eBay are changing the VAT rates that you will be charged from the 1st January 2015.
It won’t just be eBay that make changes, EU legislation is changing the way VAT is charged on electronically supplied services (which includes eBay fees) and in the future VAT will be applied based on the country the customer is located, rather than where the supplier is headquartered.
All . For sellers who have already registered a VAT ID with eBay, they will not notice any change. eBay business seller fees will be displayed as net prices on the fee pages after 1 January
How the changes will affect you
Consumers
Consumer sellers will see no change to the total amount that they pay. eBay will still keep the same fee schedule but, instead of including VAT at 15%, fees will include VAT at 20% from 1st January 2015.
VAT registered sellers who have supplied their VAT number to eBay
eBay say that you won’t notice any financial change, you will already be paying fees net of VAT. The only change you’ll see is cosmetic in the way fees are displayed
VAT registered sellers who have NOT supplied their VAT number to eBay
Currently you’ve been paying eBay fees including VAT. From the 1st of January you’ll start paying eBay fees net of VAT, but if you you can start saving 15% over the busiest selling period up to the end of the year.
Whilst you’ll receive fees net of VAT we would strongly advise you to register your VAT number with eBay. It’s the best way to demonstrate that you’re a serious business, but more to the point if you have a VAT inspection you want everything to be 100% accurate! Don’t invite a more detailed look at your accounts simply because you didn’t take five minutes to with eBay.
Business sellers who are not VAT registered
Not all businesses need to register for VAT. However eBay have dispensation to charge all business sellers net of VAT from the 1st January 2015. You’ll get a 15% discount on your eBay fees from that date!
How eBay fees will be displayed
eBay business seller fees will be displayed as net prices on the fee pages after 1 January 2015. This means that if currently as a business seller you are paying 10% final value fees as an example, next year the fees will be displayed as 8.7% (8.7% fees plus 15% VAT = 10% fees).
Effectively eBay are knocking off the current 15% VAT rate for all business sellers so you’ll need to get used to the new fee percentages for your categories.
Why are eBay making this change
Over the past year there have been a ton of stories in the press about companies such as Amazon, Starbucks, Google and many other companies not paying enough tax. Here at Tamebay we’ve always said companies should only pay the tax in a country that that country’s law demands.
Now that the law (not just in the UK but across the EU) is changing, eBay are complying as we would expect them too. eBay have maintained the position that they pay all taxes due in every territory that they operate in and the VAT changes announced today for business sellers is eBay simply continuing to comply with tax legislation.
72 Responses
I’m in France (not VAT registered), and am told it will go from 10% to 10.4% on FVF on the basis that VAT is 20% here to Luxembourg’s 15%.
It’s not going to make a radical change, but it’s still more fees to pay. Between the FVF’s, listing fees, charging on base shipping prices, and Paypal taking their cut, eBay is becoming one of the more expensive platforms out there.
Have you got a link for the dispensation for business sellers under the VAT threshold? As I am not registered I have to pay VAT on everything else, so why not eBay fees?
The FAQ provided by eBay is really unclear on people under the threshold other than than the big brother ish “Without your VAT ID on file we may need to contact you for alternative evidence that you are a business.”
I thought they were trying to get people to register as businesses (so as to give proper protection, and pay taxes) rather than move businesses the other way
Seems a bit odd that business sellers below the VAT threshold won’t pay VAT on fees. Not that I am complaining if this story is accurate. If it is then I will definitely be putting more stock on ebay from January 2015 as fees of 7.3% with TRS discount are reasonable. Might even upgrade my shop status. ebay will do rather well out of this I would guess so a win win all round for a change!
And it might encourage more “business privates” to come out and pay income tax which may be the thinking behind the dispensation.
ebay have said that they may request alternative proof that you are a business if you do not register a VAT number. They do not specify what this proof will be but it could well be an HMRC ref number which could be cross checked with HMRC. I’m guessing this is to prevent private sellers registering as a business to save on fees and at the same time not pay income tax.
This is the best news ever for genuine business sellers! 🙂
Quote from the HMRC website on the changes, which is confusing me further:
Who is making the supply?
If you supply consumers through an online store or gateway, and the online store or gateway is acting in its own name, then they will normally be considered to be supplying the consumer. This means that the online store or gateway will be responsible for declaring and paying any VAT due. You will be treated as supplying the store and so will be making a business to business (B2B) supply, rather than a B2C supply. If this is the case, these rule changes do not directly affect you.
As I am a business seller under the threshold, this will save me £1,500 a year.
Or 2 weeks All Inclusive in Barbados 😀
Distinct lack of comment anywhere from “private” sellers.
More food for thought – it would not go down well with the EU if ebay raised their net fees now that they are net of VAT. Be interesting to see how this all pans out.
And it may well increase VAT revenue not reduce it as there will be less VAT offsetting to do. And also increased proprietor and partnership income tax and corporate tax revenue as a result of slightly higher margins.
And remember private sellers will still pay the VAT on fees.
This solution is good for ebay as it will flush out black market sellers therefore raising standards.
I am totally confused. The normal procedure for VAT is that everybody pays it on their purchases and then those who are registered for VAT reclaim what they have paid via their periodic VAT Return. Think about a Petrol Station. You drive in and put the fuel in your car. The pump shows the value of your purchase VAT inclusive. If you are VAT Registered, or if you are on expences you ask for a VAT Receipt. This them goes into your accounts(or as part of your expence claim to the company and then into their accounts).
I just cannot see the necessity for any change to the basic system.
So a Private Seller or indeed a Business Seller would pay the VAT as per normal and reclaim it if they are registered. If not then tough they have to grin and bear it and stand the cost just as they have to on every other purchase, including petrol.
I thought from the strangely worded ebay email that we would see fees net of VAT on a rolling basis day to day then the VAT would be added when the months invoice is closed.
I groaned thinking about calculating the VAT to be added on each fee as I keep a day to day spreadsheet on each item I sell.
I’m probably wrong but hey ho.
The new legislation is about VAT collected staying in the country where the sale takes place.
Consumers (private sellers) will be charged VAT at the local rate and the VAT collected will be passed to the local treasury.
For business to business sales (that is ebay fees to business sellers) VAT if charged would still go to the treasury in whose country ebay is domiciled. In ebays case Luxembourg.
By not charging VAT on fees to business sellers then the VAT on fees cannot be offset so more VAT collected by business sellers goes to the local treasury in which the sale takes place. The largest ebay markets UK and Germany probably insisted on this as their VAT take would rise. Revenue from VAT registered business sellers on ebay probably far outweighs revenue from small business sellers below the VAT threshold and so overall there is a gain for the UK treasury even though VAT on fees won’t be charged on non VAT registered business sellers.
If ebay charged VAT on fees for non VAT registered businesses then it would go to Luxembourg anyway so what is there to be gained for the UK treasury? Better to say don’t charge VAT on fees to all business sellers and we keep more VAT within the UK and possibly increase the level of income and corporate taxes paid.
Surely this is a fee increase?
Previously:
10% fees, minus 15% VAT = 8.7%.
VAT rate now charged at 20%, so it should be this:
10% fees minus 20% VAT = 8.33%.
But they are still charging 8.7%, so the fees are now 10.4% (8.7 * 1.2).
VAT registered sellers will still pay 8.7%, non VAT registered sellers will pay 10.4%.
I don’t believe non-VAT registered sellers will be charged 0% VAT. If someone can link to article which says this, please do.
Will this affect me.
I am hong kong seller, but item location ‘london’.
So if I understand this correctly:
HMRC clearly state that non VAT registered businesses must be treated as consumers and be invoiced including VAT.
Ebay say that non VAT registered businesses will be invoiced excluding VAT.
As the non VAT business has no mechanism to pay the VAT, it doesnt get paid?
The exemption for suppliers regarding VAT ID’s is if a business doesnt supply its VAT ID for whatever reason, alternative evidence can be accepted.
If I don’t have to pay VAT on ebay fees during 2015 (as a non VAT registered Ltd company) I’ll eat my TV.
I have a simple question and am looking for a simple answer.
From 2015 will selling on ebay be cheaper for non-vat registered businesses?
So who pays the VAT?
The UK treasury does absolutely not benefit on ebay to business fees VAT. they are perfectly happy with the new legislation that they themselves negotiated. they receive more VAT from ebay not less. 20% on all ebay to consumer sales is better than nothing. it all went to Luxembourg previously. as would VAT on business to business sales if it was charged. as it is not charged and cannot be offset then all business to consumer VAT goes to the treasury also. The UK treasury is the big winner here.
ebay are responsible for collecting VAT not non VAT registered ebay business sellers. HMRC will not come knocking on your door so do not worry. and in any case.the VAT would not go to HMRC so why would they be interested?
The other bit of good news about this for the UK is that there is now absolutely no point in ebay and other electronic service companies moving offices and domiciling to that country in the EU that has the lowest VAT rates and chasing these lower VAT rates. There is no longer a benefit in doing this. So ebay and other electronic service companies will probably move back to the UK from Luxembourg returning jobs to the UK with these moves.
And if “business private” sellers refuse to register as a business then they pay the 20% VAT on the ebay fees to the UK treasury, not the Luxembourg treasury as before, so at least some tax is paid to HMRC. Before nothing was paid. Another win for the UK HMRC!
That clarification is correct. The difference is £116.10 so £32.50 extra in income tax and NI is paid to HMRC which is better than £116.10 going to Luxembourg. It is an absolute fact that in future no business to business ebay fee VAT will be going to Luxemburg as there won’t be any charged to any business seller. All business to consumer VAT will go to the country in which the sale takes place.
The real question is are sole traders to be reclassified as private sellers on ebay? That would cause ebay and consumer law a lot of headaches.
“The real question is are sole traders to be reclassified as private sellers on ebay?”
I have invoices for stock purchases. This is one item of proof that ebay could require if a VAT registration number is not available. I have a Royal Mail PPI account which has a minimum requirement that 1000 packages a year are shipped. Again Royal Mail invoices are proof that should satisfy ebay. Copies of invoices can be emailed to ebay so it is relatively straightforward for ebay to obtain evidence that a seller who is not VAT registered is running a business as classified by HMRC.
You should probably look at this:
https://www.gov.uk/government/publications/vat-notice-741a-place-of-supply-of-services/vat-notice-741a-place-of-supply-of-services
This hasn’t been updated for 2015, yet, but the rules that are changing are business to consumer not business to business. So the business to business parts apply now and after 1 Jan 2015.
Basically if a business is supplied e-services then the business should not be charged VAT by the supplier, but the business becomes liable to account for the VAT that the seller didn’t charge, under the ‘reverse charge’ (section 18).
If a business in the UK is below the turnover limit for VAT then the reverse charge services are seen to be part of the business’ taxable turnover for VAT. So the reverse charge is not collected if the business is still below the turnover limit (in the same way that VAT is not charged or collected on other sales by the business) but the amounts charged in fees by e-Bay could, when added to the business’ normal turnover, take it above the limit and mean that it has to register for VAT.
So all businesses are, in effect, treated the same way for VAT. A registered business has to charge itself the VAT that e-bay doesn’t charge it and an unregistered business has to do the same if the charges (+ its normal turnover) mean that it goes over the VAT registration limit.
If the business to business parts apply now where is my ebay VAT refund for the last few years amounting to ££££’s?
Here is my take on this…
I dont see the problem, nothing has changed apart from location.
Lets say £15 + lux %15 VAT £2.25 = 17.25 is what you pay…
Now… because ebay sell an advert placement to a UK seller they charge, £15 + %20 VAT £3 = £18.00 is what you pay..
Now, if your VAT registered you can claim back £3 but ebay still get what they got before, they just invoice you with and without vat so you can see it.
If your NOT vat registered your ebay fees really went up by 0.75p
so,…
Winner, HMRC
No change – VAT registered business
No change – eBay
Loser – non VAT registered uk business.
Thats how I see it.
So, giving that info would ebay now start reporting business sellers in the UK to HMRC whos turnover exceed the VAT amount for the year?
OFFTOPIC:
But eBay is down again, Monday morning = great.
Ebay down Monday morning can’t check sales my ebay etc. Why can’t ebay stop faffing around with their systems in the run up to Xmas?
Can get on ebay but I have nothing in “my Ebay”. I know there were a couple of auctions ending this morning I was planning on bidding on, oh well I feel sorry for anyone who has anything ending today.
At JD,
I used to DJ with Pete Tong 🙂
Nothing working for me either
No call back facility on eBay and if you click on the chat help the wait time is 53 minutes.
Good old eBay, breakdown on a Monday morning 🙁
So, giving that info would ebay now start reporting business sellers in the UK to HMRC whos turnover exceed the VAT amount for the year