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important change that Amazon has implemented starting from August 1st
Dear Fellow Amazon Sellers,
I hope this message finds you well.
I wanted to bring to your attention an important change that Amazon has implemented starting from August 1st. Amazon has begun charging VAT on both FBA and referral fees, which has resulted in an increase in the overall costs associated with selling on the platform.
This change directly impacts our profit margins, and it is crucial that we take proactive measures to mitigate this effect. I strongly recommend that we all review and adjust our pricing strategies to account for the increased fees. By doing so, we can ensure that our businesses remain profitable despite these new charges.
Let's continue to support each other in navigating these changes. If you have any strategies or insights on how to best manage this situation, please feel free to share.
Wishing you continued success in your sales.
Kind regards
10 replies
Seller_hOZNPw7G8FIjl
This has been widely publicised so should not have come as a shock. In fact there was a notification in this forum about it 2 months ago: https://sellercentral.amazon.co.uk/seller-forums/discussions/t/fe8e800e-d95c-42ae-a98b-e6e682547f90
Seller_soBD2wwhsVOww
Anounced months ago,been increasing my prices in small amounts since to cover the extra fees.
Seller_9idPMYuN5lTTl
It doesn't impact your profit margins if you're VAT registered.
In fact, you would have been charged this anyway if you aren't VAT registered.
So if you're paying 20% VAT already, it makes 0 difference to you other than your cash flow. Profit margins remain untouched.
Seller_d8YGbIjNqwFxn
Many non VAT registered sellers had claimed VAT exemption and didn't pay VAT on there fees.
Also people on the Flat Rate VAT scheme would now have to pay it previously they didn't and they can't claim it back.
The biggest worry is Cashflow though as it really impacts that.
Seller_XxhC9e2MdIqIy
Am I missing the point here - Amazon must have already been charging vat on their fees and advertising, this is nothing new - so what's actually happened on the 1st?
Seller_tRuvBEHDedp4q
Amazon were issuing invoices for fees from Luxembourg and then applying VAT under the Reverse Charge mechanism (so in effect not charging it as it was accounted for on the VAT return). This was fine if you were VAT registered.
However, a loophole meant non-VAT registered businesses could claim VAT exemption with Amazon and were also not charged VAT on their fees - this putting a non-VAT registered business at a slight advantage over VAT registered businesses.
As from August 1st, Amazon will be issuing invoices for fees from its UK office. This will mean VAT is added to the fees and a VAT registered business will reclaim on their next VAT return (albeit it will effect cashflow as they would not have to pay it upfront under Reverse Charge). This now mean a non-VAT registered business will now have to pay the VAT on fees (exactly as they do for all other services they buy in).
Invoices for advertising have always been issued from the UK office and so have always had VAT applied. It is only invoices for fees that will be affected.
Seller_nMvvMNiZTUmR1
I have found i am £150 per day worse off due to the change as sell 300+ items per day under £10 so small items high volume....i have done a quick calculation and think my vat per quarter will drop by half
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