VAT on sales price
Hello all,
I am a North American selling on Amazon while I study here in the UK. I am, therefore, not all that familiar with VAT which is a different beats than the sales taxes we have in North America. So please forgive my ignorance.
I am not VAT registered because I just don’t do enough sales to bother registering. That means, as far as I am aware, that 100% of the price I am paid for an item, minus FBA fees, goes to me. Am I correct?
The reason I ask is that I recently received a reimbursement. When I complained that the reimbursement was lower than expected I was told that it is not…that I had not calculated tax into my expected amount. From what I gather, they are saying that the amount I expected to receive was 20% higher than it should have been because I had not calculated for VAT.
But, if I understand correctly, since I am not VAT registered, I would not have paid the 20% and, therefore, Amazon is improperly lowering my reimbursement by 20%. Am I correct?
61 replies
Seller_WDhdcjDfu6Z4g
First of all, i would recommended contacting a tax accountant for some advice on whether you should be VAT registered. If you are not classed as a UK resident you may be required to register for VAT regardless of your turnover.
Assuming you are correctly not registered for VAT, Amazon will charge you VAT on top of all their fees. If you were VAT registered you would be able to reclaim these back, but as you are not registered, you can’t and have to pay them.
So when not register you receive 100% of the sale price minus the referral fee (+ 20% VAT) and minus the FBA Fees (+20% VAT)
I hope that makes sense
Seller_z6B2L9xab6HlP
Amazon change reimbursement values a few months ago so it’s:
- Sales price
- Minus VAT (regardless of whether the seller is VAT registered or not)
- Minus Amazon fee (+VAT if seller is not VAT registered)
- Minus FBA fee (+VAT is seller is not VAT registered)
This means non-VAT registered sellers get screwed over with the reimbursement values.
Seller_bTWdh2nDLiBdC
Another scam from Amazon…
So first, they “lose” in the Mail the item I sell for £50 and for the pleasure of them losing my item I get to pay them £10 for fba services.
Then, after 45 days, they issue me a reimbursement in which they take another £10 for FBA services they do not actually undertake them scam me for another 20% of the sale price.
So, in the end, on that item which should have netted me £37.40 had they not lost it, I only actually received £20 once you calculate that they paid me £30 for it and I had already paid £10 in fba fees.
So because Amazon lost my item I took about a 50% hit to my profits…but Amazon got paid their money anyways.
Seller_n33KwLeg9XOvi
Yes thats it - sadly
With a Seller Name like … Inc… In my opinion, I’m doubtful of your student status (studying in the UK)… Plus all your on sales items appear to be FBA. Is there something you have not told us in the OP?
Seller_bTWdh2nDLiBdC
I wonder, rhetorically of course - since we all know the answer - whether Amazon actually sends the 20% they take from non-Vat registered sellers to the government. Ya right!
I wonder if the government would be interested in knowing that Amazon is improperly charging 20% Vat on the government’s behalf?
Seller_8HUMp1xBsGh2j
Hi, Amazon should not be deducting any VAT from your sales as there is no VAT being charged. Unless you have, or are likely to breach the VAT threshold, that is. IF that is the case they may well be witholding an equivalent to the VAT that would be payable to cover themselves.
If you want to make sure, you can download the transaction reports from the reports section on seller central and see every fee, charge, sale and other transaction that goes on behind the scenes. That way you can be certain what the deductions are for.
Good luck.
Seller_0wtUXIEXUtgYh
Vat should be added to the purchase price at the confirmation page before the customer pays like sales tax in the US. A lot of revenue is lost because of this.
Seller_L3E8iknKXqZNV
I just checked my last statement and cant see anything being deducted from my disbursement for vat.
I think I would notice.
Seller_8PqdYLL8nb4uF
Is it that…
Amazon do not HAVE to reimburse sellers and therefore any reimbursement is like a ‘service’ from Amazon to the seller?
Amazon will be VAT registered and therefore any reimbursement will be classed as a ‘gross’ amount inclusive of their notional VAT element.
Amazon are unlikely to want to reimburse an amount (inclusive of VAT) greater than the original loss amount. Therefore they pay the reimbursement, but as gross, inclusive of VAT. As they will be liable for that VAT, they deduct it from the amount before paying you the (also greatly reduced) net amount.
There is also something in their policy somewhere about only reimbursing sellers for the ‘cost to seller’ value of the item. They are stripping away any assumed profit as the sale has been nullified. You are therefore being reimbursed for the "replacement cost to you’ rather than the retail value. This would be a sound argument if it were not for all the other smoke and mirrors in operation at all levels within the Amazon machinery.
I have heard that Amazon are looking to begin their own mass, specially coded, rerouting courier service, whereby ALL Marketplace sales will have a coded ‘substitute’ address similar to the coded email addresses that will then be decoded by the carrier to reveal the buyers actual address to enable delivery. However, the Marketplace seller will not know the Name, Email, Address or phone number of their customer. They will merely get the order and ship to the coded address with a reference number. Amazon will do the rest at additional cost to the seller.
HAs anyone else heard anything along these lines?
Seller_L3E8iknKXqZNV
To reimburse means to compensate for a cost incurred.
in what sense then is it a re-imbursement?
my disbursement could be seen as such - as I am being reimbursed for the cost of my sales.
