Roughly 800 Latvian-registered businesses sell on Amazon's European marketplaces. Most started small — a product sourced from a local manufacturer, listed on amazon.de, shipped from a spare bedroom. Then FBA happened. Suddenly inventory sits in warehouses in Germany, Poland, the Czech Republic, and France. VAT obligations multiplied. Accounting complexity went from manageable to overwhelming — and the seller is still the same person who started with a spreadsheet and a dream.

This guide is for Latvian Amazon FBA sellers who have outgrown basic bookkeeping and need to understand what the tax authorities actually expect.

How Amazon FBA Creates Multi-Country VAT Obligations

The core issue: when you send inventory to Amazon's FBA network, Amazon distributes your products across multiple fulfillment centers in different EU countries. The moment your goods physically arrive in a country, you have potentially triggered a VAT obligation there.

The movement of goods rule. Under EU VAT law, moving your own goods from Latvia to a warehouse in Germany is treated as a "deemed supply" — an intra-community supply from your Latvian entity to yourself in Germany. This requires:

VAT registration in Germany (or whichever country the goods move to).
Reporting the movement as an intra-community supply (zero-rated) in your Latvian VAT return.
Reporting the corresponding intra-community acquisition in your German VAT return.

Amazon's Pan-European FBA program distributes inventory across up to 7 countries: Germany, France, Italy, Spain, Poland, the Czech Republic, and Sweden. Using this program without VAT registrations in each country is a compliance violation.

The OSS exception. If you sell goods stored in Latvia directly to consumers in other EU countries (not using FBA or using FBA with inventory only in Latvia), the One-Stop Shop mechanism covers your VAT obligations. You charge the destination country's VAT rate and report through a single quarterly return filed in Latvia. But OSS does not apply to local sales from foreign stock — if goods are shipped from an Amazon warehouse in Germany to a German customer, that is a domestic German sale requiring a German VAT return.

VAT Registrations: Where, When, and How

Countries where you likely need registration:

If you use Pan-European FBA:

Germany — almost certainly, as it is Amazon's primary EU fulfillment hub.
Poland and Czech Republic — Amazon stores inventory here for Central European distribution.
France, Italy, Spain — if your products are distributed to these markets.
Sweden — newer addition to the FBA network.

The registration process:

Each country has its own registration procedure, language requirements, and processing times:

Germany (Bundeszentralamt für Steuern): 4–8 weeks, German-language application, tax representative may be required for non-EU entities (not for EU companies).
France (Service des Impôts des Entreprises Étrangères): 6–12 weeks, French-language forms.
Poland (Urząd Skarbowy): 2–4 weeks, relatively straightforward.
Czech Republic: 2–4 weeks.

Practical tip: Use a VAT compliance service (AVASK, hellotax, Taxdoo) to manage multi-country registrations and filings. The cost — typically EUR 100–200 per country per month — is a fraction of the penalties for non-compliance.

Filing obligations per country:

Once registered, you file periodic VAT returns in each country (monthly or quarterly, depending on the jurisdiction). You also file:

EC Sales Lists (for intra-community supplies).
Intrastat declarations (if thresholds are exceeded).
Annual VAT summaries (in some countries).

A Latvian FBA seller with registrations in 5 countries might file 30+ VAT returns per year across jurisdictions.

FBA Fees: What Is Deductible and How to Record Them

Amazon charges a constellation of fees, all of which are legitimate business expenses:

Referral fees: 8–15% of the sale price, depending on the product category. This is a selling expense.

FBA fulfillment fees: Per-unit charges for picking, packing, and shipping. Ranges from EUR 2.50 for small, lightweight items to EUR 15+ for large/heavy products.

Monthly storage fees: EUR 26–36 per cubic meter (standard), spiking to EUR 36–43 per cubic meter during Q4 (October–December). Recorded as a warehousing expense.

Long-term storage fees: Additional charges for inventory stored over 181 days (EUR 3.80/cubic meter surcharge) and over 365 days (EUR 170/cubic meter or EUR 0.10/unit, whichever is greater). These punitive fees make slow-moving inventory very expensive.

Advertising fees (PPC): Amazon's sponsored product and brand advertising costs. These are marketing expenses, fully deductible.

VAT on Amazon fees: Amazon charges VAT on its fees based on where the service is deemed to be supplied. For B2B services to a Latvian VAT-registered company, the reverse charge mechanism typically applies — Amazon invoices without VAT, and the Latvian company self-assesses. Check each invoice: Amazon's fee invoices come from different entities (Amazon Services Europe, Amazon EU S.à r.l.) and the VAT treatment can vary.

Recording Amazon settlements:

Amazon pays sellers bi-weekly. The settlement report shows:

Gross product sales
Minus: referral fees, FBA fees, advertising costs, refunds
Plus: reimbursements (damaged/lost inventory)
Equals: net payout

Your accounting must record the gross figures, not just the net payout. Revenue is the gross sale price. Each fee category is a separate expense. The settlement report is your primary source document — download and archive every one.

Inventory Across Multiple Warehouses

Amazon's inventory management creates unique accounting challenges:

Inventory movements. When Amazon moves your stock from a warehouse in Germany to one in Poland (a routine optimization), it triggers a deemed intra-community supply. You need to report this movement in both countries' VAT returns. Amazon provides inventory movement reports, but they are not always timely — delays of 2–4 weeks are common.

Inventory valuation. Use a consistent method (FIFO is standard) across all locations. The cost of goods includes:

Purchase price from supplier
Shipping costs to Amazon's warehouse (inbound shipping)
Import duties and customs fees (if goods are sourced outside the EU)
Inspection and quality control costs

It does not include FBA fulfillment fees — those are selling expenses, not inventory costs.

Lost and damaged inventory. Amazon regularly loses or damages seller inventory during warehousing and fulfillment. Amazon issues reimbursements, but not always automatically. The accounting:

Write off the inventory at its book value.
Record Amazon's reimbursement as other income.
The difference (positive or negative) hits your profit and loss statement.
Review Amazon's FBA inventory reimbursement reports monthly. Many sellers leave EUR 1,000–5,000/year in unclaimed reimbursements.

Unsellable inventory. If Amazon designates inventory as unsellable (customer returns in non-resellable condition, expired goods), you can request removal or disposal. Removal shipping costs are a deductible expense. Disposed inventory is written off with appropriate documentation.

Currency and Payment Considerations

Amazon payment currency. Amazon pays sellers in the currency of the marketplace where the sale occurred. Sales on amazon.de pay in EUR, amazon.co.uk in GBP, amazon.se in SEK. If you receive non-EUR payments, you convert at the ECB rate on the payment date. Exchange rate gains and losses are recorded in your profit and loss statement.

Amazon Currency Converter (ACCS). Amazon offers a service to convert non-EUR payments to EUR before deposit. The exchange rate is typically 1–1.5% worse than the ECB rate. This is an exchange cost — record it as a financial expense, not as a reduction in revenue.

Receivables management. Amazon's bi-weekly payment cycle means you always have outstanding receivables. At month-end, record the accrued but unpaid balance as a trade receivable. This is important for accurate monthly financial statements.

Common Mistakes by Latvian Amazon Sellers

Selling through FBA without foreign VAT registrations. This is the most expensive mistake. Germany alone can assess retroactive VAT plus penalties of 10–25% on unpaid amounts. Amazon may also suspend your selling account for VAT non-compliance — it has been doing so actively since 2019.
Recording only the net Amazon payout as revenue. This understates revenue, understates expenses, and creates a discrepancy that VID will catch during any audit comparing your bank statements to your declarations.
Ignoring inventory movements between countries. The deemed supply from one country to another must be reported. Failure to do so creates unreported intra-community transactions — a serious VAT compliance issue.
Not reclaiming VAT on Amazon fees. Amazon charges VAT on some fee invoices (particularly advertising in certain countries). If you are VAT-registered in those countries, this is recoverable input VAT. Many sellers do not even open these invoices.
Mixing FBA inventory costs with personal shopping. If you buy products on Amazon for personal use through the same account you use for selling, separating business and personal transactions becomes a forensic exercise.

For detailed VAT mechanics, see our VAT guide. If your Amazon business needs accounting that can handle Pan-European FBA complexity, contact us.

Accounting for Amazon FBA Sellers Based in Latvia