April 19, 2018 by Andrew Minalto - 239 Comments

VAT for Amazon Sellers – The TRUTH No One Wants to HEAR!

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Welcome back!

Let’s talk about Value Added Tax (VAT) as it relates to selling on Amazon.

Recently, there has been a storm forming around this subject, especially after the infamous Amazon invalid VAT number email that I covered in last week’s post. I have received tons of emails from my blog readers asking one simple question: DO I HAVE TO REGISTER FOR VAT?

Since I am often responding to each individual with the same answers and information over and over again, I’ve decided to create a blog post that answers this question in as much detail as possible. I will cover as many scenarios as I can think of, so that after reading this post, it is 100% clear whether you, in your specific case, have to register for VAT to sell on Amazon or not. With that, let’s get started!

The Basics of VAT

VAT is something we all hear about and experience on a daily basis, whether it’s through business transactions, Amazon forums, retail shops, or invoices and receipts. VAT (Value Added Tax), as the name suggests, is a consumption tax based on the value of goods and services. This tax is used in all European Union countries, as well as many other countries. In Canada, for example, it is called GST (Goods and Services Tax), but the principle remains the same.

The VAT rate varies from country to country, but in Europe, it is usually around 20%. Here are a few examples of current EU VAT rates for 2018:

  • Belgium – 21%
  • Austria – 20%
  • Denmark – 25%
  • France – 20%
  • Germany – 19%
  • Ireland – 23%
  • Italy – 22%
  • Poland – 23%
  • Sweden – 25%

In the UK, the rate is set at 20%, which actually puts us amongst the countries with lowest VAT rate. In the past, it has been even lower; prior to 4th of January of 2011, the VAT rate in the UK was just 17.5%, and there was once a temporary period where VAT was only 15%.

The VAT rate we are talking about here is the STANDARD VAT rate, which is the rate used on most everyday goods like:

  • Home products
  • Garden products
  • DIY & tools
  • Clothing & shoes
  • Etc.

Basically, most everyday products that you see on Amazon or in your local Tesco will have the standard VAT rate of 20% applied to them. It is the rate you are most likely to encounter on a daily basis.

However, there are some goods categories that have a special, lower VAT rate of just 5%, these include:

  • Children’s car seats
  • Radiators
  • Gas/Oil fired boilers
  • Solar panels
  • Water and wind turbines
  • Etc.

And there are some goods and services categories that are 0% VAT rated, like:

  • Charity shops, selling donated goods
  • Equipment for disabled people
  • Low-vision aids
  • Printed books
  • Children’s clothing and footwear
  • Motorcycle and bicycle helmets
  • And others!

Lastly, there are goods and (usually) services that are completely VAT exempt, like:

  • Admission charges by charities
  • Lottery tickets
  • Betting and gaming
  • Bingo
  • And others!

You can get a more detailed overview of goods and services and their various VAT rates on this page.

In each country, these categories of VAT rates for goods and services will vary. The information presented here only applies to the United Kingdom, so if you’re residing in another EU country, you will need to check your local information on this.

VAT is charged at the moment of a sale/transaction, and the business or person who is VAT registered is responsible for filling out regular VAT returns (usually quarterly) to forward the VAT amount they have collected from customers to the HMRC.

When you are VAT registered, you can claim back the VAT that you pay on your business expenses. So, in that VAT return, you will also provide details of all the VAT paid on business expenses—for example, VAT paid on goods purchases, online selling fees, and other business-related expenses—and DEDUCT that amount from the payable VAT.

Let’s do a quick example to really make this crystal clear. Let’s say that, in a three-month period, you have sold goods worth £10k (incl. VAT). The amount of VAT you charged was £1.67k (20%), but you also paid £1k in VAT in that period through your normal business expenses. In that case, you would only send £0.67k to the HMRC, which is the difference between what you have charged and spent in VAT.

This is obviously a simplified explanation. The VAT law and rules, especially in relation to international trade, are very complex. However, this is just to give you a basic understanding of how it fundamentally works for an average seller.

The most important thing to remember is: You do not want to register for VAT when you’re just starting out IF you’re not obligated to register for it. We’ll cover how to know if you’re obligated to register for VAT later in this post. Just know that it does not make financial sense or benefit you to voluntarily register for VAT because you will always end up paying more in tax than a seller who is not VAT registered, if you sell the same item at the same price.

As always, there are some rare exceptions to this.

It could be financially beneficial to register for VAT from ONE one IF:

  • The majority of your sales will be B2B transactions. If you are selling the product to other VAT-registered businesses, then it might benefit you to register. Businesses don’t care about paying VAT because they know that they will deduct it from the payable amount anyway. Plus, businesses like to get a proper VAT invoice for their purchases. On Amazon, this is now very easy to do with the Amazon Business Services, which includes automated VAT invoicing solutions. More on this another time.
  • You sell zero-rated or 5% VAT rated goods. It’s pretty simple; you will charge a small % of VAT on your end sales but will be able to claim back the full VAT paid on your business expenses. I would still recommend that you do the math to figure out exactly how beneficial it is in your particular situation, but if you sell 0% VAT rated goods, you definitely want to be VAT registered from day one, so you can claim back VAT on business expenses. As you won’t be charging your customers any VAT, the HMRC will actually be sending you payments for the VAT you have spent on business expenses. It’s basically free money.
  • You plan on investing aggressive amounts of money into inventory, equipment, or plan to work with huge losses in the first year or two of trading. In this situation, you would be spending MORE in VAT than you earn, which creates the negative VAT balance. So again, the HMRC will pay you back the difference you have spent in VAT to what you have taken in sales. This situation will be very rare, though, and will be more applicable to bigger companies who usually come into the market very aggressively with offices, manufacturing plants, huge advertising budgets, etc.

I won’t go into detail on each of these three scenarios as they are the exceptions and not the rule. That said, if you do fall under any of these three categories, I would recommend you consult an accountant who can assess your situation and do the correct calculations for you to help you decide whether it is worth registering for VAT from day one or not.

There is also a FLAT VAT rate scheme available in the UK, which allows small businesses to pay a fixed amount of VAT to the HMRC to keep their accounting as simple as possible. For the sake of time and relevance, I won’t get into it in this post. We’re just going to cover the VAT information that will apply to the vast majority of sellers here. Just know that this scheme exists and might be worth looking into further if you’re UK-based.

For Amazon sellers, I do not specifically recommend this flat VAT rate scheme because some of the Amazon VAT services may not be available to you if you are using this option. But again, please consult a qualified accountant on this topic.

Ok, this is as far as I want to go into VAT basics. The topic is obviously huge, so if you want to dive deeper, you can find tons of reading material on the HMRC website or simply book a consultation with an accountant who can provide you with qualified advice. Please remember that I am not an accountant, so please do not ask me specific VAT/accounting questions as I can’t provide you with qualified information.

Now, let’s take a closer look at how exactly VAT relates to Amazon sellers, and, most importantly, how you can figure out whether you need to register for VAT or not!

VAT Registration Thresholds

I have already touched on this subject, but it bears repeating. When you’re just starting out and registering a Ltd. company or have Sole Trader status, you won’t be VAT registered by default. You can voluntarily register for VAT from day one IF you want, but most typically won’t and will only register for VAT when they reach a certain threshold of sales.

This threshold will be different in each country, and it often changes from year to year.

Right now, in the United Kingdom, for the year 2018, the threshold stands at £85,000 per last 12 months of trading.

So, you have to make at least £85k in SALES over the last 12-month period before you’re obligated by law to register for VAT in the UK.

Often people ask: what does this number include? Do I have to take off my Amazon fees or FBA fees?

No, you don’t have to take anything off this number. This is purely your sales/turnover—the amount of money you’ve taken in for the last 12 months of trading. Keep in mind that this is NOT based on a calendar year! It is based on the last 12 months of sales on a rolling basis.

So, if you think that you have come close to the threshold, you will want to check your last 12-month sales report in your Amazon account to see if you have reached the £85k threshold or not:

It is advisable to register for VAT in advance, e.g., when you see that you will go over the threshold in the next month, that’s when you should register. Otherwise, you’re just making more accounting work for yourself later on because you’ll have to calculate VAT on sales that happened prior your registration date. My advice is to just keep it simple and register at least a few weeks ahead of time.

Sometimes you will find that you balance right on the edge of the threshold. As we know by now, not being VAT registered is more beneficial, so you may want to lower your marketing activities at such a time to artificially lower your sales and stay below the threshold. That is only recommended if you know for sure that your sales won’t improve that much over time and won’t go over £100k or more in near future.

If you discover that you have gone slightly over the VAT threshold in one month but know for sure that you will go back under the next month, you can ask for a temporary exemption from the VAT registering process. You can find more details on this on the HMRC website.

And just like you have registered for VAT, you can also DEREGISTER from VAT if your sales fall below the threshold in the future. So, say you start selling a very hot product on Amazon and your sales go over the £85k threshold, but then, after two years, demand for the product drops and your sales are down to £60k per year. Then you can deregister from VAT and continue selling on Amazon as a non-VAT registered seller.

Ok, so far, so good! Keep in mind that everything I have covered so far in this post can also be applied to any offline business too since the VAT basics are same for offline and online businesses. However, there are a few slight differences that online sellers, including Amazon sellers, need to face—so let’s get into it!

Distance Selling VAT Thresholds

Yes, there’s another VAT registration threshold, and it’s called the “Distance Selling EU VAT Threshold”. This particular threshold was introduced just a few years ago to help fight VAT evaders in the EU and basically put the appropriate VAT money in the pockets of the country that the item is sent to. So, for example, if you sell something to a person in Germany, the German VAT rate is applied to the sale and Germany receives that VAT payment from you.

These VAT thresholds apply to any business selling to an EU country! It doesn’t matter where you’re located in the World—be it the UK, the US, China or Brazil—if and when you reach the specified threshold of each country, you must register for VAT in that country, start charging local VAT on sales to that country, do VAT returns, and pay the appropriate VAT to that country.

Sound complicated?

It is.

Registering for VAT in a different country, usually in a different language, and completing VAT returns can be a very complex and time-consuming task. It’s not usually something you can do easily on your own.

Luckily for us, these distance selling EU VAT thresholds are pretty high. Here are few examples:

  • Austria – 35k EUR
  • Germany – 100k EUR
  • Ireland – 35k EUR
  • Spain – 35k EUR
  • France – 35k EUR
  • United Kingdom – 70k GBP

Yes, the UK distance-selling limit stands at £70k, and this will be applicable to sellers living outside the UK but who are targeting the UK marketplace and, specifically, Amazon.co.uk. Once your sales reach £70k in a calendar year in the UK, you are obligated by law to register for VAT in the UK.

This is an important distinction. Unlike the normal VAT registration rules that we have already covered, these distance-selling thresholds are calculated per CALENDAR YEAR—not the last 12 months of trading. This makes the process much easier for you as you can do the calculations based on the current year instead of the last 12-month period.

Now, this VAT registration threshold kicks in when your sales to a specific country reach the limit set by that country, but when goods are NOT stored in that country. So, this applies when you store goods in your home country and send orders out internationally from your base location via regular post and courier services.

It is very important to understand this caveat, as there is one other factor that can kick in and require IMMEDIATE VAT registration in a foreign country:

Goods location

Yes, goods location.

This is one of the biggest misunderstandings when it comes to VAT and selling on Amazon. Goods location can and will trigger a legal VAT registration requirement. Many people are not aware of this because this EU law is just a few years old, but it doesn’t change the fact that it is currently effective and being enforced. Even Amazon has taken action to bring sellers in line with this legal requirement by asking for VAT numbers based on this factor alone.

So how does this work?

This time, the rules are very simple:

You must register for VAT in each country where your goods are stored, except your local/home country!

And there are no thresholds! It starts from day one, so even if you send just 10 items to another country and sell them from there, you need to register for VAT in that country. Even more, you don’t even have to sell to that specific country! The location of the goods alone triggers this VAT registration law. So, for example, you may not sell your goods in Poland but since Amazon has a European warehouse in Poland, you will have to register for VAT in Poland too.

This is why I strongly recommend you reconsider using the Pan-European Amazon fulfilment program. It will trigger your VAT registration requirements in multiple countries because your goods will be moved across Europe.

Obviously, it’s best to register for VAT BEFORE you send any goods to that country and start selling, just to keep your books clean and Amazon happy.

The only country this law does not apply to is your home country, which is where your business is registered. You can keep stock there without needing to register for VAT until you reach the VAT registration threshold.

Ok, with basic VAT information, thresholds, distance-selling and the goods location rules covered, it’s time to take a look at some real-life scenarios to help you better understand the whole VAT issue and determine with certainty whether or not you need to register for VAT!

Do You Have to Register for VAT?

Let’s start with some of the most typical situations that will apply to people based in the UK:

Seller location: United Kingdom
Stock location: United Kingdom
Turnover: £50k in the last 12 months
Have to register for VAT? NO

Your turnover is below the UK VAT registration threshold, you store goods only in the UK, so you don’t have to register for VAT.

Seller location: United Kingdom
Stock location: United Kingdom
Turnover: £90k in the last 12 months
Have to register for VAT? YES

As you have reached £90k in sales for the last 12 months of trading, you do have to register for VAT in the UK.

Seller location: United Kingdom
Stock location: United Kingdom, Germany and Poland
Turnover: £50k in the last 12 months
Have to register for VAT? YES

As you’re storing goods in Germany and Poland, you have to register for VAT in Germany and Poland. You don’t have to register for VAT in the UK as your sales are just £50k in the last 12 months.

Seller location: United Kingdom
Stock location: United Kingdom, Germany and Poland
Turnover: £90k in the last 12 months
Have to register for VAT? YES

You have to register for VAT in all three countries; in Germany and Poland because you’re storing your goods there and the UK because you have reached the VAT registration sales threshold.

Seller location: United Kingdom
Stock location: United Kingdom
Turnover: £70k in the last 12 months, £50k to Greece in 2017
Have to register for VAT? YES

You have to register for VAT in Greece as you have sold £50k worth of goods to that country. This is above the Distance Selling EU VAT registration threshold for Greece, which stands at €35k.

However, you don’t have to register for VAT in the UK yet since you have not reached the UK’s VAT registration threshold of £85k per last 12 months.

Seller location: United Kingdom
Stock location: Italy
Turnover: £10k in last 12 months
Have to register for VAT? YES

You have to register for VAT in Italy from day one because you’re storing goods there in Amazon’s warehouse. You’re not obligated to register for VAT in the UK, though, as you have not reached the UK VAT threshold.

These are the most typical scenarios a UK-based seller will face. Now, let’s take a look at what happens when someone from outside the UK but who is living in the EU sells on Amazon.

Seller location: Slovakia
Stock location: Slovakia
Turnover: £20k in the last 12 months
Have to register for VAT? NO

Your stock is held with you in Slovakia and you haven’t reached the local VAT registration threshold, which currently stands at 49,790 EUR (so almost €50k).

Seller location: Slovakia
Stock location: Slovakia
Turnover: £50k in the last 12 months
Have to register for VAT? YES

You have to register for VAT in Slovakia as you have reached the local VAT registration threshold, which stands at 49,790 EUR.

Seller location: Slovakia
Stock location: Slovakia
Turnover: £250k in the last 12 months, £75k in 2017 to the United Kingdom
Have to register for VAT? YES

You have to register for VAT in Slovakia since you have reached local VAT threshold. PLUS, you have to register for VAT in the UK as you have reached the Distance Selling EU VAT registration threshold, which stands at £70k per calendar year.

Seller location: Slovakia
Stock location: United Kingdom
Turnover: £20k in the last 12 months
Have to register for VAT? YES

You have to register for VAT from day one when your stock arrives in the UK, no matter how much you sell.

Seller location: Slovakia
Stock location: United Kingdom
Turnover: £100k in the last 12 months, £50k of that to Portugal
Have to register for VAT? YES

You will have to register for VAT in all three countries: your home country, Slovakia (as you have reached local VAT registration threshold), United Kingdom (as your goods are stored there), and Portugal (as you have reached the Distance Selling EU VAT registration threshold to Portugal, which currently stands at 35,000 EUR).

Ok, lastly, what about people who are based outside the EU? Sellers from the US, China and other countries around the world?

The same rules of distance-selling thresholds and goods placement country apply to them! If you reach the distance sales threshold to specific countries, you have to register for VAT there. If you store goods in an EU country, you have to register for VAT there.

Here are some of the most typical examples applicable to Amazon sellers:

Seller location: United States
Stock location: United States
Turnover: £20k in the last 12 months on Amazon.co.uk
Have to register for VAT? NO

You are storing goods in your home country and you’re not reaching the distance selling EU VAT registration thresholds, so you don’t have to register for VAT.

Seller location: United States
Stock location: United Kingdom
Turnover: £20k in the last 12 months
Have to register for VAT? YES

As you’re storing goods in the UK, you have to register for VAT in the UK from day one.

Seller location: United States
Stock location: United States
Turnover: £80k in the last 12 months to UK customers
Have to register for VAT? YES

You have to register for VAT when you go above the £70k threshold for distance selling to the UK, even though you still store your goods in the US.

Seller location: United States
Stock location: United Kingdom
Turnover: £100k in the last 12 months, £40k of that in 2017 to Spain
Have to register for VAT? YES

You have to register for VAT in the UK (goods location) and in Spain too since distance sales to Spain exceed the €35k threshold.

I really, really hope these examples will help clear this issue up for once and for all. And I hope it makes it easier to figure out how this whole VAT thing works and whether you need to register for VAT or not.

These are the most typical situations I could come up with, but this is not a full and exclusive list! Please let me know in the comments block below the post if there is a scenario I haven’t covered so I can add it to the list.

Conclusion

So that was it! A detailed overview of VAT registration for Amazon sellers. I have tried to include as much information as possible without being too specific or providing contradicting guidance. I will repeat myself once again and remind you that I’m not a qualified accountant and I can’t help you with specific VAT calculation questions or anything like that. You need to consult with a professional accountant to get qualified advice.

As Amazon sellers, we all wish that these laws, rules and regulations were never invented. We don’t have large budgets for accountants, tax lawyers and all the other resources that large companies have. It can get frustrating; trust me, I know the feeling because I’m an Amazon seller myself and I’ve had to figure it all out myself.

A few years ago, it was all total nightmare to navigate because there was no clear guidance or any of the tools and services that are available today.

Amazon does understand the problem this creates for small sellers, hence all the VAT tools and services they have recently introduced on the platform. No other third-party marketplace (eBay, Etsy, etc.) has done anything like this, so we should be thankful that they are at least trying to make it easier for us.

We should also be thankful for all the extra sales opportunities Amazon’s expansion into other countries brings us! I can’t really complain about the VAT issues—which is nothing to do with Amazon itself—when we get the opportunity to sell in almost every major country in the world, store goods at Amazon’s warehouse, and make money without lifting a finger.

So please, as you dive into figuring out your VAT situation, always keep the positives in mind, like the opportunity for international trade and what it can do for your business. These are opportunities that, just a generation ago, were inconceivable for a small business or individual. There are people who always complain about something. I ignore such people. Don’t waste your time and energy on negativity—look for solutions and be thankful for the opportunity!

I’m sure I will come back to the whole VAT issue very soon because there are some things I want to cover separately, like the VAT registration process itself, Amazon VAT services, etc. If you have any suggestions for what VAT topics I should cover in future blog posts, please leave them in the comments section below.


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239 Comments
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  1. Hi Andrew
    We’ve recently had our Amazon DE Account deactivated and I’m finding this VAT reg thing a minefield! (Like many!).

    We were enrolled in PAN EU for a very short time but when I realised the impact on VAT registration we canceled that and recalled multi-country inventory.

    On reading your posts which are excellent, I can see that there is almost no way around the Tax Certification requirement for Germany. Without it, I don’t think our German account will ever be reactivated despite not storing goods in Germany and despite the fact that we won’t hit the monetary threshold for VAT in Germany.

    My question is this: If we have a German Tax Certificate but don’t hit the monetary theshold and don’t store in Germany will we still have to supply VAT returns monthly and annually?

    Hope you can help.

    Thanks
    Tracey

    1. Andrew Minalto

      Hi Tracey,

      Thanks for your comment.

      That’s a good question! Unfortunately, I don’t have the answer to that, but I think that no – you won’t have to do VAT returns in Germany. The tax certificate is a different thing and VAT is a different thing. So, as far as I understand, if you just go with the Tax Certificate, you’re not VAT registered and don’t have to do returns. But I would contact a tax advisor to be 100% sure.

      Thanks,
      Andrew

      1. Thanks Andrew. I really appreciate your reply and your time.
        Absolutely love your articles – super informative and very useful

        1. Andrew Minalto

          You’re welcome Tracey! 🙂

  2. Antonio silva

    Hi Andrew
    my company is Portugal based .
    If i am vat registered in Poland and Germany , how it will work in the follow situation
    Stock in Poland send to a Germany customer , where i will pay the vat ?

    1. Andrew Minalto

      Hi Antonio,

      Thanks for your comment.

      In Poland. Because they charge VAT based on the country item ships from. More information here:

      https://sellercentral.amazon.co.uk/gp/help/help.html?itemID=202084570&ref=efph_202084570_cont_home

      Thanks,
      Andrew

  3. Moussa Djibrina

    Hi Andrew,

    I have searched everywhere through the web but i have not found an article as detailed and clear as yours. Thank you. My situations is:
    I am from Niger Republic resident/citizen and sells on amazon by FBM through my UK foreign owned Ltd. Now, i need to import inventory from Niger to amazon.co.uk fulfillement center for FBA purpose. I am very far from the 85000 GBP thereshold and i am wondering if i will have to register for VAT prior to sending inventory to Amazon.co.uk on behalf of my UK ltd!

    I Thank you per advance,

    1. Andrew Minalto

      Hi There,

      Thanks for your comment.

      No, if you have a UK company and trading below the threshold, you don’t have to register for VAT.

      Yes, you will have to pay VAT on this importing deal, but it doesn’t mean you have to register for VAT.

      Thanks,
      Andrew

  4. Hey Andrew, thanks for a very informative article. In my case, I’m an EU citizen and the owner of a single-member US LLC. I’m currently selling on Amazon.com/FBA through said LLC.
    I have an issue with Amazon.com (US) collecting EU VAT on its fees (selling fees, subscription fees, apparently PPC, too).

    Up until now I have assumed that as an LLC company I’m not subject to VAT. I understand that the reason that is the case may be that my EU address is visible somewhere in Seller Central.

    How do I structure my Seller’s Account in order to not be subject to VAT? Would that require electing the LLC to be taxed as a C-corp?

    Kind regards
    John

    1. Andrew Minalto

      Hi John,

      Thanks for your comment.

      Yes, if you have an Ltd. company in the US, you should not be charged VAT.

      I would recommend you simply contact seller support and ask them why is this happening?

      Thanks,
      Andrew

  5. Thanks for post Andrew, great help. Can you help clarify this for me;

    Based in UK, under VAT threshold and not UK VAT registered
    I distance sell via Amazon to France and Germany
    I want to start sending stock to Germany (FBA) and I know I need to register for German VAT due to the stock location.
    Will I pay German VAT only on the sales fulfilled from a German warehouse? Or do I have to pay German VAT on all the Amazon.de sales ; e.g. UK fulfilled and German FBA fulfilled?
    What about sales from German marketplace but going to another EU country e.g. Austria – are they liable for German VAT too?

    thanks in advance 🙂

    1. Andrew Minalto

      Hi Rich,

      Thanks for your comment.

      Yes, all sales that will happen on Amazon.de, will be liable for German VAT. At least that’s how it works for me and I guess it will be the same in your situation. Once you register for a VAT in Germany, sales sent from the UK to Germany will also get charged German VAT.

      Thanks,
      Andrew

  6. Thanks for all this info! Do you know if importing from outside the EU is a factor? It seems like VAT is payable on import. Would I have to register for VAT regardless of any thresholds?

    1. Andrew Minalto

      Hi Maru,

      Yes, when you import from outside the EU, you pay VAT & import duty.

      But no, it does NOT require you to be VAT registered (you don’t have to be VAT registered to pay these taxes at the time of import).

      Thanks,
      Andrew

  7. I am interested in selling into the UK by using Amazon FBA and having my products warehoused in the UK. I am a resident and citizen of New Zealand but also hold a dual citizenship with the UK. If I register for a Uk company would this exclude me from changing VAT until I meet the £85,000 threshold?

    1. Andrew Minalto

      Hi Matt,

      Thanks for your comment.

      Yes, if you set-up an Ltd. company, you won’t have to register for VAT until your sales reach the £85,000 threshold for the last 12 months and you will be able to use FBA in the UK.

      Thanks,
      Andrew

  8. Hi
    Does it work the same as income tax?
    As in , the vat threshold is £85k, so if I earn £85.1k is the vat on all £85.1k or just the over threshold £1k?

    Thanks
    Gareth

    1. Andrew Minalto

      Hi Gareth,

      Thanks for your comment.

      No, it does not work like income tax – when you become VAT registered, you start charging VAT on ALL sales, starting from very first £1.

      Thanks,
      Andrew

  9. Dan Gibbins

    Really great article that gets to the point quickly! thanks!

    1. Andrew Minalto

      Thanks Dan! 🙂

  10. Andrew, a very informative article. I am thinking about importing from China to FBA USA. Do I need to register for VAT as I am storing the goods there? Also, what is the distance selling threshold of USA? Thanks.

    1. Andrew Minalto

      Hi Ben,

      Thanks for your comment.

      There’s no such a thing as VAT in the US – they have Sales Tax and each state has its own rules and thresholds. You can learn more about it on this website:

      https://www.taxjar.com

      Thanks,
      Andrew

  11. Hi Andrew,

    Thanks for taking the time to come up with such a comprehensive guide to all this!

    I’ve been using Pan-European FBA for almost a year without fulfilling all my VAT obligations in all these countries… As such, I was wondering 2 things:
    1) Have you heard of tax authorities in the Czech Republic, Poland, France etc coming after UK sellers with fines/penalties
    2) Do you know what sort of penalties I can expect for registering late (if any) if I use the Amazon VAT Services?

    Thanks again!

    1. Andrew Minalto

      No, sorry – I don’t have any such information….

      I’m sure you can find such stories if you do a search on Amazon seller forums.

      I have heard that sellers do receive tax fines for doing late returns in France.

      Andrew

  12. Hello Andrew,

    Love your detailed explanation about this whole situation but I would be grateful if you help me understand mine.
    I run a very small business in uk with uk ltd and resident in uk and nowhere near the threshold. Last month an Italian company (that I have worked in the past and fully trust), approached me and would like me to expand their products in Europe (specially online with Amazon as they are not ready for digital sales yet) and I also think that we will never reach the threshold in each country. At this stage I proposed to open an amazon account with my uk company and take care of all the sales but this is where my doubts start and not sure if i should proceed.

    I will be an uk company selling in the 5 marketplaces (including Italy), but the products are shipped directly from the company in Italy as they are made to measure and bespoke so it’s impossible for me to keep stock in the Uk.

    Before I get into this I’m just wondering if it would be ok to proceed as the company will pay all their taxes in Italy and I would pay my tax (if i go over the threshold) in the countries that I am selling. Just wondering if I getting myself into something bigger than it seems?

    Sorry for the long message and thank you for any help you can share.
    David

    1. Andrew Minalto

      Hi David,

      Thanks for your comment.

      Basically, this will be a dropshipping scheme – they will supply you (you’re the seller on Amazon), but send stock directly to customers.

      I’m not 100% sure on how VAT works in this scenario as I have not done dropshipping myself. But as the stock remains in Italy (and it is a part of the EU), I don’t think there’s much complexity to it – apart from the Distance sales thresholds (which you say you won’t reach).

      I am not a tax advisor so can’t give a definite answer here, but from what I see, it should be fine and you won’t have to register for VAT in those countries. But please do consult an accountant to be 100% sure.

      Thanks,
      Andrew

  13. I don’t know if the advice on this page is Amazon specific, but VAT GLOBAL (google them, they’re pretty big) are giving different advice in some situations. For example James Beattie went to them with this scenario…

    UK Company with UK sales over VAT threshold
    All stock is dropshipped directly from China to the customer in the UK
    No stock held in the EU

    In this case, VAT GLOBAL are stating that charging VAT is not required.

    Not sure what the difference is between this and some of the other scenarios you mentioned, but found that interesting. I don’t know the full technichal reasoning from VAT GLOBAL (but James went into it briefly on his youtube channel).

    1. Andrew Minalto

      Hi Kieran,

      Thanks for your comment.

      I’m not an expert in dropshipping schemes so don’t really know how VAT works around that…

      I also use VAT Global for Amazon EU marketplaces and they have been very helpful and professional so far.

      Thanks,
      Andrew

  14. Hi Andrew, love the content.

    If I FBA sell in UK, and I make my product eligible to be sold in Germany NOT with prime (so I’m still keeping the stock in UK), the return address is located in UK, will I still need to register for VAT in Germany if I exceed the 100k threshold?

    Is there a workaround to not register for VAT in another country, at least at the beginning?

    Many thanks and best regards,
    I

    1. Andrew Minalto

      Hi Ingmar,

      Thanks for stopping by.

      Yes, you will need to register for VAT in a EU country IF you reach the Distance Selling Threshold (even if you still keep goods in the UK).

      But it won’t apply for you in the beginning, as I don’t think you will reach 100k EUR sales to Germany that quickly.

      Andrew

  15. David Jayden

    As a foreign sole trader (FBA), how and where can i get VAT registered? I need to get it done before my product arrive at UK, am I correct?

    1. Andrew Minalto

      Hi David,

      Yes, that is correct – you need to register for VAT in the UK.

      You can find a registration form on HMRC website, which you need to fill out and post via mail.

      Thanks,
      Andrew

  16. Hi Andrew Minalto great post we are already selling in from Amazon FBA UK, and we are under the threshold in each country, we are already registered VAt in UK because we stored the item in the UK,. we are clear and we understand the threshold, and because our selling amounts are lower than the thresholds we don’t have to register in other European countries, my question is those small sales that we have in Amazon Spain, Amazon Italy, Amazon Germany and Amazon france, do we have to pay any VAT to the government in those countries, or where do we pay ? or is not necessary to pay until we reach the threshold, or Amazon deduct automatically from the fees, I dont know please we are confused

    thank you

    1. Andrew Minalto

      Hi Daniel,

      No, you don’t have to pay VAT on those countries as you’re only registered for VAT in the UK.

      Thanks,
      Andrew

      1. Hi Andrew Minalto thank you, so in my report to pay the VAT in the UK, those sales in other countries are excluded, for example, if I sell in the 1st Qt 2019

        UK: 1000 GBP
        Spain:100 Euros
        France:100Euros
        Germany:100 Euros
        Italy:100Euros

        I will report to HMRC only 1000 sales GBP

        thank you very much

        1. Andrew Minalto

          Hi Daniel,

          No, you report ALL sales to the HMRC and pay VAT in the UK on those sales.

          Andrew

  17. Thanks for writing such a detailed article – really appreciated! Through this, my understanding is that as a Canadian sole proprietor using FBA to sell in the UK, I will need to register for UK VAT. However during the registration process, it says that ‘principal place of business’ must be in the UK. How does that work??

    1. Andrew Minalto

      Hi Alexandra,

      Thanks for your comment.

      Yes, if you’re based outside the UK AND plan on using FBA in the UK, you need to register for VAT.

      But you can’t do that online – there’s a special form for people outside the UK, which must be filled out, printed and posted to the tax office via post.

      Thanks,
      Andrew

      1. Hi Andrew,

        As some others have mentioned, this is by far the most thorough VAT explanation for Amazon Sellers online. It is indeed remarkable what you have detailed!

        In alignment with what Alexandra wrote and your answer, as an EU citizen (Portuguese living in Lisbon), aiming at selling on Amazon UK (with stock in Amazon UK, expected revenue below £25k/year), as a sole proprietor, I need to apply for a VAT. You mentioned a special form for people outside the UK, which must be filled out, printed and posted to the tax office via post. Does that mean I need to go to the UK to fill it up? Can’t I send it (filled and printed) by post from Lisbon?

        1. Andrew Minalto

          Hi Joao,

          Thanks for your comment.

          No, you can send it via mail – that’s fine. You just can’t apply online, as UK residents can.

          Simply print the form, fill it out and send via the post to HMRC.

          Thanks,
          Andrew

  18. Hello Andrew,

    This is probably the clearest explanation of VAT I’ve ever read. Thank you so much for taking the time to write it up.
    I feel like I get it now, but I’d like to be totally sure.
    If you’d please see if this example is correct:
    -US Seller with stock based in the US
    -Sells under 70k to the UK in a calendar year through Amazon
    =No need to register for VAT?

    1. Andrew Minalto

      Hi Oscar,

      Thanks for your comment.

      Yes, exactly – you don’t need to register for VAT in the UK in that case.

      Andrew

  19. Hi Andrew,
    Just to clarify something, you pay VAT on the amount you sell on Amazon before fees? Not the amount paid into your bank after fees?
    Thanks
    Paul

    1. Andrew Minalto

      Hi Paul,

      Yes, of course – you pay VAT on the retail price of your products.

      Thanks,
      Andrew

  20. Hi Andrew,

    Does it matter where are the goods coming from in order to establish if I have to register for VAT in the UK?

    What about this scenario :
    – Seller residence: UK
    – Stock location : UK (Amazon FBA) but imported from China.
    – Seller company : UK LLP
    – Sell products to : UK Marketplace only
    – Turnover : less than 50.000£

    Do I have to register and pay for a UK VAT ?

    Thanks in advance

    1. Andrew Minalto

      Hi Victor,

      Thanks for your comment.

      No, it doesn’t matter where the goods come from in your example – you don’t have to register for VAT as you’re below the £85k threshold.

      Hope this helps! 😉

      Andrew

  21. Hi Andrew,
    Thanks for writing this informative blog post! You have helped us a lot!

    From my understanding, if 12 months sales revenue is over the distance selling threshold, I will need registration of Italy and UK VAT number even I store products outside EU ?

    My situation is:
    Seller location: Limited company in US
    Ship from: US
    Sell in Amazon IT and UK
    Revenue: more than 85k EUROs in the past 12 months in Amazon IT and UK

    If I am required to register UK and Italy VAT number, from now on, do I need to charge customers extra 22% / 20% sales VAT and pay UK and Italy tax authority?

    I find the following news saying that non EU business collect sales VAT starting from January 2021.

    https://www.ey.com/gl/en/services/tax/international-tax/alert–new-eu-vat-rules-simplify-vat-for-e-commerce

    Do you know if registering VAT number means I need to add sales tax to all orders immediately?

    Thanks so much for your help,

    Kind regards,
    Jo

    1. Andrew Minalto

      Hi Jo,

      Thanks for your comment.

      First of all, Distance Selling thresholds are calculated per CALENDAR year and not last 12 months of sales (as with normal VAT registration thresholds).

      Secondly, the new system you’re talking about – that will only be available from 2021 so you can’t use it now.

      To answer your questions – YES, if your sales in a calendar year goes over the distance selling thresholds in the UK and/or Italy, you need to register for VAT in those two countries, do regular VAT returns and pay taxes. It’s up to you to incorporate VAT into the existing price, add it on top of your existing price or make it somewhere in the middle. What matters is that you will have to collect VAT on sales and pass that money on to the tax office.

      Hope this helps!
      Thanks,
      Andrew

  22. Great article, very clear and concise information.

    Hope you can clarify my own VAT situation here.

    UK Citizen
    Live in Japan
    Started FBA on the UK market only, a few months ago (no intention of selling more than 40k a year) and when I registered my Amazon account I used parents UK address for my business address, HMRC also have this UK address for me.
    So basically I` am wondering if i am classed as a distance seller because I live in Japan or because HMRC still have my address as UK address, I do have to register for VAT?

    I should add that I have registered for self-assessment and will pay tax accordingly.

    Any clarification is much appreciated.

    1. Andrew Minalto

      Hi Arlo,

      Thanks for your comment.

      No, I think that won’t apply to you. You’re a UK citizen, you have the UK address registered for your business etc. I think in HMRC eyes you’re a UK based business owner who currently lives abroad. At least that’s how I see it (don’t take my word on this for granted).

      Thanks,
      Andrew

  23. Learned a Lot, Thank you! Since this is the first time selling on Amazon UK (Seller location: Taiwan, Stock location: United Kingdom), we received a VAT notice letter from HMRC. We need to pay vat before deadline and submit VAT Return Online. My question is how can we reclaim vat?

    1. Andrew Minalto

      Hi Liezel,

      Thanks for your comment.

      You need to register for a VAT number in the UK and then when you do VAT returns you will show all the VAT you have paid on imports and pay the difference to the government.

      Andrew

  24. Jaxon Gunderson

    Hello,

    I am incorporate in the US
    I have stock in the UK
    I am VAT registered in the UK (HMRC)
    I sell online to UK, Germany, France, Italy and Spain, below the thresholds.
    I am including VAT in my prices.

    I am currently filing for quarterly VAT through the UK (HMRC)
    Do I only file with my UK sales or do I have to include my Germany, France, Italy and Spain sales?
    I believe the former is correct but I want to make sure.

    1. Andrew Minalto

      Hi Jaxon,

      You need to include all the sales in your HMRC tax/VAT reports.

      Andrew

  25. Hi, I sell from the UK and store my products here too but sell worldwide and my turnover is below the threshold. Am i right in thinking no VAT registration required?

    1. Andrew Minalto

      Hi Darren,

      Yes, as long as you don’t reach distance selling thresholds in those countries, you’re fine.

      Thanks,
      Andrew

  26. Hello Andrew,

    What about this scenario :
    – Seller country of residence : France
    – Stock location : USA (Amazon FBA)
    – Seller company : UK LLP (with another french partner)
    – Sell products to : USA only (no UK, no Europe)
    – Turnover : 100 000$ a year

    Do I have to register and pay for a UK VAT ?

    Thanks,
    Mike

    1. Andrew Minalto

      Hi Mike,

      Thanks for your comment.

      I don’t think you have to register for VAT as your sales are below the £85k threshold.

      BUT it could be that because you’re selling to outside of the EU, by default you need to register for VAT. I’m not 100% sure about this, you will need to ask someone smarter.

      Good thing though is that EVEN if you have to register for VAT, you won’t have to charge it on sales as you sell only to non-EU customers. So it can even be better for you sometimes to register for VAT as maybe there are selling expenses that you pay VAT on.

      Thanks,
      Andrew

  27. Hi, thanks for the great post! What if
    Stock location: USA
    Amazon location: USA (Amazon.com)
    Seller location: UK
    Customer location: USA
    As a sole trader Amazon.com is charging me 20% UK VAT with an EU VAT number. Could I avoid this VAT charge if I were to register for VAT in the UK? (I’m not selling to UK/EU customers, just USA)

    1. Andrew Minalto

      Hi Chris,

      Thanks for stopping by.

      Yes, you could. IF you’re ONLY exporting/selling outside the EU, it does make sense to register for a VAT number, yes.

      Thanks,
      Andrew

  28. Thanks for the article. But i have one more question. I have a company in Bulgaria and i opened an Amazon business seller account with my bulgarian VAT number. I want to use amazon FBA and as i understand i have to open an UK VAT number correct? But the question is if i have to open an UK VAT number that is connected to my Bulgarian company or if it is better to have an UK VAT just for Amazon. Thank you.

    1. Andrew Minalto

      Hi Roberto,

      Thanks for your comment.

      Yes, if you want to use FBA in the UK, you need to register for a UK VAT number.

      The UK VAT number will still be issued to your Bulgarian company/name, but it will be used for UK transactions.

      You will also have to do quarterly UK VAT returns.

      Thanks,
      Andrew

  29. Great blog. Hard to find clear good info like this nowadays…

    Forget me if i have missed the answer in the comments, but here it goes, hope you can leave your input on our situation:

    Ltd. is based in Lithuania. 100% of our products are being bought and shipped from China to US, UK and DE. (FBA)

    As of now, Amazon simply deducts taxes from our sales (they are rather small i agree). As your blog suggests, we ought to register for UK and DE VAT and deal with paying taxes to the said countries for monthly/quaterly/early income?

    What we struggle with, is the US vat (or gst). It being a 3rd country, should we carry on and let Amazon deduct the taxes themselves and don`t worry about it, or should we get into the hell of registering dozens of VATs for each state that our products land in ?

    Thanks

    1. Andrew Minalto

      Hi Andy,

      Thanks for your comment.

      Yes, you have to register for VAT in the UK and Germany, no question about that. And do VAT returns etc.

      In the US, Amazon is charging Sales Tax on behalf of you in a number of States. For all other States – yes, you are liable to register for a Sales Tax number, charge it, do tax returns etc. It’s a very complex issue and you will find lots of discussions about this online, via forums/Reddit etc.

      Andrew

  30. Hi Andrew
    Thanks so much for this site – have previously searched without success for information on Amazon VAT.
    Question 1 I am VAT registered so pay no VAT on fees. When completing my VAT return do I have to declare the fees in box2 as a purchase of service from EC?
    Question 2 Is VAT charged on Amazon ‘other’ eg. postage charged to customer.
    Thanks so much.
    Sarah

    1. Andrew Minalto

      Hi Sarah,

      Thanks for your comment, unfortunately, I’m not a qualified accountant and I can’t help you with those questions…

      I personally HATE accounting stuff and have outsourced it all basically from the day when I started selling online almost 15 years ago. I know the basics, I know how VAT works etc. (hence this post) but I don’t know the small details, forms etc., as I don’t work with them on a daily basis.

      Thanks,
      Andrew

  31. Hi Andrew,

    Thank you for this post is really helpful.

    I’m a sole proprietor registered in the UK for 5 years. I’m not VAT registered yet. As a sole proprietor, I never needed a VAT since mostly I did create Invoices as a consulter for part-time tasks and the amount never surpassed the minimum threshold.

    I just began selling on Amazon EU markets and probably I will not reach this year the minimum threshold either in the UK neither in the other EU countries.
    My product is stocked in the UK. I’m not registered on the Paneuropean program. I requested the Amazon customer service that they assured me that the program is not active to avoid the VAT nightmare that that will create.
    Now in this scenario, a German customer asks me for an Invoice. Could you please let me know if I do comply if I send in an invoice without a VAT number and with my UTC number on it?

    Thank you in advance.

    1. Andrew Minalto

      Hi Pablo,

      Thanks for stopping by.

      Yes, you can still provide invoices to customers if you’re not VAT registered, that’s perfectly fine.

      The invoice simply won’t have any information/data on VAT as you’re not charging it.

      Thanks,
      Andrew

      1. Thank you so mutch Andrew
        I had no idea how I could get this answer. I really appreciate it.

        1. Andrew Minalto

          No problem, you’re welcome Pablo! 🙂

  32. Melissa Papageorgiou

    Hi Andrew,

    Brilliant post. Written in plain English. Thank you!!!

    If you do not mind, can you look at our case and answer some questions?

    Our business model:

    Incorporated in the UK
    Manufacturing and Shipping from China in Europe (plus US/Australia)
    Launching in a few weeks

    For Europe:
    1) Do thresholds apply to us? If yes, do we include Tax/Vat in our sales price only once we hit thresholds and are collecting for a government?
    2)We have a VAT in the UK – should we cancel it as we have not launched yet?

    Note – for a little more background: Our freight forwarder has their own postal service, that will do a direct injection of the packages to the local post or courier in the destination country. Our freight forwarders also own/manage the warehouse in China.

    Thank you so much!
    Melissa

    1. Andrew Minalto

      Hi Melissa,

      Thanks for stopping by.

      1) Yes & yes.

      2) Not sure on this one, you will need to consult an accountant. I’m not really experienced in such complex dropshipping style schemes.

      Andrew

  33. Hi Andrew,

    Thanks for the amazing Advice.
    I have a question regarding thresholds.

    Seller Location – UK
    Stock Location – UK / Poland
    Seller VAT registered in UK and Poland

    Stock held in Poland FBA is being sent direct to UK customers – 80k
    Would the VAT from 80k be paid to Poland or UK?
    Im unsure if the stock held in poland is crossing the Threshold limit for UK and should be paid there under my current UK VAT registration.
    If VAT is paid to Poland, Technically unfair trading would apply here. A poland residant can sell goods to the UK opperating above the threshold and would be paying a lower VAT rate at 20%.

    Your help here would be much appreciated.

    Regards
    Andy

    1. Andrew Minalto

      Hi Andy,

      Thanks for your comment.

      With such complex questions, you really need to seek an accountant’s help… I’m sorry but I’m not an accountant.

      But I know for sure that VAT is paid based on the goods location – so if the item is stored in Poland and is shipped out, you would apply the Polish VAT and that VAT would go to Poland as item’s location is Poland.

      Andrew

  34. Hi Andrew,

    Firstly a great blog you have here, I have learned alot so far. Being from the UK, I am looking to pursue a side hustle as a FBA seller. You mention that if my sales is below £85k, I don’t have to register for VAT.

    However, when shipping goods from China (using Flexport, maybe other companies too), I have read that they require yourself to be VAT Registered. Would you be able to voice your opinion on this matter,

    Many thanks

    D

    1. Andrew Minalto

      Hi Derek,

      No, that is not true – you don’t have to be VAT registered to import products from China.

      Use reputable freight forwarder such as Woodland Global and you will be fine.

      Thanks,
      Andrew

  35. Hi Andrew,

    Thank you for the valuable information here. It was pretty straight forward.

    I have a few questions just for the sake of clarity;
    When you say “seller’s location” I’m guessing you actually mean where the seller is physically based.

    – But what if for example the seller is French, located in the US and selling in the EU.
    What would be the VAT situation granted that the stock could be in the US or France for example?
    – Also, isn’t the “seller’s location” more related to where the account is based/ was created from? (.com/.fr./.uk)?

    Thank you very much, and keep up the good work there.

    Alex

    1. Andrew Minalto

      Hi Alex,

      Sellers location basically means where the Ltd. or Sole Trader status is registered (location for the business).

      In your example, if the stock is held only in the US and France, you would need to register for VAT in France.

      And in other EU countries IF you reach distance selling thresholds.

      Thanks,
      Andrew

  36. What if the seller is located in the EU like Ireland but dropshipping from china to the UK directly to the buyer? Is the seller regarded as an importer?

    1. Andrew Minalto

      Hi Kevin,

      That’s a good question but I don’t really know how this all works with drop shipping (have never been a huge fan of that concept so haven’t really researched it that much).

      Andrew

  37. Jeanette Barnes

    Hi Andrew,

    Great article and thank you for the invaluable advice.

    I have a quick question which is as follows:

    I am setting up an Amazon FBA business trading via a UK Ltd company where I will be the sole director and shareholder. I will only be selling in the UK and the stock will also be held only in the UK, so no distance selling involved.

    However, I will be living in Spain and be a Spanish personal tax resident. Any profit the company makes will be disbursed to me as a salary so there will be limited company tax to pay in the UK.

    Will the company retain the £85,000 VAT limit or would the company be subject to a lower VAT limit? I was not sure when you say “Seller Location” whether this meant the location of the business entity or the location of the director/shareholder?

    Once again many thanks for your time.

    Jeanette

    1. Andrew Minalto

      Hi Jeanette,

      Thanks for your comment.

      No, it doesn’t matter where you live – it’s the company location what matters.

      So in your case, you will still have the £85k VAT registration threshold if you keep stock in the UK.

      Thanks,
      Andrew

  38. Brian Portworsnick

    Hi Andrew,
    first of all a big compliment, great article. Alright, here my story. I am native German but tax resident in Italy. totally unregistered in Germany since years. Now my question.
    I want to register a Uk ltd but sell on the German AMZ FBA market. I assume I am not hitting the 100k in Germany the first year. But nevertheless, does my UK ltd need to register just a German VAT no. or even do I need to setup a GmbH (like ltd) as a branch in order to receive my German VAT no? Well, there exist now also the UG ( in order to compete with the British ltd, no start capital is required ) For sure I still have an old German VAT no. from my forme sole-trading business in Germany and this stays life long. But this is just private, right? As a capital ltd. I should have a new VAT no. ????? Thanks for help here. Best regards Brian

    1. Andrew Minalto

      Hi Brian,

      Thanks for your comment.

      Why do you want to form an Ltd. company in the UK in the first place?

      If you plan on selling in Germany AND you’re originally from Germany, why not simply set-up company in Germany and get VAT number there?

      I see this as the most logical plan, especially with all the uncertainty that Brexit brings to the plate…

      Andrew

  39. Richard Shuttleworth

    Hi Andrew,

    Great article.

    I am a UK sole trader who is not VAT registered. My stock is held in the UK and my Amazon UK sales are under the rolling 12 month £85,000 limit so do not intend to register for VAT. I am also based in the UK.

    I am considering selling in the US on Amazon.com via FBA with stock held in the US. I will be registered on Amazon.com under the same sole trader name and wondered if my USD gross sales figure, once converted to GBP, would be added to my UK sales when considering the £85,000 VAT limit? Or, will I merely be liable for US sales and income tax which will not effect my UK VAT limit?

    I have also considered setting up an entirely separate business entity to use for Amazon.com so that the two sales channels were kept at arms length.

    Would greatly appreciate your thoughts.

    Thanks again,

    Richard Shuttleworth

    1. Andrew Minalto

      Hi Richard,

      Thanks for your comment, it’s a good question!

      As far as I understand, IF you use FBA in the US and don’t sell to the US from UK, those sales will not count towards your VAT threshold calculation as the place of supply of these goods in the US. See this link for more information:

      https://www.gov.uk/vat-registration/calculate-turnover

      BUT to be 100% sure, use the Live Chat option on HMRC website and ask them directly:

      https://www.gov.uk/government/organisations/hm-revenue-customs/contact/vat-online-services-helpdesk

      Would be great if you could report back on what they said! 🙂

      Thanks,
      Andrew

  40. Hi Andrew,
    I’m a new Amazon seller in UK, about to sell under my non-VAT registered UK Ltd company. I’m currently waiting for a shipment of products from China for which I assume I’ll pay 20% VAT + duties on the cargo and shipping cost when it arrives at customs (through my shipping forwarder).
    When I come to sell on Amazon, will I then need to pay 20% VAT of sales every quarter to HMRC? If so, I’m effectively paying VAT twice on the products I’m selling. For that reason I assumed it would be better to register for VAT to avoid being charged twice, to offset the VAT paid on importing the products against the VAT I should pay for selling them.
    From reading your article though it sounds like I’m wrong on this, so a little confused here.

    1. Andrew Minalto

      Hi Edward,

      Thanks for your comment.

      No, you won’t charge VAT on your sales because you’re NOT VAT registered.

      You only start charging VAT when you become VAT registered.

      But yes, you will pay VAT at the importing stage, on goods sourcing value.

      Thanks,
      Andrew

  41. Thanks for the article Andrew – really useful!

    When I look at my ‘Payments’ reports on Seller Central, and do a monthly report in ‘Date Range Reports’, it shows total sales exclusive of VAT. It doesn’t state that, but I’ve compared it to the VAT detail reports, and it definitely is showing the exclusive amount.
    My question is, does Amazon transfer to me the VAT inclusive amount or exclusive amount?
    Thanks!
    Oliver

    1. Andrew Minalto

      Hi Oliver,

      Amazon transfers VAT inclusive amount to you on sales where VAT was charged. There will be sales where no VAT is charged though like to VAT registered businesses outside the UK. But in general, Amazon does not do anything with VAT charged on sales and transfer it all to you.

      Various reports throughout Amazon show amounts ex-VAT, that’s true. You need to pay attention to the details there.

      Thanks,
      Andrew

  42. Hi Andrew,

    Thank you for such an insightful and helpful article – really appreciate the time and effort you took to write it!

    We are a UK VAT registered business based in the UK and below other 3rd party EU member state VAT thresholds – just to set the scene. My question is in relation to VAT declared to HMRC on Amazon UK/DE/IT/ES/FR sales. For an example, if we sell £1000 worth of goods on any of the Amazon EU marketplaces, then Amazon takes their seller fee’s, fba fee’s etc and the income for our business comes to £700. We are then paid £700 from Amazon for our product sales. Do we declare £140 VAT (20% of £700) or do we declare £166.67 (20% of £1000)? I have not found any material online to aid with this – and I cannot find VAT invoices for Amazons fee’s either so I am stuck as to what way to go with this. In my eyes, technically we are invoicing Amazon for £700 for the goods?

    Please let me know your thoughts – any pointers are very much so appreciated.

    1. Andrew Minalto

      Hi Stephen,

      Thanks for stopping by.

      Have you enrolled into VAT calculation service with Amazon? It seems you haven’t! Because when you enrol, Amazon provides very clear VAT invoices for all the services (seller, FBA, marketing) they have provided at the beginning of each month (for the previous month).

      They also provide a separate invoice for global listings – these would be the items Amazon buys from you and then sells to customers in Europe.

      Thanks,
      Andrew

  43. Hi Andrew,
    we’re a UK based seller with FBA stock in Germany. We have a UK and DE VAT number.

    The issue we’re having is that Amazon enforces DESTINATION VAT over ORIGIN VAT methodology in their VAT Calculation service.

    Since we added our German VAT number, ALL your sales to that Germany, regardless of whether they are shipped from our UK warehouse (FBM), or from an Amazon fulfillment center in Germany (FBA) are automatically taxed at the German VAT rate.

    This warning may be something to include in your article, or to further investigate.

    Cheers,

    Micah

    1. Andrew Minalto

      Hi Micah,

      Thanks for your comment and thanks for letting me know about this.

      I don’t use FBM so wasn’t aware of this.

      Andrew

  44. Hi there,

    Thanks for this very detailed article. I am in a situation a bit specific and I do not see mine on the list, so I allow myself to ask it.

    Seller based: Canada
    Stock held: Hong Kong, China
    Selling on: Amazon UK, more than 100k of sales a year.

    Basically, I am a dropshipper. So, when a buyer from amazon UK buy from me, I buy from someone in Hong Kong of China, who ship to my buyer directly. I think that, what the company does, it that they send the goods to another company in the UK and then, they send it to the customer. But basicelly, when purchased by the customer, the goods are in Hong Kong or china.

    What is the VAT implication of this, when it comes to me ? Do I need VAT registration in the UK ?

    Thanks a lot for your help,

    Regards,

    Francis

    1. Andrew Minalto

      Hi Francis,

      Thanks for your comment.

      You need to register for VAT in the UK as your distance sales to the UK are above the threshold which is £70 000 per year.

      You’re the seller, you’re the company who makes these sales in the UK, so you’re liable for VAT.

      I’m not an accountant though but that’s how I see it.

      Thanks,
      Andrew

  45. Hi, I sell on amazon UK, but I am based in Portugal, use pan European but all my stock it is in Fba France or send it from Portugal directly. Why is amazon asking for a vat number in Uk? there is anyway amazon will stop asking for the vat? I am a small business, my income it is under the 70k pounds all countries together, why they are asking anyway? do I really have to ask the vat in UK
    regards

    1. Andrew Minalto

      Hi There,

      Thanks for stopping by.

      If you use Pan EU program, your stock is distributed to multiple countries in Europe so you will have to register for VAT in every country your stock is held in, including the UK.

      There are NO thresholds for it! Even if you store just a few units of the product in the UK, you have to register for VAT.

      Andrew

  46. Hi,
    Thanks for the great article. We are a US-based company, Stocked our products in AMZ UK, selling to customers in UK, FR, DE, IT and ES. We need your feedback to decide the scope for annual VAT filing/returns.

    1. Do we need to include the sales from other EU countries during the UK VAT filing or it should be just the sales to UK customers only since we didn’t cross the distance sale thresholds in other EU countries.
    2. Do we need to do the UK VAT filing though we did not cross the UK sale threshold limit of 70k pounds? Or is it required to do the annual VAT filing even if we sell 100 products that year since we stocked/VAT registered in the UK?

    Thanks for the help.
    Srini.

    1. Andrew Minalto

      Hi Srini,

      Thanks for stopping by. You will need to ask these questions your accountant/person who will be doing your VAT returns as the whole VAT thing in EU is much more complex than most people think. Especially if you are based outside the EU and deal with multiple EU countries.

      But the answer to your second question is 100% YES – you need to do VAT returns in the UK even if you do just one sale. And usually these are quarterly returns, not yearly.

      Thanks,
      Andrew

      1. Thanks Andrew for the updates.

  47. Hi,

    Thank you for very important informations. I have a question. What if;
    Seller Location: UK
    Stock Location: UK
    Turnover : UK 50 thousands, Germany 35 thousands, France 30 thousands.

    Totally I have reached 95 thousands pound. Do I have to register UK VAT or not. I’m confused. Thanks in advance

    1. Andrew Minalto

      Hi Naim,

      Thanks for your comment.

      Yes, you do have to register for VAT in the UK in your situation, as far as I understand it.

      Because ALL of the sales count towards your company’s turnover and as it exceeds the threshold, you do have to register for VAT in the UK.

      You should, of course, consult an accountant but that’s how I see it.

      Thanks,
      Andrew

  48. Hi Andrew,

    Most useful article about Amazon VAT, thanks a lot!

    Please advise:

    1. Could we do DEREGISTER for the distance selling EU VAT?

    2. As distance selling EU VAT is calculate per calendar year, is it from Jan to Dec?

    Thanks,
    Anson

    1. Andrew Minalto

      Hi Anson,

      Thanks for your comment.

      1. Yes, you can. Essentially it’s same VAT registration as you would store goods in that country so the registration and de-registration procedure is exactly same.

      2. Yes, correct.

      Thanks,
      Andrew

  49. Hi

    Just started on amazon, and Newly VAT Reg, Can you please tell me if I have to add 20% on top of the selling price of any goods?? I am going to sell on amazon,

    Cheers

    1. Andrew Minalto

      Yes, if you’re VAT registered, you will now charge VAT on sales.

      Whatever you increase your prices accordingly OR just work the new cost into existing prices, is totally up to you.

      Thanks,
      Andrew

  50. Hi Andrew,

    Great website, thank you!

    I need to register for VAT in Germany and France, due to my stock being held there (FBA). I have spoken to a company who have quoted £600 set up then £140 a month to file! Bit of a kick in the teeth. Do you have any recommendations or advice of how to get this done cheaper? I don’t want to do it myself.

    They also said that I would need to file returns going back to the first date that I stocked in Amazon Germany/France.

    1. Andrew Minalto

      Hi Tom,

      Thanks for stopping by.

      Yes, that is correct – you will need to file returns for previous periods.

      I am personally now going through the process with a company called VAT Global – try contacting them and see what price they can offer you:

      https://www.vatglobal.com

      For me, they’re doing all the registrations and 1 full year of VAT returns for FREE! Well, not for free – but Amazon will cover these costs as I received an email
      for a special promotion. If you sell a decent amount on Amazon already, contact Amazon support and ask them whatever you qualify for this promotion too as I know it has been extended into 2019 too.

      Thanks,
      Andrew

      1. Thanks Andrew

      2. Hi

        Did you have to go through the process of resubmitting your VAT returns? I guess that would mean reclaiming the VAT from HMRC then sending it to Germany (or whichever country you are filing in)

        1. Andrew Minalto

          I haven’t started selling on Amazon.de yet.

          I will wait for my VAT number and then do it.

          Thanks.
          Andrew

  51. hi Andrew,
    THANK YOU VERY MUCH FOR THE HELPFUL ARTICLE.

    I am not yet a seller on amazon but i am planning to become a seller on amazon.co.uk. I live in the UK, and i am only planning to sell in the UK through amazom fba system. My question is How many things do i have to pay to the HMRC or the UK GOV? for example i know that i need to pay
    1. income tax or corporation tax if registered as a company.
    2. VAT – if above £85k in sales(Is the £85k only the profit i make?) in the last 12 months of trading.
    Is that all or am i missing something else? Please HELP Andrew.
    Again thank you very much for the beautiful information.

    Ayub
    Cheers.

    1. Andrew Minalto

      Hi Ayub,

      Thanks for stopping by.

      Yes, basically it is corporate tax and VAT. But VAT only when you register for VAT.

      £85k is the threshold for turnover, not profits. And it works on a rolling 12 month period, not calendar years. So, basically, when at any given point for the last 12 months your turnover exceeds £85k, you’re required by law to register for VAT.

      Hope this helps!

      Thanks,
      Andrew

  52. Hi Andrew,
    Thank you so much for your post. As always, amazing summary and lots of useful information. I have a question. I suppose you are already VAT registered so could you tell me how does it work with import VAT? Do you still have to pay it when importing goods into the UK? I have a LTD registered in the UK, but I am not VAT registered yet and I am trying to calculate what the total product cost will be after having to register for VAT.

    Currently the total product cost is
    1. products + shipping + import VAT + import duties + amazon pick and pack + amazon referral fee + amazon fee VAT + additional services or products that also include VAT (amazon subscription, labels, inserts for example)

    Could you please tell me what elements would still remain after registering for VAT?

    Thank you so much,
    Astra

    1. Andrew Minalto

      Hi Astra,

      Thanks for your comment.

      Yes, you still pay VAT on imports at the time of importing OR you can delay the payment via the Duty Deferment Scheme:

      https://www.gov.uk/government/publications/notice-101-deferring-duty-vat-and-other-charges

      I recommend you read more about how VAT works or consult a tax advisor as in the beginning it is hard to understand the concept. The simple version is – you pay the government the DIFFERENCE in VAT you charge on sales and what you pay out to others. For example, if in a month you pay £1000 in VAT in Amazon fees, VAT on imports etc. and CHARGE £2000 in VAT on end sales, you would pay the government the difference, which is £1000.

      Hope this helps Astra & let me know if you have any further questions.

      Thanks,
      Andrew

  53. Hi Andrew,
    Thanks for the article.

    My question is bit different from what I read above. We are registered in UK and planning to activate PAN FBA program on Amazon. I want to take advantage of Input VAT on my EU sales via Amazon. Right now my purchases is centralized at UK and the input vat is claimed from my UK sales only. I like to do the same with EU VAT bill as well. Is there a possiblilty?

    1. Andrew Minalto

      Hi Sankar,

      I’m sorry but I won’t be able to help you with such specific VAT questions.

      You need to consult an accountant to get professional advice.

      Andrew

  54. Hi Andrew,

    Hoping you can help.

    Just started selling on FBA uk and notice in the FBA fees we are being charged tax under the headings of referral fees and FBA fees on each item. Are the tax charges from Amazon due to come back to us? As we are not a VAT registered company. Our listing price says price inclusive of VAT though, is this a mistake on our part?

    Many Thanks,

    Daniel

    1. Andrew Minalto

      Hi Daniel,

      Thanks for your comment.

      Yes, Amazon charges VAT on fees and if you’re not VAT registered, you can’t claim back that VAT.

      You also can’t mention that you charge VAT to end customer (like price includes VAT) as you’re NOT VAT registered and you don’t charge VAT to end customers.

      Thanks,
      Andrew

  55. Dear Andrew,
    Thank you for useful information!
    I would like to know if I sell on amazon as limited VAT registered company an item for example for 100£
    Does Amazon charge 20% VAT out of this final cost of 100£ plus all the Amazon fees?
    Or Amazon charge only the fees which includes the VAT already?
    Or Amazon charge only fees and leaves for the company to calculate the VAT?
    If Amazon charge the VAT does it pay is to HMRC on behalf of my LTD?
    Could you please give an examle?
    Thank you!

    1. Andrew Minalto

      Hi Yuri,

      Thanks for your comment.

      Amazon does not pay VAT on your behalf, no BUT if you sign up for Amazon Business scheme, Amazon will calculate VAT amounts for all your sales and even create invoices your customers can download (full VAT invoices).

      As for the pricing – if you are VAT registered and sell an item on Amazon for £100, it means that the £100 price already includes the VAT part. And if you have signed up for the Business program, VAT registered BUYERS from OTHER EU countries will be able to buy your items VAT free (ex-VAT prices).

      Amazon charges VAT on fees and issues monthly invoices for these charges.

      Hope this helps!

      Thanks,
      Andrew

  56. Hello,
    If you can help me with some clarification for my situation.
    My business is registered in UK and I’m planning to sell across Europe using EFN.
    Do I need a UK Vat number to do so?
    I also want to mention that I’m not near the UK threshold because my product is not yet launched.
    And for example if i distance sell across Europe dose that sells account for UK vat threshold?
    Any help will be appreciated because I keep finding contradictory information and is really confusing

    1. Andrew Minalto

      Hi Gabriel,

      Thanks for your comment.

      Yes, in your case I would consult an accountant who specialises in international trade, ideally Amazon businesses too. As I don’t know how exactly EU sales will affect your UK registration requirements etc. So, unfortunately, I can’t help you out as I don’t want to give bad advice I’m not 100% sure about.

      Andrew

  57. Dear Andrew,

    Thanks a lot for the valuable article really it is the first material I could understand the VAT issue from, really wonderful.

    I have a little question here, is the income tax in the home land something separate from the VAT?

    To make my question clearer, I will write my scenario.

    I live in the Netherlands, and will start my FBA Amazon business from the Netherlands but will sell in Amazon.com USA.

    Here according to what I understood :
    1. I must ask for American VAT because my stock will go to Amazon warehouse in USA.
    2. I will pay VAT to the Netherlands in case of my sales exceeded the threshold of VAT minimum in the Netherlands (for example 90.000 Euro ).

    my question is there also “income tax” to be paid to the Netherlands? or this is all what I have to pay?

    With regards,
    Mahmoud

    1. Andrew Minalto

      Hi Mahmoud,

      Thanks for your comment.

      Income tax has NOTHING to do with VAT. VAT is a totally separate tax with no connection to income tax.

      There’s no VAT in the US. In the US they have Sales Tax which is a whole different story (complex one).

      I don’t know about the specific in the Netherlands but I’m sure there’s an income tax to be paid there too, sure! You need to
      find out how much is that tax via local sources.

      Thanks,
      Andrew

  58. Hello Andrew. Thank you for laying out the VAT basics so clearly. I ship US products to UK fulfillment centers for Amazon UK customers. The UK sales is under £40k a year. I have been selling there for 3 year. I recently obtained my VAT #. Will I be responsible for paying VAT on past sales, or will it just start from my VAT date? Thank you for your help.

    1. Andrew Minalto

      Hi Scott,

      Thanks for stopping by!

      Depends on how long you have been doing it but yes – you will have to pay VAT on sales from the day/time you started selling stock from the UK location.

      Thanks,
      Andrew

  59. Hi Andrew,

    Fantastic article!

    Could you please advise on this scenario:

    Seller location: United Kingdom
    Stock location: India (Items directly dispatched to buyers in Uk via courier)
    Turnover: £90k in the last 12 months (sales on Amazon UK)
    Have to register for VAT? YES or NO?

    1. Andrew Minalto

      Hi Ava,

      Yes, you have to register for VAT because as a business, in the UK, you have reached the VAT registration threshold.

      Thanks,
      Andrew

  60. Hi,
    We’re a UK Charity and we publish books and sell a magazine. We are tax exempt and have no VAT number. Can we sell on Amazon?
    Thanks.
    Alex

    1. Andrew Minalto

      Hi Alex,

      Yes, you should be able to sell on Amazon.

      To be 100% sure, contact Amazon seller support and ask them directly about your status and options to sell on the marketplace.

      Andrew

  61. Victoria Rubio

    Hi Andrew,

    Thanks for the very insightful article.

    I have been an Amazon FBA seller in the UK for around 1 month – I didn’t register for VAT because I don’t plan to surpass the 85K threshold just yet. However, looking at my transactions report within Amazon, I see that they have been taking the 20% VAT themselves for all of my units sold – Is this a thing? The guy on the phone mentioned that this was because I didn’t provide a VAT number – do I need to voluntarily register in this case so they stop taking my VAT themselves? I am baffled by this to be honest so I just wanted to check with everyone else to see what’s the best solution around this.

    Thanks,

    Victoria

    1. Andrew Minalto

      Hi Victoria,

      Thanks for your comment.

      No, there’s no such a thing. Amazon won’t charge VAT on your behalf.

      Maybe you’re mixing it up with VAT paid on Amazon fees?

      Andrew

  62. Sarfraz Ahmad

    HI,
    According to you that if the seller and stocks both located in USA and Annual turnover is £20k in the last 12 months on Amazon.co.uk, I do not need VAT registration. I am a USA seller and stocks are also in USA and ship from USA. Amazon.co.uk suspended my account for not registration of VAT. You please guide me the suitable way to reinstate of my Amazon.co,uk account. Or if i need to register VAT, whatt will be the total cost?

    1. Andrew Minalto

      Hi Sarfraz,

      No, if you keep stock in the US, you don’t have to register for VAT in the UK. Unless your items/returns are being stored in the UK, which will trigger the requirement of registering for VAT (as stock is held in the UK).

      You need to contact Amazon and ask them why did they suspend, I can’t help you with that.

      Andrew

  63. Lee Meadows

    Hi Andrew,
    Thanks for the article, has helped clear up a few things.
    I am based in the UK but have been selling via Pan European for a while. I received an e-mail from Amazon last week stating that I needed to be registered for VAT in countries where I hold stock in their FC’s, they are particularly interested in Germany.
    My issue is that although we do make a few sales each day in Germany I’m not sure it is enough to take on the process, and cost of becoming VAT registered there, I am yet to be registered here in the UK as I have not yet reached the threshold. I had read somewhere that it was possible to change a setting in SC to tell Amazon to hold your stock here in the UK? Sounds to good to be true?
    Also is there a way of remaining FBA here but selecting FBM for the German marketplace?
    Thanks in advance
    Lee

    1. Andrew Minalto

      Hi Lee,

      Thanks for your comment.

      Yes, you can keep stock in the UK and sell to European websites. And you can do a mixture of FBA and FBM too.

      Read more on various programs Amazon offers here:

      https://services.amazon.co.uk/services/fulfilment-by-amazon/unified-account-and-efn.html

      Thanks,
      Andrew

  64. Hi Andrew,

    I mainly sell on Ebay and I am usually selling around £70k per 12 month period, give or take a few thousand. So i have never had to worry about paying VAT in the UK.

    But i was thinking of expanding and selling on Amazon as well, I was wondering, If i set up an Amazon account and was to sell £30k per 12 month period, would this combine with my Ebay turnover (£30k + £70k (£100k total)) to push me over the £85k UK VAT threshold, or are they kept separate.

    Any advise would be greatly appreciated.

    Thanks

    1. Andrew Minalto

      Hi Tom,

      Yes, of course – you would combine those two revenue streams.

      Thanks,
      Andrew

  65. Hi Andrew,

    Fantastic article!

    Could you please advise on this scenario:

    Seller location: United Kingdom
    Stock location: India (Items directly dispatched to buyers in Uk via courier)
    Turnover: £90k in the last 12 months (sales on Amazon UK)
    Have to register for VAT? YES or NO?

    1. Andrew Minalto

      Yes, you have to register for VAT as your sales have gone over VAT registration threshold in the UK.

      1. Thanks Andrew,

        This is despite I don’t hold stock in UK?

        1. Andrew Minalto

          Yes, because you have reached general UK VAT registration threshold.

  66. Hi!

    What a great article – thanks!

    I have just registered for VAT and have received my VAT registration number. I have now just enrolled on the Amazon VAT invoicing scheme. I have gone with the Standard VAT rate as most of my products attract this rate – however, I have 1 product which is a Zero rated product – how do I make sure Amazon don’t charge me 20% VAT on this?

    Ali

    1. Andrew Minalto

      Hi Ali,

      That’s a good question! 🙂

      You should contact Amazon ask them directly how this works as I don’t deal with zero-rated products myself.

      Thanks,
      Andrew

  67. Hi Andrew

    Is there anywhere where we can find out if our goods are vat rated in europe. I sell on amazon uk and my product isn’t rated in the uk but i need to know if this is also the case for the other 4 european countries as my product isn’t a straight forward zero rated item, it’s the way its marketed that makes it so.

    Thanks
    Claire

    1. Andrew Minalto

      Hi Claire,

      You should be able to find that information here:

      http://trade.ec.europa.eu/tradehelp/eu-product-rules-and-member-states-taxes

      Thanks,
      Andrew

      1. Thanks very much Andrew, unfortunately it wasn’t in the list of products but i’ve contacted them and asked the question 🙂

        Many Thanks
        Claire

        1. Andrew Minalto

          No problem, you’re welcome Claire! 🙂

  68. Hi Andrew, thanks for the superb article. It has been a huge help.

    I sell in the UK on Amazon, eBay etc and using Amazon FBA am heading towards the UK VAT threshold, but am a little confused and would really appreciate your advice.
    Please can you clear up the following and advise if this is correct.
    When a product is sold on Amazon in which stock is held at our business and shipped by ourselves from our store to the customer, the initial money including shipping etc. paid by the customer to Amazon ALL goes towards reaching the VAT threshold. It does not matter how much Amazon charge us in fees for the sale (we do not receive all the money given to Amazon), it is still the initial amount paid by the customer that counts. So for a product £10 + £3 shipping, the whole £13 goes towards reaching the VAT threshold, NOT … £13 – £2 (example. fees) as in practice we would only finally receive £11 in our bank from Amazon).

    Is this correct? i.e. in hmrc’s eyes, when fulfilling our own orders, does the customer pay us or do they pay Amazon then Amazon pays us? Big difference in income!

    Second question.. regarding FBA sales, stock is sent to Amazon to store in their warehouses and sell for us. So when the customer buys a product using Amazon Prime, it is actually Amazon that stores and sells it, then Amazon pays us.
    Does this mean that with FBA sales it is the final money we receive (after fees) from Amazon that counts towards the VAT threshold, or is it the initial payment from the customer to Amazon before FBA fees that counts ?

    Thanks a lot for your help

    R

    1. Andrew Minalto

      Hi Rick,

      Thanks for your comment.

      Yes, that is correct. You’re the seller essentially, and every penny end customer pays, goes towards your VAT threshold. Essentially Amazon acts as a payment processor in these transactions. You’re still the seller.

      No, it works in the same way with FBA items – Amazon is not the seller, you’re the seller. On invoices, your company name is shown.

      Thanks,
      Andrew

  69. Jeffrey Lewis

    Hi! We are currently using Quickbooks 2016 Premier Desktop and we are finding it falls short in the Multi Currency area, in that it has NOT the capability to create a Tax Agency for French VAT (TVA) in EUROS to be paid from a EURO Bank Account.
    It creates a Tax Agency UK VAT in GBP to be paid from a GBP Bank Account with no problems, but as we now sell more than €35,000 (their VAT threshold) in FRANCE and are paid in EUROs, we no longer have the easy option of paying TAX to the UK Tax office but have to pay the French Tax Office direct in EUROs from a EURO Bank Account. There is no way of doing this in Quickbooks or it seems any other software. The software writers have not yet caught up with what is happening in the online world

    1. Gurpreet Sidhu

      Hi Jeffrey

      Completely understand where you are coming from with this. I have made some software to try and tackle the problem, and we will integrate with QuickBooks in the future. I would love your feedback on it. Please check out http://www.crossbordervat.com

      I would be happy to offer you an extended free trial.

      Many Thanks

      Gurpreet

  70. Hi Andrew,
    Great website, thanks for sharing the information. Have got a question about recovering VAT from Amazon for seller fees.
    I registered for VAT in UK March 2011. I didn’t give Amazon my VAT no. until Jan 2018. From Jan 20`18 they haven’t been charging me VAT as they are registered in Luxembourg. In March 2018 I asked them to recover all the VAT I had paid on fees since January 2011. Last week they finally sent me a rebate. However I noticed the rebate only covered the period from March 2015 to 1st January 2018, and not from March 2011 to 1st January 2018. I sent them a message asking the reason for this. However they haven’t replied.
    Do you know what the reason could be that they didn’t recover any VAT from March 2011 to March 2015 on fees. I noticed there’s no VAT invoices for this period either in seller central, just a break down of seller fees without mentioning VAT. Was Amazon not charging VAT on seller fees prior to March 2015? Any info on this, would be great.

    Thanks,

    1. Andrew Minalto

      Hi Peter,

      I’m sorry but I don’t know the answer to this one…

      Probably there’s some kind of maximum period they can go back for this? 3 years in your case…

      But I don’t know, you have to deal with Amazon directly to sort this out.

      Thanks,
      Andrew

  71. Dear Andrew,
    Thank you for sharing such a good post Very much appreciated.
    I have only one more question. Amazon has recently introduced >free automatic VAT invoicing for all your Amazon customers<.

    In our situation we stock in the UK only and sell in Germany (and UK). Currently we are below German threshold for VAT (we are registered in the UK).
    Do we have to get a German VAT number if we enroll into this Amazon's offer. (By my understanding, VAT will then be displayed to German customer, hence we have to pay VAT in Germany?)

    Many thanks,

    Goran

    1. Andrew Minalto

      Hi Goran,

      Thanks for stopping by.

      On Amazon you can enter VAT numbers for each country you’re registered in so then Amazon system will automatically use this info to issue VAT invoices in countries/situations where you’re registered.

      So yes, I think you should be fine with using this service in the UK, where you have VAT number registered. All the stock that is sent from the UK, will be applicable with your UK VAT number. Unless a non-UK VAT registered buyer makes a purchase – in which case no VAT is charged on the sale.

      Your accountant should be able to explain you all this in more detail 🙂

      Thanks,
      Andrew

      1. Thank you very much for your explanation. Very helpful reply.
        Best wishes,
        Goran

        1. Andrew Minalto

          np, you’re welcome! 🙂

  72. Hello Andrew, thank you for your enlightening article!
    I’m from Portugal and I recently created my seller account at Amazon Spain.
    A few days ago, I went to the professional plan and received a notification as they would charge the monthly fee of €47.97 instead of €39.99 because i’m not VAT registered, also they will be in charge of paying the taxes to the state on my behalf.
    My intention is to import goods from non-EU countries, such as China, and sell using FBA Spain warehouse, according to your article i must register for VAT, but if they will pay the taxes in my behalf, i’m i still obligated to register for VAT?
    Thank you very much in advance!

    1. Andrew Minalto

      Hi Patricia,

      Thanks for your comment.

      Hmm, this is first time I hear that Amazon says that they will pay taxes on your behalf….

      Can you upload the message somewhere online and share link with me?

      Or if it’s not in English, translate and tell me exactly what it says?

      But yes, if you’re based in Portugal and will sell in Spain and use FBA in Spain, by law you’re required to register for VAT in Spain.

      Thanks,
      Andrew

      1. Thank you for your answer!
        The message is in english and it says:
        “Regarding your concern about why Amazon has charged you €46.39 instead of 39€, Let me inform you that 39€ is a charge if you have a VAT registration number (which means you can pay your taxes to the state). However, as in the meantime you still do not have a VAT registration number, Amazon will charge you with €47.97. So Amazon will be in charge of paying the taxes to the state on your behalf.
        Note: I would like to leave here the web page that contains this offer, so you can check on it: – https://services.amazon.es/
        I would like to tell also that Amazon only charged you €46.39 instead of €47.97, as you have gained €1.58 from the last period which starts from May 11, 2018 to Oct 4, 2018 (€47.97- €1.58 = €46.39).
        If you would like to know how to registrar a VAT number, please do not hesitate to open a new case by clicking on this link (…)
        Thanks for your patience and kind consideration.
        It was a pleasure to assist you today.”
        As i’m just starting on Amazon, this situation would be perfect because i wouldn’t have to register just yet and could see if my FBA business grows or not.
        Maybe we, new sellers, have good news here, i don’t know…
        Looking forward to hear what you think about this matter.
        Thank you

        1. Andrew Minalto

          Hi Patricia,

          No, sorry – you have misunderstood it – they’re just talking about the monthly fee and VAT they have charged you on that fee. That VAT amount they will forward to government.

          But for selling actual products, you will need to register for VAT in Spain. Amazon won’t deal with that for you.

          Thanks,
          Andrew

          1. Patricia

            It really seemed too simple to be true!

            Thank you for your support on my question and congratulations for such valuable content on your articles!

          2. Andrew Minalto

            No problem, you’re welcome Patricia.

  73. Hi Andrew,

    I really enjoyed reading your article. Thanks for taking the time.

    As a VAT registered UK seller, one area I find very little information for is the breakdown of Amazon’s fees and the VAT treatment for a UK seller.

    For example, looking at a typical Amazon fee statement, as well as your FBA fees, you will see items such as –

    – FBA inventory and inbound services fees (fees incurred shipping stock to Amazon)
    – Delivery label purchases (Postage purchased through Amazon)
    – Service fees (Pro seller fees)
    – Refund administration fees

    Is it ok to assume that these are all vatable?

    Many thanks,

    1. Andrew Minalto

      Hi Phil,

      Thanks for your comment.

      This is something you will need to ask your accountant – I don’t really get involved in the accounting details theses days – I don’t have time for that and I have realised that you can’t be good at everything (especially accounting) so I leave that to professionals.

      IF you don’t have an accountant, check out the A2X software (if you use Xero) and see how they map these entries into Xero and how VAT is applied here.

      Sorry, not much of a help, I know, but I really don’t want to give advice on things I’m not 100% sure about.

      Thanks,
      Andrew

  74. Hi Andrew !

    First of all thanks for that article!

    I have example :

    Seller location : Lithuania ( EU country )
    Product location : China
    Earned : 5k
    Im selling on amazon.co.uk .

    Do i need VAT registration ?

    Thanks for the answer ?

    1. Andrew Minalto

      Hi Evaldas,

      Are you shipping directly from China to customers in the UK?

      Like – a drop-shipping scheme from China?

      In that case no, you don’t have to register for VAT yet.

      Andrew

  75. Hi Andrew,

    Nice article.

    Just want to clarify and understand please,
    I live in Luxembourg and want to get involved in Amazon FBA using UK warehouse for the beginning .

    My understanding is that I have to register for VAT no matter what my sales are?
    and since I need to register for VAT, I have first to register a company in UK, right?

    the threshold does not catch me?

    There is no an option to start selling from a EU country like Luxembourg without a company?

    many thanks in advance

    1. Andrew Minalto

      Hi Vasilis,

      Thanks for your comment.

      1) Yes, correct. As you plan using FBA in the UK, you need to register for VAT in the UK from day one.

      2) No, you don’t need a company in the UK to register for VAT in the UK. You can register for UK VAT being a foreign citizen or using a foreign company.

      Thanks,
      Andrew

      1. thanks for your reply, but can you register for UK VAT as a foreigner and individual (without company)?

        1. Andrew Minalto

          Yes, you can.

  76. Hi Andrew,

    Really awesome article, and it was just what I was looking for!

    I’ve recently started selling on Amazon, and I had noticed that the “Fee Preview” amount in the Inventory Screen and the actual fee amount I end up being charged is not that same. I asked Amazon, and they said am charged VAT on FBA fees, commission, etc. on top of the “Fee Preview” amount – is that right? Shouldn’t the “Fee Preview” amount already include VAT?

    Subsequently they have said I can remove the VAT charges by being VAT registered, but I’m pretty sure I don’t need to since I’m way under threshold (especially after confirming your article above). However, I would love to have them start charging extra VAT on top of the “Fee Preview” amount….

    1. Andrew Minalto

      Hi Agnes,

      Thanks for your comment.

      Yes, that is correct – for some weird reason Amazon shows there costs without VAT added, assuming that everyone is VAT registered (which is not the case). I don’t really understand why they couldn’t show VAT inclusive prices for sellers who are not VAT registered (Amazon obviously knows this from your account info, so it would be super easy to integrate).

      No, you don’t want to register for VAT IF you don’t have to. Yes, you would not pay VAT on those fees BUT you will have to charge VAT on your product’s end prices, which will put you in a worse position financially than you currently are.

      Hope this helps Agnes!

      Thanks,
      Andrew

  77. Thank you for another great article Andrew.

    I currently have a brand registered in the UK, which is selling well independently under my own LTD company.

    However, I wish to expand the operation to Europe, but with a business partner. Do you know if it would be possible for me to have 2 Seller Central accounts… selling our same trademarked brand, but under a different limited company with a new business partner.

    E.g. “Phoenix Kitchens” – trademarked brand and register UK under John Smith Trading LTD remains me, exclusively as the soul director.

    We sell “Phoenix Kitchens” brand in the rest of Europe, but under John Smith Europe Trading LTD – where we have myself and my business partner as the directors.

    I am just wondering 1. If Amazon will allow me to have 2 seller central accounts, and 2. whether it will be possible to sell the UK brand under a separate join entity in Europe, and possibly beyond.

    Thank you very much in advance.

    1. Andrew Minalto

      I don’t think Amazon will allow that, no.

      In general – they do not allow you to open second account IF it sells in same category, not even talking about same goods. Yes, technically this will be a new company, but still – partially under your name. I just see this as a big mess in Amazon eye’s…

      Maybe I’m wrong though. Contact Amazon Seller support and ask them directly about this.

      Andrew

      1. Thank you Andrew,

        I will discuss with seller support – I was hoping that as it is a different market place it would not be an issue.

        Perhaps I could sell the same product, under a different brand?

        1. Andrew Minalto

          It’s a thin line to walk…

          You should discuss this with Amazon support and go with what they officially advise you.

          Otherwise you may end up like thousands of other sellers who get suspended because of breaching T&Cs, without even realising they have done something wrong by opening multiple accounts.

          Andrew

  78. Hi Andrew,

    This is a great guide, very helpful so thank you very much for that. Could I pose another scenario which is where we may find ourselves in the next 6 months?

    Seller location: United Kingdom
    Stock location: United Kingdom
    Turnover: £90k in the last 12 months…however £80k is from UK sales, the extra £10k is made up of sales from various other countries around the world.

    Do we have to register for VAT in the UK as our UK sales are under the VAT threshold?

    1. Andrew Minalto

      Hi Gaz,

      Thanks for stopping by.

      Yes, as far as I know, you have to register for VAT in the UK (your home country) as that’s where your business is registered AND your business has made sales exceeding £85k.

      So you have to register for VAT.

      Andrew

  79. Hi Andrew
    Thank you for writing this article, it’s great.

    I run a small business, selling on my website, Amazon and Etsy.

    I am based in the UK, along with my stock.
    I sell to customers all over the world but mainly to the UK.
    At the moment my turnover (for all 3 selling sites) is around £80K, so still below the UK VAT threshold.

    At the moment I make sure that I stay under this threshold as I don’t want to become VAT registered. My question is, if I could work out how much I sell to UK only could I increase my overall turnover over the £85K but make sure my turnover to UK is below £85K?

    Thank you

    1. Andrew Minalto

      Hi Kelly,

      Thanks for your comment.

      No, you can’t do that. Your overall turnover is what counts here so if/when your sales go above £85k, you have to register for VAT (you can ask for temporary exemption though if you feel that it was just a one off time, when your sales exceeded that £85k threshold). If you do go and register for VAT, consider FLAT VAT rate scheme too, which usually means paying less in VAT compared to normal VAT rate.

      Thanks,
      Andrew

  80. Yvette Kloss

    Thank you!
    What about this scenario.
    Amazon seller based in Uk as sole trader. Selling goods on amazon USA , goods stored in USA. Turnover zero as I have just started . I’m being charged Vat on all amazon fees even though I’m not Vat registered . Is there anyway I can get out of paying this Vat on fees?

    1. Andrew Minalto

      Hi Yvette,

      Thanks for your question.

      Yes, VAT will be charged on fees because you’re NOT VAT registered.

      That’s how it works 🙂

      Andrew

  81. Tom Starkey

    Hi

    Great article, thanks!

    Do you or anyone else reading this have a recommendation of how to apply and file VAT returns in Germany. We are a UK based company. The best quote we have received is £330 set up and £125 per month for filing the return. This seems very steep compared to what we pay in the UK (our UK VAT return is automatically completed by Xero)

    1. Andrew Minalto

      Sorry, won’t be able to help you out with this one…

      Maybe someone else can help.

      Andrew

  82. Hi Andrew,

    Thank you very much once again for the fantastic article.

    I am currently selling just one product on Amazon UK right now, considering expanding to European and US markets.

    Amazon have offered me free VAT registration and enrolment for EU states as a promotion you may have seen, which on the face of it looks quite appealing.

    I’m still weighing up the pro’s and con’s….considering whether I would be better of prehaps adding a new product to sell in Amazon UK or to expand into these other market places with the one product itself.

    Just wondered what your thoughts and stratergy might be – whether you feel it would be best to focus energies on one product internationally, or look to increase a range in one market place?

    Thank you in advance,

    Roger

    1. Andrew Minalto

      Hi Roger,

      Thanks for your comment.

      I really can’t answer that question for you, sorry… It’s a huge dilemma, I know, but it’s something only you can decide.

      Personally, I would stick with Amazon UK, Amazon US for now and expand product line as the whole EU VAT thing can quickly get very confusing, expensive and complicated.

      Andrew

  83. Hi Andrew,

    Thank you so much for the detailed article and sharing useful information.

    I am about to sell in Amazon USA. Amazon is charging 20% vat for monthly subscription and fba fees, as I am not vat registered. I am just starting and my turnover won’t be £85,000 in this year. Do I need to register for vat to claim the money back from amazon? If so, what are the pros and cons? Can you please guide in this? Thanks.

    1. Andrew Minalto

      Hi Renu,

      Thanks for your comment.

      Will you be selling only on Amazon US or Amazon UK too? I assume you will be using FBA.

      If you will sell only on Amazon US (to the US), it would be beneficial to register for VAT as you can then avoid paying VAT on fees BUT you won’t have to charge VAT on end sales as you will be exporting goods outside the EU.

      But if you also plan to sell on Amazon UK or Europe, don’t register for VAT until you reach the threshold as it will simply mean you’re making less profit compared to non-VAT registered situation.

      Thanks,
      Andrew

      1. Hi Andrew,

        Fantastic article on a complex subject. You clearly have a deep understanding of the different scenarios and it has been fascinating reading through all the comments.

        I’ll slot my question in here as it seems most related to my scenario so I hope you can help.

        Seller Location: UK
        Company: UK Limited
        VAT Status: Registered

        1st Stock Location: UK (Amazon FBA)
        Selling to: Amazon.co.uk customers
        VAT: Providing quarterly returns
        No problems with this element.

        2nd Stock Location: USA
        Selling to: Amazon.com customers
        VAT: Until a few days ago I was not being charged VAT on the 15% Amazon referral fee for items shipped to Amazon.com customers in the US.

        I was going through the Tax Information Interview again to ensure my Legal Entity was set up correctly and I answered as follows:

        1. Who will receive income from Amazon or its subsidiary? Individual or Business? BUSINESS

        2. For U.S. tax purposes, are you a U.S. person? Yes or No? NO

        3. Country of Citizenship: UK

        Since then, I am now being charged tax at 20% for the referral fee on all US sales.

        Is this right and I’ve just got away with it until now? I can’t see Amazon.com remitting that element that they have deducted to HMRC.

        Just wondering if I can have this changed because I am VAT registered in the UK?

        Thanks for your time reading and any help you can provide.

        Ed

        1. Andrew Minalto

          Hi Ed,

          Thanks for your comment.

          The information you have provided there is all accurate so it should be correct.

          I don’t sell on Amazon US so can’t comment on how Amazon handles VAT on fees there – but even if you pay VAT, as you’re VAT registered in the UK, you should be able to claim this Vat back via your quarterly returns.

          Probably your accountant should take a close look at those invoices – see who charges you, have your VAT number been provided there etc. It could be that Amazon Luxembourg (or similar) deals with these and that’s why you get VAT charged. This is how it worked on the UK site too, very recently. But as I said, you claim this VAT back in your VAT reports to HMRC.

          Andrew

          1. Thanks Andrew. Really appreciate this advice. I’ll have my accountant look into this and hopefully as you say the VAT can be recouped.

          2. Hi Andrew,

            Just thought I’d post here as a follow up after I checked with my accountant.

            You are correct – I can claim the VAT back on this through my quarterly returns.

            Many thanks,
            Ed

          3. Andrew Minalto

            Good stuff! 🙂

  84. Hi Andrew
    This is Gauhar from India. Your old customer of ebay course .
    i applied on hmrc website for vat registration as an indian seller .
    They send me 2 form to fill out , but i am facing some difficulty in filling them . No one is repling at there giving phone nos .
    Where i can get help to fill these forms.
    Plz help.
    Thanks

    1. Andrew Minalto

      Hi Gauhar,

      I’m sorry but I can’t help you with filling out the forms…

      If you can’t do it on your own, find someone who can help you with it (accountant or tax advisor).

      Also, you can try using VAT Live Chat on HMRC website – I have used it couple of times and found it very helpful.

      Thanks,
      Andrew

  85. Great article.
    One question I have though. I have been told that there are some sellers on Amazon selling mobile phone handsets who are using Amazon fulfilment. Under normal circumstances if a VAT registered company in the UK is selling to a non VAT registered consumer in say France, then the company would still have to account for the output VAT on the sale. However, some people say that by using FBA they are effectively selling to Amazon and can therefore avoid having to pay the VAT because Amazon themselves are VAT registered?

    1. Andrew Minalto

      Hi Peter,

      Thanks for your comment.

      I believe this happens in situations when Amazon acts as a buyer to export item outside of the UK.

      It’s not sellers fault nor do they breach any laws with this as they’re indeed selling the item to Amazon which then re-sells to end consumer.

      Andrew

  86. Hi Andrew,

    First and foremost, I really wanted to thank you for this post. It’s great help!

    One more question about the example below: In this example, where should VAT be paid and claimed back? I guess you have to pay £11.5K (£50K x 0.23) – the VAT already paid when sourcing those goods for Portugal, but for the remaining £100K I’m unclear if those should be paid where your company is registered (Slovakia), or where the goods are stored (UK).

    Seller location: Slovakia
    Stock location: United Kingdom
    Turnover: £100k in the last 12 months, £50k of that to Portugal
    Have to register for VAT? YES

    You will have to register for VAT in all three countries: your home country, Slovakia (as you have reached local VAT registration threshold), United Kingdom (as your goods are stored there), and Portugal (as you have reached the Distance Selling EU VAT registration threshold to Portugal, which currently stands at 35,000 EUR).

    Thanks a lot!
    Luis

    1. Andrew Minalto

      Hi Luis,

      Thanks for your comment.

      You will have to consult with an accountant/tax advisor for detailed advice, just like I do it myself 🙂

      I don’t really know all the ins and outs as I let my accountant deal with all of that.

      Andrew

  87. Ebrahim Moshaya

    Hi Andrew,

    Thank you for this informative article. Please could you advise how you generate the report in Amazon Seller Central which shows the Sales Snapshot for the last 12 months?

    1. Andrew Minalto

      Hi Ebrahim,

      It’s very easy to do! 🙂

      Go to Reports > Business Reports

      In DATE section select CUSTOM and choose the period you want to see/cover.

      And that’s it!

      Andrew

  88. Hi Andrew

    Really great article I have to say, will check out further posts from you. Lots of people out there giving advice on FBA, but few that manage to get precise, straight forward guidance especially on more complex topics like taxes. I’m running a mid-sized business in retail currently (>10m rev), so I’m quite familiar with VAT and it’s accounting at that scale – and yes it is quite complex and can be confusing. I’m now thinking to set up a small FBA business with my brother (small for the start ;)), so am trying to get my head around the basic commercials. I have one specific question in regards to VAT after reading your article, maybe you know that one: Assuming that we don’t register for VAT initially and we import goods from China to the UK (to store at an AMZ UK warehouse), how do we need to account for import VAT? Depending on the goods, import duties will be due for sure I take since we’re importing goods for resale, but what about import VAT as a non VAT-registered business? Will we simply pay it and then just won’t be able to reclaim it (since we’re not paying output VAT/ not filing a return in the first place) or will we not have to pay import VAT at all (just duty)? Of course this would have significant impact on our cost of goods, so drive pricing decision.

    Best regards,
    Tilmann

    1. Andrew Minalto

      Hi Tilmann,

      Thanks for your comment.

      As a non-VAT registered business, you will simply pay VAT on imports and not claim it back, yes. It’s basically just an expense in a set-up like this, just like the import duty or shipping fees to the UK.

      Thanks,
      Andrew

      1. Hi Andrew

        Thanks for fast reply!

        Best
        Tilmann

  89. Hi Andrew, you mention:
    “For Amazon sellers, I do not specifically recommend this flat VAT rate scheme because some of the Amazon VAT services may not be available to you if you are using this option. ”
    Which Amazon VAT Services are not available for sellers on the flat VAT rate scheme please?

    1. Andrew Minalto

      Hi Ray,

      As far I know the VAT returns service is not available for flat rate scheme payers (but then again you may not need it anyways).

      And there was something else which I have forgotten right now.

      Andrew

  90. Thank you mate
    it was really informative
    I have just resisted on Amazon FBA UK , However Amazon haven’t asked me for any VAT number. Knowing that I am a non UK and residing out of the UK.
    I just started communicating with suppliers in china but I wonder should I proceed and bring shipments to the UK or should I clarify about my VAT status, having said that Amazon is putting a limit of 15000 Euro on my sales (so maybe this is the VAT threshold ?)
    generally, my question is that if I am not a vat registered my goods will be deliverd to to amazon warehouse or will be stocked in borders waiting for my vat registration ?

    1. Andrew Minalto

      Hi Baker,

      IF you plan on sending goods to Amazon FBA in the UK, you should register for VAT before you do that.

      Amazon did not ask you for VAT number at account registration stage because you CAN sell on Amazon UK without a VAT number IF you don’t use FBA in the UK. But as you will be using FBA in the UK, you will need that VAT from day one of trading.

      Andrew

  91. Hi Andrew,

    Thanks for the post on VAT. I really enjoyed reading your blog.

    I am an Amazon seller in the US and am interested in expanding to Amazon Europe. Most of our stocks are in the US but we also have a supplier in Denmark. If we have the Danish supplier drop ship their products from Denmark to customers in Europe, do we have to register for VAT in Denmark? Technically the inventory were not ours. The Danish company owns the inventory.

    If those inventory count as ours, but we avoid selling in Denmark, (for example cancel orders from Denmark) do we still have to register for Danish VAT?

    Thanks you.

    Lei

    1. Andrew Minalto

      Hi Lei,

      Thanks for your comment.

      I’m sorry but I don’t know the answer to this one – I have never done dropshipping and have no idea on how VAT works in your situation.

      Try asking for advice on business forums.

      Thanks,
      Andrew

      1. Thanks Andrew.

        Lei

  92. Hi Andrew. Thank you for your article. I think I am still a little bit confused. If let’s say the final price a customer pays for your product on Amazon is 20 gbp it means that you can only sell 85000/20=>> 4250 items without paying VAT? If you sell more than that you need to register for VAT and start adding 20% to each product you sell? Thank you again for your help!

    1. Andrew Minalto

      Hi Andrea,

      Thanks for your comment.

      Yes, that is correct. At £20 a unit, it would take 4250 sales PER YEAR to reach VAT threshold.

      And you can add VAT to your price OR include VAT in the current price OR do something in between – that’s entirely up to you.

      So for example – if you increase the price by VAT amount, the new price will be £24 (£20 x 1.2).

      If you incorporate VAT into your existing price, it stays same at £20 (obviously you make less profit this way).

      Thanks,
      Andrew

      Andrew

  93. Roger Pearce

    Hi Andrew,
    Do you know anything please about UK based selling in USA with goods from China being sold in USA. Thanks, Roger.

    1. Andrew Minalto

      Hi Roger,

      What do you want to know?

      Do you have any specific questions?

      Andrew

  94. Ogai Mafuse

    Hi Andrew,

    Hope you are doing well, i am a mother of two want to start amazon selling account in the USA i read every top of this site which are very very useful i really appreciate your effort, could you please tell us more about USA vat or tax rules and where can we apply?

    1. Andrew Minalto

      Hi Ogai,

      Thanks for your comment.

      I will have a post about this in 2 weeks time, so stay tuned for that! 🙂

      Andrew

    2. Sandra Bach

      Domestic and international sellers should always speak with a U.S.-based CPA regarding which state tax agencies you need to register in and collect and remit sales taxes to. International sellers selling in the U.S. are subject to the same tax obligations as out-of-state-sellers. Most states are destination-based ie: where the product is shipping to is the state that gets paid the sales or use tax. If a state has Economic nexus laws (Marketplace Facilitators like Amazon, etc., Marketplace Vendors) in place, then Amazon is required to collect and remit the sales tax for you. The seller isn’t responsible. Otherwise sales tax nexus laws (physical, affiliate, click-through, “cookie”, etc) usually require you to collect and remit them. Some states don’t have sales tax at all but may have city or county taxes. You don’t have to have a PE permanent establishment to be subject to sales tax nexus laws. If you sell on your own website, in addition to Amazon, you are still required to collect and remit sales taxes. You aren’t off the hook for non-Amazon sales. Here are some helpful links. Nexus Law Chart for Out-of-State Sellers/International Sellers: https://www.salestaxinstitute.com/resources/remote-seller-nexus-chart & Tax Agencies by State: https://www.irs.gov/tax-professionals/government-sites

  95. Hi Andrew,

    I’ve just discovered your website which is something of a goldmine it seems. Such great, concise info.

    I think I have a grip on the bigger stuff like all the thresholds and country-specific VAT, but do you have any pointers towards more basic business stuff?

    I’m a fairly successful ebay seller, usually buying and selling used goods just as a hobby at the moment. None of this currently triggers HMRC declaration rules from what I can see as profits are only in the hundreds of pounds.

    However I’m thinking about sticking my toes into the water more formally, but struggling to get my head around really basic stuff, and whether operating as a business would just in fact wipe out my margins when scaled.

    Current example scenario operating as a private individual:

    1. Buy a used tablet off ebay usually at auction = £200
    2. Relist as a BiN with better listing and info = £300
    3. Outcome after paypal/ebay fees = £59.60

    Plan to do this at greater scale using FBA (under VAT threshold):

    1. Buy a used tablet off ebay usually at auction = £200
    2. List as a refurb on Amazon = £300
    3. Estimated outcome after amazon/FBA fees = £85 (what am I missing that will eat into this margin, tax on profits is one I assume?)

    Future plan to do this at greater scale using FBA (over VAT threshold if takes off):

    1. Buy a used tablet off ebay usually at auction = £200 (do I claim back VAT on this?)
    2. List as a refurb on Amazon = £300 (do I still price at £300 or do I need to change to account for VAT?)
    3. Estimated outcome after amazon/FBA fees = £85 (how does this figure change?)

    I know you can’t give individual advice, but hopefully you can see what I mean and perhaps point me in the right direction 🙂

    1. Andrew Minalto

      Hi Sam,

      Thanks for your comment.

      I really don’t know how VAT will work for you with used items, bought from individuals etc. – this is something you will need to research as I have no experience with that set-up.

      One thing that I wanted to clarify though – in second scenario you say you get to keep £85 after FBA/Amazon fees. How did you calculate that?

      As referral fee alone on that sale will be £36 plus you have to pay FBA fee:

      https://services.amazon.co.uk/services/sell-online/pricing.html/ref=UK_SOA_FAQ_pricing_pricing

      So make sure you fully understand how Amazon fees work.

      Andrew

      1. Yes of course I won’t be jumping in blind 🙂

        That was a rough calc of the ref fee plus est £3 fba based on amazon’s example of a toaster. Am I missing something?

        I see what you’re saying about used goods, it seems there’s a margin calculation to go through from what I can see on hmrc.

        To go back to that scenario if you have time (no worries if not) and assume I was VAT registered and buying new:

        1. Buy a product = £200 (do I claim back VAT on this?)
        2. List on Amazon = £300 (do I still price at £300 or do I need to change to account for VAT?)
        3. Estimated outcome after amazon/FBA fees = £85 (how does this figure change?)

  96. Ho Andrew,
    Thank you for the detailed article. I am still not clear on something, though. What if I have my goods in UK warehouse and I am VAT reg in the UK, but also selling on Amazon DE and Amazon Spain, let’s say. Let’s say I am delivering all my stock in UK only. Will amazon distribute it themselves in Germany and Spain and made me register for VAT in these countries?

    You must register for VAT in each country where your goods are stored, except your local/home country!

    And there are no thresholds! It starts from day one, so even if you send just 10 items to another country and sell them from there, you need to register for VAT in that country. Even more, you don’t even have to sell to that specific country! The location of the goods alone triggers this VAT registration law

    Please advise.

    1. Andrew Minalto

      Hi Alex,

      Thanks for your comment.

      No, you won’t have to register for VAT in Germany and Spain IF your goods are held in the UK. You would only need to register for VAT in those countries WHEN your sales to those countries reach distance selling threshold.

      Amazon won’t “automatically” distribute your goods from the UK to other European countries, no. They will only do this IF/WHEN you ask them to do it by signing up to one of the European FBA plans (like Pan European FBA etc.) But by default, when you send stock to Amazon UK, it will only stay in the UK.

      Hope this helps!

      Thanks,
      Andrew

  97. Tech2Globe

    Hi Andrew,

    I’ve bookmarked it, so I can come back and try some of the new tips thanks Andrew to keep inspiring us! Keep posting.

    1. Andrew Minalto

      You’re welcome! 🙂

  98. Anders Jørgensen

    Great article Andrew!

    I am on Ebay UK and US while my shop is selling to the UK.

    For my shop I use a UK supplier as that works great for me.

    I live in Denmark and by Danish laws I can’t register for vat as no stock is imported or exported/sold to Denmark!

    I do pay vat at my UK supplier for any orders I get.

    What does this mean UK vat vice Andrew? The 12 month or what

    1. Andrew Minalto

      Hi Anders,

      Thanks for your comment.

      I don’t know exactly how this works with dropshipping, as I have never done it myself.

      But theoretically, as your stock is in the UK, you probably need to register for VAT in the UK.

      But I’m not 100% sure on this one and you will have to seek professional’s advice on this.

      Thanks,
      Andrew

  99. Gurpreet Sidhu

    Hi Andrew

    Great article, very well written to explain such a confusing topic.

    I have wrote a few myself, being an Amazon seller and making some software to help the situation.

    One thing I can’t get my head around, is the “Intra-Community Supplies” report, which some EU countries want when filing. I get the simple B2B transactions aspect of it, but what about the Cross Border Stock movements between Amazon warehouses? Can you shine some light on that? Where can I find this info on Amazon Seller Central.

    Many Thanks

    Gurpreet

    1. Andrew Minalto

      Hi Gurpeet,

      Thanks for your comment.

      Unfortunately I haven’t used Pan European FBA yet so don’t know what reports on this aspect they provide.

      You should contact Amazon and ask them more information on this.

      Sorry, not much of a help, I know – but I can’t know everything 🙂

      Thanks,
      Andrew

      1. Gurpreet Sidhu

        For sure, it starts to get way more complicated…

        to stay fully compliant across the EU:

        Intrastat Reports (they have their own set of thresholds)
        Intra-Community Supplies Reporting
        EC Sales List
        Sequential Invoicing for some EU countries
        Country Specific reports (ex. SAF-T for Poland)

        Maybe you can look into these for future articles!?

        I have reached out to Amazon, who now direct you towards Avalara as the expert. Having moved on from KPMG.

        Bit of a chicken and egg situation, because you wait in line to get VAT numbers for the PAN-EU countries so you can unlock the Amazon VAT Services report. However Avalara are very slow, and don’t seem to want your business.

        1. Andrew Minalto

          Yeah, it is very complex situation indeed – NOT something you can do without a help of professional accountant.

          Luckily for me, I have someone who basically works on my books full time, for many years now and they take care of everything for me.

          Thanks,
          Andrew

  100. Hi Andrew,

    Thank You as always, so informative, so concise and helpful. Best Mentor as always!!

    Thanks again.

    1. Andrew Minalto

      You’re welcome Andy! 🙂

  101. marianna havlitusova

    Flat scheme working fab for us. We are small business paying about 8.5% in VAT on Flat scheme. We are not ready for 20% VAT yet. As we don’t sell too many products to business buyers and hardly order new stock, this options is giving us option of being on VAT (making bigger turnovers) without overspending on the actual VAT. This stage is surely a breathing space for small sellers like us, before we get to a bigger world of 20% VAT charge. I think you should have mentioned that flat rate scheme has benefits, like for example MUCH lower rate. Knowing this information, we would have been on this scheme years ago. We were too scared of 20% charge and extra accounting costs, so this decision was postponed for far too long. Sadly our old accountant did not bother explaining all this subject to us. Found new one over a year ago and we are happily expanding without too many drastic changes. 😎

    1. Andrew Minalto

      Hi Marianna,

      Thanks for your comment and sharing your experience with the flat rate VAT scheme.

      Yes, for small time sellers this can be beneficial. I did not go into too much detail about flat rate VAT as this article was about something else.

      Plus the flat rate VAT scheme is only applicable for companies with turnover of less than £150k per year, which for Amazon sellers is not that high of a number. But it can still be a good option for someone who goes over the £85k threshold but has no plans on building a bigger business than £150k a year.

      Thanks,
      Andrew

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