Understanding the Amazon VAT Changes: A Guide for UK Sellers

As the landscape of e-commerce continues to evolve, staying informed about changes in policies and regulations is crucial for maintaining compliance and ensuring smooth operations. Of particular note to UK sellers is Amazon's recent update to its VAT treatment on selling and fulfilment fees, effective from 1 August 2024.

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New VAT Application on Amazon Fees

Amazon has shifted its VAT policy to charge domestic VAT on selling and fulfilment fees based on the seller's country. This marks a departure from the previous approach where the reverse charge mechanism was applied, except for UK advertising fees. These changes mean that sellers are now required to pay VAT on Amazon fees and subsequently reclaim it through their VAT returns.

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October 2024 Update: Key Observations

Initially, it appeared that all Amazon FBA fees across the EU and UK would be subject to a flat 20% VAT. However, a review of August invoices has revealed some nuances:

• Merchant Seller Fees: These invoices generally include a 20% VAT across all marketplaces, though exceptions exist.
• FBA Fee Splits: UK-based sellers using FBA for international shipping are receiving two types of invoices. Orders shipped within Great Britain incur a 20% VAT, while international shipments are zero-rated.

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Navigating Credit Notes and Invoices

During the transition in August 2024, Amazon issued credit notes and backdated invoices for periods with varying tax treatments. This has resulted in mixed tax rates for FBA fees. For instance, an FBA fee from 1 July might still be treated as a Reverse Charge Expense.

For a comprehensive understanding of these changes and their implications, we invite you to view our webinar featuring insights from Elver E-Commerce Accountants, focusing on accounting for your Amazon transactions during August-September 2024.

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As always, staying informed and proactive is key to navigating these changes successfully. Should you have any queries or require assistance, do not hesitate to contact us. Your compliance and success in the ever-evolving e-commerce landscape remain our top priorities.