On the first of January 2021, for the first time UK marketplaces became responsible for collecting VAT on most sales from sellers based outside the UK. For imports of goods from outside the UK in consignments under £135 in value, HMRC will be moved the point at which VAT is collected from the point of importation to the point of sale and so online marketplaces VAT is now collected by eBay and other platforms. Even if an overseas seller fulfils from a UK warehouse, the online marketplace is still responsible for collecting VAT.
This isn’t a UK only change, the EU were scheduled to ape the UK but due to the pandemic have delayed the obligation for online marketplaces to collect VAT for overseas sellers until the 1st of July.
For eBay sellers, this means that any seller based outside of the UK will now have VAT collected on sales for less than £135. For UK sellers selling to the EU expect similar measures to apply to you from July.
Today, we take a look at what this means for both sellers and buyers and how VAT impacts selling and buying on eBay.
Online Marketplaces VAT and eBay
Does eBay add the VAT to the seller specified sell price (or bid) or deduct the VAT from the seller pay out
In cases where eBay is obliged to collect UK VAT, the buyer should see a VAT inclusive price in most cases. eBay are working hard on fixing the few instances where this isn’t currently the case. The VAT is deducted by eBay at the point of sale with the seller receiving the price net of VAT.
What does the buyer see if they are a UK buyer?
The buyer should see a VAT inclusive price in most cases. eBay will not charge a higher price at checkout. However, the exception may be when the purchase is made through auction format, where the buyer price is not fixed until checkout (the buyer will see messages throughout the purchase flow reminding them that VAT will be added at checkout though). eBay are working hard to fix this.
What does the buyer see if they are not a UK buyer with a non-UK address and so outside the scope of VAT?
If the supply is not subject to UK VAT collection by eBay, then the buyer experience will not include UK VAT.
How are Zero VAT/5% VAT supplies handled or is everything charged at 20%?
eBay is using third party software to ensure that the correct VAT rate is applied on items shipped to the UK.
Can the buyer get a VAT invoice?
Buyers can download VAT invoices from the order details in their account.
At the point of import, how do HMRC know the VAT has been paid?
eBay say that they cannot comment on the HMRC internal procedures. However, if the seller uses eBay shipping labels and eBay packing slips, when available, the information on these two documents indicate that eBay has collected UK VAT.