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.
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?
Hi Darren,
Yes, as long as you don’t reach distance selling thresholds in those countries, you’re fine.
Thanks,
Andrew
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
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
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)
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
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.
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
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
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
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
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
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.
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
Thank you so mutch Andrew
I had no idea how I could get this answer. I really appreciate it.
No problem, you’re welcome Pablo! 🙂
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
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
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
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
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
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
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
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
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?
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
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
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
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
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
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
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
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.
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
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
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
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.
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
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
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
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
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
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
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
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.
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
Thanks Andrew for the updates.
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
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
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
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
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
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
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.
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
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)
I haven’t started selling on Amazon.de yet.
I will wait for my VAT number and then do it.
Thanks.
Andrew
Thanks Andrew
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.
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
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
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
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?
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
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
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
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!
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
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
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
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
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
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.
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
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?
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
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
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
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
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
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?
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
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
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
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
Hi Tom,
Yes, of course – you would combine those two revenue streams.
Thanks,
Andrew
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?
Yes, you have to register for VAT as your sales have gone over VAT registration threshold in the UK.
Thanks Andrew,
This is despite I don’t hold stock in UK?
Yes, because you have reached general UK VAT registration threshold.
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
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
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
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
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
No problem, you’re welcome Claire! 🙂
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
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
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
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
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,
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
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
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
Thank you very much for your explanation. Very helpful reply.
Best wishes,
Goran
np, you’re welcome! 🙂
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!
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
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
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
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!
No problem, you’re welcome Patricia.
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,
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
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 ?
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