I wanted to open up a discussion around how Amazon applies VAT to FBA fees, and more importantly, how other sellers are managing to stay profitable under this structure.
From what I understand, Amazon charges VAT on top of their FBA fees (rather than including it), which means we’re effectively paying VAT on the storage, fulfilment, and handling charges. This eats into margins significantly — especially when compared to FBM sellers who don’t incur FBA fees or VAT on those services.
It feels like FBA sellers are at a disadvantage:
We're absorbing FBA fees plus 20% VAT on those fees
Then competing on price with FBM sellers who don’t have these extra costs
And yet Amazon seems to favour FBM in the Buy Box at times, despite delivery standards
So my questions are:
- How are people accounting for VAT on FBA fees in their pricing strategies?
- Is anyone successfully reclaiming this VAT through their VAT returns?
- How do you keep competitive when these added costs kill profitability?
- Are there any tools or strategies to mitigate this or shift favourably?
I’d appreciate any input or examples — it feels like we’re doing everything by the book but getting squeezed from all sides.