On the 1st of July, the VAT compliance regime in the EU changes with marketplaces being responsible for collecting VAT on many sales when sold by a seller from outside the EU. This has already changed in the UK and Amazon and other marketplaces are already collecting UK ecommerce VAT and how it works directly impacts sellers outside the UK today, plus gives some useful insights as to how it will work on Amazon from the 1st of July in the EU.
These UK ecommerce VAT FAQ are directly from Amazon and so are specific to their marketplace, but will in general apply to all UK marketplaces.
Amazon UK ecommerce VAT FAQ
What is UK ecommerce VAT
What is UK ecommerce VAT
Effective January 1, 2021, if you sell goods to UK customers who are not registered for UK VAT:
- From inventory stored inside the UK and your primary place of business is outside of the UK: Amazon is required to collect and remit UK VAT irrespective of the shipment value.
- From inventory stored outside of the UK: Amazon is required to collect and remit UK VAT if the shipment value equals or is below £135. Prior to January 1, 2021, sales under £15 were VAT-exempt but this has been removed.
Outside of the above supplies, sellers remain liable to meet any VAT obligations in the UK and account for any UK VAT due on sales, purchases, and importations.
My business fulfills shipments directly to UK customers. Are there any changes to parcel labelling under UK VAT on ecommerce (VOEC)?
There are no new parcel labelling requirements under UK VOEC. If Amazon has declared UK VAT on the shipment under UK VOEC, ensure that a single order number corresponds to a single shipment (in other words, do not split an order number into multiple shipments or combine multiple order numbers into one shipment), and ensure that:
- You confirm to your logistics partner that Amazon has declared UK VAT on the shipment
- You provide your logistics partner with the correct intrinsic value for the shipment (see next FAQ for more information. If Amazon declared UK VAT on the shipment, then this should not exceed £135)
- If requested, you may provide Amazon’s UK VRN: GB190023639
If your logistics partner asks for Amazon’s EORI number, inform them that this information is not public and is not needed for customs declaration under UK VOEC.
How do I determine the correct intrinsic value for the shipment?
The intrinsic value is the price that the goods are sold for, excluding VAT, customs duties and any shipping or insurance costs which are stated separately on any invoice. This can be found on the Manage orders page under Order details, referred to as “Unit price (VAT exclusive)”.
Can I still report VAT under the UK Flat Rate Scheme under UK VOEC?
No, the UK Flat Rate Scheme is not applicable to supplies where Amazon is liable to remit UK VAT under UK VOEC. Amazon will use the normal UK VAT rates for calculating and withholding VAT on these sales. You may want to contact your tax advisor to discuss if any changes are required to your VAT registration with HMRC or the preparation of your VAT returns. Click here for HMRC’s guidance on the Flat Rate Scheme.
What happens if the customer returns a UK VOEC order?
Where a UK VOEC order is refunded either partially or in full, Amazon will reimburse the VAT element of the refund amount to the customer. You will be responsible for reimbursing only the VAT exclusive price back to the customer through the same returns process on your Manage returns page. You can identify that an order is under UK VOEC prior to shipment with the indication of “MarketplaceFacilitator” on the Order details page when confirming the order on Seller Central. The refund of VAT for orders falling under UK VOEC and designated as “MarketplaceFacilitor” will be managed directly by Amazon.
What is postponed import VAT accounting?
From January 1, 2021, the UK introduced postponed import VAT accounting which enables businesses to account for UK import VAT within their VAT return instead of paying to HMRC at the point of importation. If you are registered for VAT in the UK, you will be able to account for import VAT on your VAT return for goods you import into:
- Great Britain (England, Scotland and Wales) from anywhere outside the UK
- Northern Ireland from outside the UK and EU
How do I ensure that I do not include the VAT reported by Amazon in my VAT return?
Amazon introduced the Tax collection responsibility column to both the Amazon VAT Transactions report and VAT Calculations report to identify the party responsible for collection and remittance of VAT to the authorities. Where it states “MARKETPLACE” then Amazon will remit the VAT to the authorities. If it states “SELLER” then you remain responsible for any VAT due.
Amazon add, please ensure that you do not report VAT where it states “MARKETPLACE” under Tax collection responsibility. If a third party assists you with your VAT compliance, please ensure that they are aware of these reporting changes.
