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!
If you need help with VAT registrations and returns for your Amazon business, I can highly recommend this company: VATGlobal.com
They did my EU VAT registrations and now are also doing my monthly VAT returns for PAN-EU sales. I have arranged a special deal with VAT Global for my blog readers. You will receive a special discount on the VAT registration and returns fees IF you mention this code when contacting them: ANDYVAT2020
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.
I own a UK ltd company but we have plans to do trading only in Germany. We have not traded yet. I know little about self assessment and tax returns. Kindly, give me an advise, what else we need besides self assessment, Vat and tax returns to keep things smooth in future and avoid fine.
Also let me know, should I do self assessment, VAT and tax returns on my own, because everything is NIL at the moment, and there is nothing actually to file. Or should I choose accountant at this stage.
Hi Jesse,
Sorry but I can’t really give advice in specific cases like this and would definitely suggested contacting an accountant.
Thanks,
Andrew
Thank you kindly for the article Andrew, it’s such a helpful resource.
Can I double check that as of Jan ’21 this article is still correct?
i.e If I sell < 100k euro on Amazon Germany, fulfilling all orders from FBA warehouses in the UK only, I do not need to be VAT registered in Germany?
See what Andrew says, but I think that’s right, since you won’t be having any stock physically located in Germany and sales will remain under their threshold.
Having said that I would expect lower sales for you than if you had an active listing on DE site… but then you’d be required to register VAT in German, since you’d require to have stock sent to Germany.
Thanks Andrew, sorry to state the obvious, but Brexit will have a big impact on this. I’m UK seller currently selling across UK & EU. With Brexit now amazon asking me to stock inventory somewhere in EU. Germany is the right option since that’s where the volume of sales is. However, painful move since I do not reach the threshold. Also amazon VAT services sound good as first year is free, but then they charge 400 per country/per year…
This will make little businesses harder to justify.. Sorry for the moan I’ve got a business running in auto for years and now feeling it’s all in danger… rant over…
Andrew, thank you for writing this article! You have included all of the information it took me months worth of frustration to try to learn on my own when I sent my first shipment to the UK. If only I’d seen this sooner!
Now that my first shipment is there and I’ve had some sales, I am completing VAT returns that are not nil…
I’m based in the US. I shipped my goods there at the END of one quarter, but there weren’t any sales until the next quarter. Does this mean that when I claim my input VAT from that initial quarter on $0.00 sales, that I essentially lose the benefit of deducting my input VAT? As it can only be claimed against sales? Or can it carry over to the next quarter when I actually did have sales?
Thanks so much!
-Cassie
Hi Cassie,
Thanks for your comment.
It carries over, yes. But I’m not really an accountant – you should ask questions like these on an accountant forum, like this one:
https://www.ukbusinessforums.co.uk/forums/accounts-finance.55/
Thanks,
Andrew
Hi,
I am registered business in the UK doing amazon fba in the UK. I am not vat registered as my turnover is below the threshold. Currently i am doing MCI i think where my items are shown across europe and sent from UK warehouse.
Now to do this in Germany amazon have forced me to become vat registered in Germany which I have now done and now my first return is due 7th November 2020.
I have 0 sales as I just got my vat number few weeks ago. What i was wondering is that can i claim all advertising and all other vatable invoices that i have through amazon Germany vat filing? Do you have advice on this?
Thanks
rj
Hi RJ,
Thanks for your comment.
No, you can’t do that. I don’t know the details, but you can’t do it that way. You need to consult an accountant for more information.
Andrew
Hi Andrew,
Thanks for such a comprehensive information for the new sellers.
Please guide me through my situation;
1. I have registered Ltd company in UK, and I don’t live in UK or EU. I have registered for the UK VAT last week and I am yet to get a response from the HMRC. I just saw a free promotion Amazon is offering for VAT registrations and filings in 7 EU member states for the first year. Should I go for it because recently Amazon restricted storing more than 200 units in its warehouse, so I have to buy 3PL services in UK if I don’t choose PAN EU. Is it still allowed to store more units in Amazon across EU states if we choose PAN EU?
2. If I choose PAN EU, where would I ship the products to? By that, I mean which EU member state? Which one is more smooth in terms of customs and VAT duty?
3. If I choose PAN EU, can I still make listings and sell in selected states; e.g, only UK, Germany, Italy, and Spain while leaving France, Poland and Czech Republic? What would that mean in terms of VAT registrations and filings?
Thank a lot!
Hi Rauf,
Thanks for your comment.
1. No, PAN-EU won’t help you with this. It’s 200 units across ALL Amazon marketplaces. This number won’t increase if you register for the PAN-EU program. That is unless you create a new SKU for each marketplace, but that wouldn’t be a good idea as then your listings won’t show combined REVIEWS and ratings from all marketplaces.
2. You can’t send goods directly from China to Amazon. Amazon can’t act as your importer, don’t even try this.
3. No, you can’t. With the PAN-EU program, you can’t select which countries you want to use. For that, you should look into the Multi-Country Inventory (MCI) program.
Thanks,
Andrew
Andrew, just wanted to leave a comment to say thank you for a simplified guide on this!
Legend!
You’re welcome Dan! 🙂
Hey!
I left question? Can you answer and not delete it?
I already answered your question! 🙂
Andrew
Hallo!
We are selling in Amazon from Latvia. We just overstep treshold for France. We registered for VAT number to France and some other EU contries. For now, as we have reached treshold, we stoped sell to France costumers. Getting VAT number estimated time is 9-12 weeks. All documents have accepted and now we just need to wait. Question is – When we can turn selling on for France? Only when we get VAT number or right now when we have registered to get it?
Thank You!
Hi Sandris,
Thanks for your comment.
IF Amazon allows you to continue sell in France, you can do that. You will do back-dated VAT returns when you receive your VAT number, that’s perfectly fine.
Thanks,
Andrew
Hi Andrew,
I found your blog a few days ago and I have to say there is a wealth of good information here, many thanks!
Just to get my head round the VAT issue, could I ask a simple question? I’m sure it’s been answered before, and it might even say in the article, but I clearly blind!
I’m in the process of getting my product manufactured in the UK. I’m based in the UK and will only be selling to the UK. I’m not VAT registered, and I’m only dipping my toe into this so-to-speak so the turnover will be much less than £85k!!
So my understanding is that I would have to pay 20% VAT on all of Amazons fees. So that’s the 15% fee, the FBA fee and storage fee. I’m not paying 20% on my items selling price right?
Appreciate just a simple clarification so I know I’ve got this!
Thanks!
Hi Scott,
Thanks for your comment.
Yes, you’re 100% correct on all points 🙂
Thanks,
Andrew
Excellent, thanks Andrew, much appreciated!
You’re welcome! 🙂
Hi Andrew,
Your blogs are so helpful, so thank you for sharing this information.
We currently sell on Amazon.co.uk and Amazon.com and are expanding into Amazon.de (with products translated into German). We have used the Amazon VAT services and all of the necessary documents to sell on Amazon.de have been verified in seller central, and we have been told that it will take around 3 – 4 months to get our VAT number and Tax certificate.
We have a shipment ready to go to Amazon.de, which will take approx 6 – 8 weeks. Can I ship our products into Amazon.de before our VAT number and Tax certificate are received? We do not expect our first years sales to exceed £100K.
We have contacted the Amazon VAT services, who passed us onto Amazon Seller support, who have said:
“the answer to your question is a tax advice and you should forward your question to an external tax advisor, since Amazon cannot provide tax advices.
If you shipped your products without a VAT number and tax certificate you could incur in penalties from the tax office, so it is better for you to check with your tax advisor.”
If we wait 3-4 months, then ship the products, they’re not going to be available online for approx 6 months. Can you advise if we’re likely to have problems if we ship our products before we receive our VAT number and tax certificate?
Thanks
Kate
Hi Kate,
Thanks for your comment.
It’s hard to say what will happen… I personally did wait until I got my VAT number on hand and only then sent in goods into Germany. And that’s probably the best advice I can give to someone who doesn’t want to take any unnecessary risks.
If you send in goods prior to getting the VAT number, Amazon themselves can actually ban/cancel/suspend your German seller account, which could cause even more issues, if you already have stock located there.
So yeah, I personally wouldn’t risk it.
Thanks,
Andrew
Hello,
First of all thank you so much for taking the time and creating this blog and helping people.
I live in a non EU country and I sell printed children’s books in US(FBA) already. I am hoping to expand my business to UK. I also want to do FBA in UK market.
I have two questions;
1) Can I control which countries my products will be sold by Amazon and which warehouses they will be held? Because for now I only want to sell to the people who live in the UK..
2) Since I will be selling books which as you mentioned above is a %0 tax added product. Do I still have to register for Vat?
Note: I am planning start with an individual seller account in the UK. Because I don’t think I will be selling more than 30 books per month.
Thank you,
John
Hi John,
Thanks for your comment.
1) Yes, you can sell only in the UK, that’s fine.
2) Yes, you do. But the VAT rate will be 0%.
Thanks,
Andrew
Hello Andrew,
Thank you for this blog post. Often use your blog post to help us.
A quick question:
UK Based
Sales, UK and USA FBA.
Do USA sales count towards/contribution to threshold?
For example lets say seller is UK limited company. $100k sales USA, £20k sales UK. I presume would the seller still not have to register for VAT?
Thank you very much.
Yes, as far as I understand, that is correct.
USA sales won’t count towards your UK VAT registration threshold.
I wonder if you are correct about that a foreign company holding stock in USA need to register for vat when It passes the distance sales threshold. I believe the distance sales threshold only applies when shipping from another eu country,
Even if a US company register for vat in the UK it should not charge vat on sales that are shipped from USA, as these are out of scope of UK vat. The customer needs to import the product and pay the vat in the UK.
Yes, you would need to double-check this with an account/tax advisor. I’m not 100% sure on that one.
Hi
thank you for this post and all your great posts
if i sell VAT exempt items for example grocery products via the PAN EU program. do i still need to register for VAT in each country? or since i will not be charging VAT it is not required to register for a number
thank you in advance
You would still need to register for VAT number and do VAT returns, yes.
Also, you need to check whatever those goods are still VAT exempt in those countries as these rules vary from country to country.
Andrew
thank you for your reply
i have searched this information everywhere and could not find it, can you please let me know a reference where you found the information
and could you clarify why it is required since i will not be using the number.
thank you
You will still be using the VAt number, for zero-rated goods, IF you’re VAT registered.
The VAT rate will show as 0 on the invoice, but it will be shown. Just by something 0 rated on Amazon and see for yourself that VAT is shown as 0% on the invoice.
You can get more information by simply calling HMRC helpline.
Andrew
Hi Andrew
1. What are the VAT requirements if you are based in the UK and sell mainly in the US? Do you need to register for UK VAT? Also, would we need to pay the sales tax that Amazon has collected to the US Government.
2. Also, if you have stock in Amazon FBA warehouses in Germany and Canada is VAT required for those countries? We are currently paying German Taxes and Amazon is deducting sales tax for Canadian Sales.
Hi Alex,
Thanks for your comment.
1) No, unless your sales go above the £85k threshold. But you could benefit from VAT registration in a case like this as you will be able to claim the VAT back on ALL expenses, but don’t charge any VAT on sales as you’re selling in the US. Yes, you will have to register for sales tax in dozens of States, do tax returns etc. VERY expensive and complicated process.
2) Don’t know about Canada, but in Germany – yes, you need to be VAT registered there.
Thanks,
Andrew
Thanks Andrew
Hi,
Thanks for such a detailed post as always Andrew! If you don’t mind, perhaps you could help with this.
Seller Location: UK
VAT Registered in UK
Have previously made sales to EU countries ONLY through Amazon FBA which has been accounted for on UK VAT returns already.
Now registering for PAN EU and EU VAT numbers. Tax authorities want to know:
1. “How many items have you sold in [country] to date?”
2. “Have you sold any good LOCALLY in [country] before this registration application?”
Do these historical items (sent from UK FBA FCs) count as items sold “in” a country?
Does goods sold “locally” only refer to goods sold FROM an FBA FC in that specific country?
Thanks for any help you an provide 🙂
Hi Liam,
Thanks for your comment.
I’m not a tax advisor, but if you ask me – answer to first question is actual distance sales you have made to that country from the UK. And answer to 2nd one – 0.
But again, I’m not good with this – I hate accounting/taxes etc. LOL! Who is doing your EU VAT registrations? You should probably ask them for advice/help with this matter.
Andrew
Hi,
Thanks for the reply Andrew! Yes what you said is the way I would understand it too!
I went with VAT Global as suggested, but they seem to be saying that even sales to to [country] “from” the UK would need to be included and historic VAT returns submitted. That can’t be right at all…..That would be like a business registering for VAT in the UK and suddenly having to submit historic VAT returns for all previous business transactions….Perhaps the adviser just worded their email slightly wrong but I just wanted to get a sense of what others in business felt before moving forward. Thanks again!
Hi Liam,
Yeah, that doesn’t sound right… if your distance sales to that country stay below the threshold, you shouldn’t have to do back-dated VAT returns.
Maybe they thought you were using PAN-EU program there?
Andrew
Hypothetical Scenario
Seller location: UK
3 Stock locations all nicely registered:
– 20k fulfilled from german to germany
– 60k fulfilled from france to france
– 10k fulfilled from uk to uk
Total Turnover: £90k in the last 12 months
Do I have to pay VAT in Uk for the full 90k even though I only fulfil 20k from there + france 60k so paying VAT twice on 60k?
Or only France as its the only above the local threshold and all sales come within France (even thought Im based in the Uk as sole trader)
If paying twice VAT then would it be better to open a company in France and import directly? And only pay VAT the on the 60k and the rest is only 30k so no VAT to pay in the UK.
Many thanks!
Hi There,
Thanks for your comment.
You really need to find an accountant that can help you with this – international VAT is not something you can do on your own if you’re not an accountant by trade.
But to put it simply – no, you don’t pay VAT twice – never. The VAT is applied for each transaction separately, based on where the goods are sent from OR where the customer is located. But you never pay VAT twice on the same transaction, in two countries.
Thanks,
Andrew
Thank you for your answer.
Would you know if I would have to pay any VAT in the UK in this case, since only 10k is coming out of the uk, (though being a sole trader based in the UK), and the rest of the 80K the stock is actually located and shipped from abroad?
You will charge and pay VAT in the UK on sales that happen in the UK – so on £10k in your example.
Hi, Andrew, I’m opening the Amazon account on Amazon UK as an individual seller (a non-VAT payer in my country-Lithuania), will I be charged any VAT from the very beginning with negligible sales?
Hi Jurate,
Thanks for your comment.
Yes, if you plan on using FBA in the UK, you have to register for VAT in the UK from day one (no matter what your sales are because the stock will be held in the UK).
Thanks,
Andrew
Great article I must say. I have a more specific question if you could help me.
If a business is selling from UK, stock in the UK into Germany. Said business is selling both 0% rated products, and 20% rated products.
If for example, we sell 200k goods into Germany, 100K of which were 20% rated products, and the other 100K of products are 0% rated (cycling helmets) Do we still need to apply for a VAT number in Germany? If so do we need to charge VAT on the 0% rated products or do they still come under UK Law and continue to 0% rate them?
I can’t find anything online which explains this part. I’m aware if we sell into Germany 100K of what the UK considers Vatable products we need to apply for a German Vat Number but it doesn’t explain the 0% rated products and what then happens to them if over threshhold? My assumption is that we don’t need to apply for a VAT number but could be wrong? If 0% rated products become 19% rated products once sold into Germany for example it would wipe out so much margin.
Thank you in advance for your help!
Hi Jamie,
Thanks for your comment.
I’m not a tax expert, but as far as I know – products in Germany will be taxed at the German VAT rate, even if in the UK the rate is 0. So, from what I can tell, you do have to register for VAT in Germany and have to charge German VAT on all sales to Germany.
But as I said, I’m really not a tax expert so you should probably consult someone who knows more about this than me.
Thanks,
Andrew
Hello, just a quick query if possible.
We area VAT registered company selling mainly to UK customers from UK held stock. We are below the threshold however.
Our products are listed on Amazon.de.
We occasionally sell an item to Germany at levels well below local and national thresholds.
The question is, do we charge VAT on these occasional German sales, and if so, at German or UK rates?
I do look forward to hearing.
Best
Nick
Hi Nick,
Thanks for your comment.
Yes, of course – you do have to charge VAT for those sales to Germany, at your local/UK rate.
Only time when you wouldn’t charge VAT on German sales is IF the buyer (in Germany) is a VAT registered company. Then you sell the item to them without charging VAT. Your accountant should help you with booking these sales properly.
Thanks,
Andrew
Hello Andrew,
Thank you for your very helpful guidance.
I have 2 questions to ask, it would be terrific if you could help me out with them.
1) I am small individual seller on amazon.co.uk with turnover about 10k per year, far below 85k threshold for VAT registration. However, since I used FBA and had items stored in UK warehouse, I was forced by Amazon to register for VAT number in UK. Now I have my VAT registration and I need to submit my VAT returns, even though they are in couple of thousands of pounds for each period. Is there some threshold to be applied, or do I need to pay it, since I’m registered?
2) Would you be able to advise me what to put on my VAT return for period where I didn’t make any sale, but rather refunded one item to customer. How to fill out VAT form for this period?
Hi Daniel,
Thanks for your comment.
1) If you’re VAT registered, you have to do VAT returns, no way around that I’m afraid. It doesn’t matter how much in sales you make.
2) I’m sorry, but I’m not an accountant and can’t really provide advice on this.
Thanks
Andrew
Hello Mr Minalto, I am a UK-based Amazon Seller (sells on in the U.K.) and I have a burning query I need help with. I am approaching VAT threshold, depending on how accurately I have been recording amazon sales. When reconciling Amazon disbursement I get every two weeks, do I just account for the actual money that hit my bank after they have taken their fees or do I reconcile using the Amazon disbursement statement that shows the raw sales amount before Amazon deduct fees, refunds, etc.? I would be grateful for your help.
Hi Deloreen,
Thanks for your comment.
You take raw sales figures of course. You don’t take off any fees to calculate your turnover.
Thanks,
Andrew
Hello Andrew,
Does this mean that if I sell item for 1200 GBP and Amazon fees are 150 GBP out of it, I need to pay VAT from 1200 GBP, or 1200-150 (1050 GBP)?
Thanks,
Daniel
Thank you very much for your response. Happy New Year!
Thanks! 😉
Thanks for the information. I’ve found that (once VAT enabled with Amazon), that they deduct the VAT paid by the customer before sending the transfer money to the seller. Does this in fact mean that a seller does not need to pay VAT again, as Amazon have already deducted that money and paid the VAT directly (assume to Luxembourg?
Hi Vince,
Thanks for your comment.
No, that’s not true. Amazon does not hold any VAT on sales – all the money goes into your seller account balance and then you have to do the VAT returns and pay taxes on your own.
Thanks,
Andrew
Hi Andrew,
Can you kindly recommend a good accountant in UK with experience in cross-border VAT for amazon sellers, please?
Hi Nathan,
Thanks for your comment. Is this for Amazon? Just the UK side or EU marketplaces too? For just the UK side, you can find good Amazon accountants here:
https://www.ukbusinessforums.co.uk/directory/
For EU/PAN-EU VAt registrations and monthly VAT returns I use this company:
https://www.vatglobal.com
Thanks,
Andrew
Hey! I just wanted to say thank you for this amazingly helpful post. I’ve hunted for this information A LOT and not found anything nearly as clear and helpful as this. I was actually selling on Amazon across the EU but pulled my listings after reading a post that said I DID have to be registered for VAT in each country – regardless of sales! Nonsense! I’m relisting immediately!
Thank you,
Peter.
Good to hear that Peter & you’re welcome! 🙂
Just to be clear – you do have to register for VAT in countries you have stock in, no matter what the sales are. Apart from your residency country, where you use th elocal VAT sales threshold.
Thanks,
Andrew
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
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
Thanks Andrew. I really appreciate your reply and your time.
Absolutely love your articles – super informative and very useful
You’re welcome Tracey! 🙂
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 ?
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
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,
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
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
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
Thanks Andrew
It seems the issue was that I didn’t have my “Official Business Address” nor “Business Address” set up at all (under Settings -> Account Info). Thus they billed me accordingly to the address available under “Legal Entity”, which is my EU residency. I’ve since updated both to match my LLC address and have confirmed that Amazon indeed stopped charging me VAT on its fees.
Good to hear that & thanks for sharing this with us! 🙂
Andrew
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 🙂
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
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?
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
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?
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
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
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
Really great article that gets to the point quickly! thanks!
Thanks Dan! 🙂
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.
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
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!
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
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
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
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).
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
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
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
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?
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
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
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
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
Hi Daniel,
No, you report ALL sales to the HMRC and pay VAT in the UK on those sales.
Andrew
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??
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
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?
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
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?
Hi Oscar,
Thanks for your comment.
Yes, exactly – you don’t need to register for VAT in the UK in that case.
Andrew
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
Hi Paul,
Yes, of course – you pay VAT on the retail price of your products.
Thanks,
Andrew
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
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
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
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
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.
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
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?
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
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.
Hi Jaxon,
You need to include all the sales in your HMRC tax/VAT reports.
Andrew