’ format. I hope I have done that successfully.

If you even suspect that you’re likely to approach these figures to any of the countries above in your trading year, then please consult expert advice, such as from your accountant.

PS: If anyone knows how this applies to Amazon FBA items that are held in say France or Germany, I’d love to hear from you and please post a comment in the comments section below.

Updated Services List, Forthcoming Articles & Client History

Forthcoming ArticlesI’ve been really quiet again on the article front this week again. I’ve not given up, quite the opposite. I’ve been beavering away in the background updating other content on the site (like Amazon & eSellerPro category pages) and that’s what this article is about, what is coming up and what I have completed in the past few days.

Also, I have a draft article on my MBA progression that is due for tomorrow morning (Friday 11th March), if you have any background on working with someone whom has an MBA, been through the process, employed, read about or have any information you may feel would be of use to me, please contact me today, as I’m at the OU in the evening.

Forth Coming Articles

This is not a complete list as there are a few that I wish to keep in my ‘back pocket’ for later use. However should give you an idea on the topics that are due to be released here in the forth coming days:

  • What is Fulfilment By Amazon & How much does FBA cost? (FBA Calculator included!)
  • Should I be using Amazon’s FBA (Fulfilment By Amazon)
  • Which eBay Shop Subscription Level should I be using? (Fees Calculator included!)
  • The untold truth about using 3rd party software such as Channel Advisor or eSellerPro
  • Is eSellerPro really worth +£2,000 plus fees?
  • Why choose Channel Advisor, aren’t they Web 1.5?
  • What is 247 TopSeller?
  • An Ex Employees/Insiders guide to eSellerPro
  • Get Ready, Get Set. Facebook Credits are going to change EVERYTHING
  • How To: Using eBay Shop Keywords to Leverage the Extra eBay Shop Pages

Client History!

This page is really is in its infancy currently. however it has been an interesting experience, remembering all the different companies I have worked with. The stark reality that there are so many and how different each of them were. The Client History page is not complete yet, however it visually shows the breadth of businesses I have had and still have the joy of working with.

New Service Offerings

I’ve been documenting what exactly I can offer potential clients and what I have been helping businesses for what is a very long time now with. Its been quite an interesting process as I am well-rounded-character and have experience in a lot of fields, that is a quality that makes me unique, however I do have key offerings, these are:

Business Mentoring & Consultation
The person you can turn to for advice, suggestions and solutions to your issues. If you want to work 4 hours per week we’ll work towards that, if you want to grow by X% then, we’ll do what is needed to achieve that goal.

Competitive Intelligence
A legal and ethical business practice, which allows executives and managers in making strategic decisions for an organisation. Competitive Intelligence is the defining, gathering, analysing and distributing intelligence about a company, its products & services, its competitors and any aspect that affects the company in question.

In short, knowing your competition better than they know themselves.

Data Manipulation & API Integrations
I am an expert with MS Excel, can write VBA, iMacros, PHP and JavaScript by hand, however I know that there is no point in adding complexity, if the lowest skilled user cannot use it. That’s why I have for a long time used the term I coined ‘Matt Proof’.

From SOAP to CSV, XML to HTTP Post, if it needs to be altered, chopped, changed, manipulated, uploaded or abused to a much nicer format for use elsewhere, then there is an extremely high chance that I can aid you with this. I’ve included several examples on this on the Data Manipulation & API Integrations page.

If you are interested in any of these services, then contact me today.

Fulfilment By Amazon Webinar: Shipment Creation and Inbound Process

Fulfilment By Amazon. FBAIf you’re interested to understand in more detail how the shipment creation and the inbound process of Amazon’s fulfilment services (FBA) works, Amazon have a webinar at 5pm GMT on Wednesday 26th January.

I have attended a few Amazon webinar’s in 2010, they were well laid out and always learned something new while watching, the questions & answer sessions at the end can be very useful too.

Register Now

Apparently space is limited (is this a modifier to provoke action?) you can register your place following the link below:

Or for those whom need a call to action button, click the button below:

Register Now

Webinar Overview:

We are pleased to invite you to this FBA webinar focusing on the topic of sending shipments to our UK fulfilment centres. We will discuss the following:

– Quick Reminder about the shipment creation process
– Amazon’s requirements and restrictions
– Examples of common mistakes and problems which occurred last year
– Q&A

A representative from our operations team will be there to share first-hand experience and tips on these issues.

This session will mostly focus on learning how to improve your shipment process and avoid inbound problems. We will dedicate as much time as possible to questions.
For sellers starting with FBA, who are not familiar at all with the shipment creation process, we recommend you to first watch the recording of our previous webinar ‘Create your first shipment’, located here.

Title: Fulfilment By Amazon: Shipment Creation and Inbound Process
Date: Wednesday, 26th January 2011
Time: 5:00 PM – 6:00 PM UK Time

PS: Thanks to Carole from the Amazon FBA team for clarifying the day as the dates were out

How To: Win the Amazon Buy Box

For seasoned sellers, they know when they get the Amazon Buy Box, because they start receiving batches of orders. Its literally an ON/OFF switch for orders once the Amazon Buy Box is enabled for that seller.

In this article I will explain to you what the Amazon buy box is, what impacts it and how Amazon FBA can weigh the odds in your favour to win it.

So what is the Amazon Buy Box?

The Amazon Buy BoxUnlike eBay where you can have multitudes of the same item over many listings, Amazon’s format is different, Amazon has one ‘master’ listing and then allows multiple sellers, including itself to sell that item.

This master item, contains information that is an amalgamation of data from eligible sellers of the given item. Although some master items are created by Amazon themselves and contain more in-depth descriptions than they allow merchants to create

The ‘Buy Box’ is Amazons way of sorting the sellers that have the master product available to the customers.

You’ll notice that there are two parts to this ‘Buy Box’, the one that merchants fight for are the upper ‘Blue Buy Box’, this is how the vast majority of sales are made on Amazon.

The lower part was added in 2010 and shows offers from merchants that are very close to the merchant that is currently winning the coveted ‘Blue Buy Box’ spot.

If you look at the blue part, this is coloured differently from the rest of the section and on the Amazon site, coloured quite differently so it stands out, within it, is the primary “call to action” button, ‘Add to Basket’. You can see it dwarfs the other buttons. This is why getting access to the buy box is critically important, if you’re not in the box, you’re literally not in the game.

Amazon Blue Buy Box Winners

This is where Amazon are pretty darn smart and incorporate a large number of factors into whom wins the blue buy box and also it is to be noted that the winner (where there are more than one equally competing merchants) can and does rotate.

In the screen shot of the buy box above, if you look closely you’ll see that not the cheapest option is sat in the blue buy box, instead an offer for ‘£1,380.25 + FREE SHIPPING’ is winning, although the secondary offer is at ‘£1,369.99 + £6.00 shipping’ which is less than the current winner.

In fact looking at the screen shot below, neither of these two are the cheapest and clearly illustrates that you need just more than price to win the blue buy box and crucially the sale.

competing-for-the-buy-boxSo as you can see, there are actually four other merchants that have this same item for sale, but even still, none of these won the box and instead another has taken the box.

And if this is not bad enough even after 30 refreshes in different browsers, from different machines on different networks, I could not get the buy box to shift off that seller, but I did win at the game by logging into an Amazon account that had Amazon Prime enabled on it.

getting-the-buy-boxSo what are the factors that influence the buy box?

We’ve seen from the above that if Amazon decide that they want to give a seller the buy box, then they will give out the keys to sales and sometimes it can be quite sticky even when prices are quite some way out too.

To understand the logic behind the buy box we need to understand what Amazon wants. This is actually quite simple:

Amazon want only to sell items to customers from merchants it can trust. Ultimately if Amazon suggest a different seller, then this is representing themselves.

Unlike eBay, this is Amazon’s own marketplace, they sell on it themselves, it is THEIR marketplace, so you better have some compelling reasons why they should allow you to sell goods along side them and for them to allow you access to the buy box.

Note: This is why I love Amazon so much, it is extremely rare that I have an issue with an order from Amazon, whether its direct from them or a merchant on the site.

While not exhaustive, these are the main factors in winning the coveted Amazon Buy Box.


Besides actually being eligible, the total order price including postage, is the second most important factor in winning the blue buy box. This is only superseded by sellers that use Amazon’s FBA.


How many do you have and how quickly can you ship? By consistently fulfilling orders in a quick time, improves your chances.


This goes back to consistency and is probably why the seller in the first part of the article stuck on the blue buy box, they have been consistent when selling this product over a period of time.


Really daft, but first you must be eligible for the buy box. New merchants are not awarded access to the buy box for several weeks, even months until they prove that they can be trusted. Remember this is Amazons own marketplace and their own customers.

I say this time and again, never, ever piss off Amazons customers.


By having a low refund rate indicates that you are in-control of your business. Not letting buyers (remember they are Amazon’s buyers) down, you are helping Amazon trust you.

Customer Feedback

By keeping negative ratings to a minimum, you are pleasing Amazons customers. Amazon like businesses that keep their customers happy. These comments can be revised and I strongly urge you to watch the feedback you receive. Remember its their customers…

A-to-z Guarantee Claims

This is Amazons return process. While you are bound to have a number of returns, Amazon expects very few, act fast on these as it will play in your favour. Not getting them in the first place by excellent customer services is probably a better route.

Fulfilment – FBA

This requires a special mention and I will expand on this in the next section

The not-so Secret Pricing Rule

I let this slip in a recent article, you an read it here: The Amazon Buy Box – You know the Secret Formula Right?

Amazon Fulfilment AKA FBA. Guaranteed Blue Buy Box

Quite a bold statement, ‘Guaranteed Blue Buy Box’, but once you understand that by using Amazon’s Fulfilment services called FBA, then you are actually giving the despatch control to Amazon, thus as long as your pricing is relatively close then the buy box is yours.

In the screen shot above where multiple buy boxes are shown, the one to the right includes s screen shot from an Amazon account that has Amazon Prime. This is a service that costs £49 a year and gives Amazon customers access to unlimited free next day deliveries, they do this by offering it on their own and on items that are held in their fulfilment services.

I will be posting more information on FBA in a future article, I did write this up before Christmas but decided it needed more work.

Combining the Factors

Its only by combining all these factors together, can you expect to have access to the Amazon blue buy box and make lots of sales on Amazon.

Sure, you can and will make sales without the buy box, but a common conversation with seasoned Amazon sellers is that they pretty much know when they have hit the buy box for certain items because they get a flood of orders for the item that has won it.

Links of Interest

These links provide further information on the factors that influence winning of the buy box.

Part 1: Battle of The Giants – Tesco V’s Amazon – Who Will Win?


I’ve decided to release this earlier than what I had originally planned, its verging on the longest article I have done since University and while reading back through the first few sections its already totalling in excess of 10,000 words. So I’m releasing this beast in more manageable parts, for both me and you.

Over the next few days and weeks, I will be exploring the possibility of Tesco launching a ‘Tesco Direct Marketplace‘, to potentially rival that of Amazon (and eBay and anywhere else for that matter). I’ll be looking at the options that Tesco have available to them and what plus points they can take from their rivals and also which pitfalls to be careful of.

Its not going to be light on concepts, as with the possibility of a new platform. I am seeing this as a chance to re-write the whole idea of a Marketplace and evolve it further than what has been done before. It comes the potential to make a success we have not really seen from a retail giant, but it also has the potential to become a mess and land the company in an awkward position publicly and possibly financially.


2010 was a really interesting year as a by-stander, eBay has made more steps towards taking on Amazon directly (single styled listings etc), Amazon had a stab at eBay suggesting to sell granny’s unwanted lamp she had a Christmas present on Amazon (rather than eBay, amongst other smaller things), Amazon had a stab at Tesco by launching food products and Tesco responded almost immediately with a direct stab back at Amazon with a PR release that they were to be taking on Amazon with a new marketplace.

While all this has been going on have been relatively quiet and literally cleaning up, a recent satisfaction poll have them ranked right behind the two Amazon’s in third place beating the likes of John Lewis, Apple, M&S and so on…

However isn’t going to be the focus of this article, what I am going to be doing is exploring the idea of what could be done and how I would suggest its tackled, if Tesco was seriously considering launching a new marketplace to rival Amazon.

I’ll warn you now, I am expecting this article to be in the realms of thousands of words, I have even been thinking I could use this as a base for a dissertation, its bound to end up in that scale of coverage, although having never completed one and never having received any outline on how to format one, I feel I may be mocked for even suggesting this.

Note: If you have any comments I am always humbled to receive feedback, see the reply box at the bottom of the page.

Lets take a look contenders

Before we can progress we need to take a closer look at the two contenders in this fight. These are two heavy weight fighters of stellar proportions, whom both have obscenely deep pockets to dig into and a grit to make even the great Mohammed Ali run scared.


Amazon UKAmazon is synonymous with quality, speed and trust. You slap anything on Amazon and the buyers feel extremely reassured by that Amazon logo alone. Half the time I am sure that buyers do not really know whom they are buying from, as they assumed that the vast majority of the time its directly from Amazon themselves.

With Amazon launching their fulfilment offering ‘Fulfilment By Amazon’, also known as FBA, their Amazon prime customers really do not see any difference in cost of shipping, nor really any great degree in despatch times, as its all being despatched from their own warehouses.

Lets not forget that Amazon’s original business plan in 1994 scared the daylights out of investors at the beginning of the dot-com boom, they were literally the only one that had a decade long plan, where-as everyone else was measuring in months, Amazon took the view that it takes years to bring an business idea such as theirs to fruition, just look at them now, its only just begun.

Starting in 1994 and launched on-line in 1995, Amazon for me is one of the first choices of marketplace I go to, in fact I rarely go elsewhere for my book buying addiction and since receiving an iPad as a bonus pressy (see article here), the one click buying of books for the Amazon Kindle reader App, has my bank account running scared.

Books and other media are a symbiont of the Amazon brand, literally if I think of a book, I think Amazon and I am not alone in this with Amazon, I believe the general Internet population are of the same line-of-thought, its almost second nature, a preprogrammed thought pattern, Book = Amazon.

I remember preparing some presentation notes on Amazon and the differences between Amazon and eBay, it was really quite a trip back, while remembering that Amazon started off with a similar start as eBay, sporting an auctions offering for merchants, but it never really caught on as eBay even then was creaming it. So Amazon launched a new fixed price marketplace called zShops, its the spin off from this, which we know today as ‘Seller Central’.

zShops was faded out, basically I believe because it was crap (interface and no way of easily creating new product), but it did work and was bundled up into what we know as Seller Central and is actually a very simple and broad system to use.

I could go off into a bender on the Amazon Seller Central platform here, but for now you need to be aware that its similar to eBay as in you are able to create new inventory records and sell on Amazon.

Amazon is an interestingly flip to Tesco, as you’ll read shortly, Tesco have a lot of the off-line bases covered, inversely Amazon have a lot of the web bases covered, a quick brain-dump on thier channels:

  1. Amazon main and international sites
  2. Amazon Prime (listed separately as its genius)
  3. Own branded product range, named Pinzon
  4. Javari
  6. Amazon Web Stores (AWS)
  7. A9 (believe this to be Research & Development)
  8. Fulfilment by Amazon
  9. An affiliate program of epic scale
  10. The Amazon Kindle
  11. ‘Amazon payments’ a payment processor (due to the UK in May?)
  12. And a whole host of ‘cloud’ based offerings & web services

And for sales, we’re talking billions, the figure I could find from wikipedia was $24.5bn in 2009, I could not find any quoted figures for 2010, a rough stab would be at the £30nb or more.

A side note, the Amazon logo

Amazon UK

Hey Look Amazon, A to Z!

Now I’d love to say I realised this, but it was a in a discussion with a client, notice the arrow below the A and Z, We do everything from A to Z? Makes sense now, I never spotted that.


Tesco isn’t to be shunned at all in this fight, these are remember, the retail giant of the UK and by a massive margin too. Using the figures from wikipedia, they had a market share of 30.5% in Dec 2009, ni-on double that of ASDA with 16.9%, Sainsburys 16.3% and Morrisons at 12.3%.


In 2006 Tesco launched ‘Tesco Direct, their public strategy is quoted as:

In 2006 we launched Tesco Direct , a new online and catalogue non-food offer, with over 12,500 products available online. Next day delivery is standard for small items with a unique two-hour delivery window. We issued 11.5 million catalogues last year. The popularity of our in-store Direct desks, which are now in 231 stores, continues to increase as more customers order and collect items from their local Tesco. We plan to add clothing to our online offer later this year. To find out more visit

I found an interesting statement on the Tesco Plc site for the year ending 28th Feb 2009, indicating that while they made an opening loss of around £22M, they were 2% up in direct comparison to UK trading profit.

The article is here and I have included the extract below

Increased productivity and good expense control enabled us to maintain solid margins and deliver good profit growth despite these challenges, whilst also absorbing initial trading losses totalling around £22m on Tesco Direct. After these costs, UK trading profit rose 12.7% to £2,381m (last year £2,112m), with trading margins at 6.2%, including TPF, slightly up on last year. On a 52-week comparable basis, UK trading profit rose 10.7%.

If you look further around thier Plc site, then some truly stunning numbers are publicly shown, I dribbled when I read these numbers, they have a Non-food sales figure of £13.1 billion, yes billion for 2009/2010. After the Christmas we just had, this has to be closer to the £15bn mark.


I could not find any published figures on the sales volume for the Tesco Direct site, an guess that the site takes about 2bn, with the majority of sales being made from their main site or the other two sub sites for clothing and entertainment.

Tesco Outlet on eBay

In 2008 in partnership with Trojan Electronics, Tesco launched on eBay as Tesco Outlet, I know this as I was the person that trained the staff and the two companies on the software they are using to launch to eBay with. As Trojan Electronics is a refurbishment house, it made great sense for Tesco to leverage the refurbishment channel and sell the goods direct (well indirectly, but its far superior and more lucrative for them this way).

In October 2010, on eBay alone, Tesco Outlet according to Terapeak, scored in the region of £370K of sales on eBay, £531K in November and £488K in December, although the sales for the first few days of the year are pitiful in comparison, I can only assume that someone forgot to launch a sale.

With the £13.1bn worth of non-food sales, then you have to expect some broken kit, most of which ends up in refurbishment houses such as Trojan, however not all ends there are can traditionally retailers such as Tesco get done-over on the pricing of kit, this was actually a shrewd move by them that year, although I am pretty sure that this was started by the asset recovery sections on the Tesco Giant, rather than being initiated at Board level; Maybe its what has given them the taste to take on Amazon?

Tesco Sales Channels

Tesco know they need to go multi-channel and have been busy, what a set of channels they have, a quick brain-dump on these are:

  1. Retail Super Stores (food)
  2. Tesco Metro/Express
  3. Tesco Extra & Homeplus
  4. Catalogues
  5. Telecommunications (Tesco Mobile)
  6. Tesco Finance
  7. Tesco Direct Site
  8. Tesco Clothing Site
  9. Tesco Entertainment
  10. Tesco Outlet on eBay
  11. Club cards (noted as a separate channel on purpose, you’ll see why later)

Note the lack of Amazon here, they could have easily ported their goods on to the platform, but never did. I wonder why? But ‘Holy Cow’, these peeps have more channels and fingers in pies that one can shake stock at. Amazon needs to be scared, if its off-line, Tesco have the ALL bases cover and soon maybe, online covered more thoroughly too.

The Contenders Summary

Some 1600 words in and I’ve not even got to the juicy parts yet, but without this understanding of the two marketplaces above, we cannot compare the two together. I will not just be comparing these two either, I will be pulling in the good and bad points from other market places too to give a fuller picture.

eBay has never to my knowledge declared war on Amazon and inversely I have seen Amazon wave two fingers at eBay. I always expected for a third party such as Microsoft or Google to get in on the fight, perhaps Amazon see Tesco as easy prey, maybe now Tesco see Amazon as easy prey.

These two companies are giants in their own arena’s, it was not going to be long until the two bumped into each other and this really has the makings of something on an epic scale.

What ever happens this is going to be a battle of epic proportions and I really do not know who is going to win in the end, if either of them. But thats not the point of this article, what I am now going to explore is how Tesco can make a Marketplace to rival Amazon. Its not going to be easy.

Your Feedback

So, I’ve primed the background to these giants, one an off-line expert, one an on-line expert, who is your money on and why?

Fulfilment By Amazon Webinar: First steps to get started

Fulfillment By AmazonJust received this in the email queue, defintely worth looking at for anyone whom is considering using FBA:

We are pleased to invite you to this webinar where we will present best practices and tips to get started with Fulfilment by Amazon, including:

– How to select the most suitable items in your inventory to convert to FBA
– How to send your first shipment, avoiding the most common errors
– How to check the health of your FBA inventory to make sure you made the right decisions

This webinar should be useful for:

– sellers who registered for FBA but who are not sure how to get started
– existing FBA sellers who want to make sure they use all the correct techniques and practices to manage their FBA business

Title: Fulfilment By Amazon: First steps to get started
Date: Tuesday, November 16, 2010
Time: 13:00 PM – 14:00 PM UK time

Registration Link: