Update to Amazon UK and EU agreements and VAT treatment
Effective August 1, 2024, Selling on Amazon, Fulfilment by Amazon, and all other services currently supplied by Amazon Services Europe S.à r.l. (ASE) will be supplied by Amazon EU S.à r.l. (AEU). All agreements, policies, terms and conditions currently referring to ASE, including Amazon Payments agreements, will be updated to AEU. Additionally, all invoices issued by Amazon will be issued by AEU instead of ASE after August 1, 2024.
If your company is established in the UK, Germany, France, Italy, Spain, Netherlands, Poland, Belgium or Sweden, you will be invoiced by the AEU branch in your country of establishment. As a result, local VAT rules apply and and VAT will be charged on your Amazon fees. In the majority of cases, we expect that you will be able to recover this VAT through your normal VAT return process.
We recommend that you contact your tax advisor for more information on recovering VAT as per your country of establishment's local regulations.
If your company is not established in the countries listed above, you will be invoiced by the AEU head office in Luxembourg, and there will be no change to how VAT is applied on Amazon fees.
Note: This change doesn't impact your account access, listings, product pricing, customer reviews, selling services or the price of services.
For more information, go to Update to Amazon UK and EU seller services entity and VAT treatment.
202 replies
Seller_XEL6qq7YDef5M
Subject: Urgent Clarification Needed on VAT Application on Amazon Fees
Hello Amazon Team,
I am a UK-based seller, and I have serious concerns regarding the recent update about VAT treatment effective August 1, 2024. I would greatly appreciate clarification on the following points:
Scope of VAT Application:
Will VAT be charged on all Amazon fees, including Selling on Amazon fees, Fulfilment by Amazon (FBA) fees, commission fees, sponsored ads fees, and any other service fees?
VAT Reclamation Process Across Multiple Countries:
As a seller operating in multiple countries (UK, France, Italy, Spain, and Germany), will we have to reclaim VAT separately from each country’s tax authority?
What is Amazon’s guidance or support for handling VAT reclaims in each country?
Challenges with VAT Reclamation:
I have had very bad experiences reclaiming VAT from France, with delays extending over three years. This situation has caused significant financial strain. The potential requirement to reclaim VAT from multiple countries could severely impact cash flow and potentially bankrupt many businesses, especially when VAT constitutes 20% on top of Amazon fees, which already take up around 50% of turnover.
Given the gravity of these concerns, I urge Amazon to provide detailed guidance and support for sellers on these points. It is crucial to understand how these changes will be implemented and what measures will be in place to assist sellers with VAT reclaims efficiently.
Thank you for your prompt attention to these urgent issues.
Seller_0L2wIKRLuFYXz
This is probably all linked to the place of establishment vat issue that happened,
Seller_dBkFAAKkpAi1G
I received your new policy notice yesterday, which stated:
After August 1, 2024, your withdrawal amount will change. Local VAT rules will apply to fees charged by Amazon, and we will deduct the relevant VAT when charging fees;
What impact does this policy have on us? Do you need to withhold VAT on every order placed by Amazon registered by local companies (UK, Germany, France, Italy, Spain, Netherlands, Poland, Belgium and Sweden)?
I understand that local companies also have to start withholding VAT? Our company was established in Northern Ireland. I don’t quite understand whether it needs to be withheld. I need your answer.
Seller_76AUwmqvSyRIM
Scope of VAT Application:
Will VAT be charged on all Amazon fees, including Selling on Amazon fees, Fulfilment by Amazon (FBA) fees, commission fees, sponsored ads fees, and any other service fees?
VAT Reclamation Process Across Multiple Countries:
As a seller operating in multiple countries (UK, France, Italy, Spain, and Germany), will we have to reclaim VAT separately from each country’s tax authority?
The announcement is not ambiguous. It is crystal clear.
You will be charged by the AEU country in your country of establishment. So if, for example, you are established in the UK, you will be charged by Amazon UK for ALL UK and EU sales. The invoices will include VAT and you will have to reclaim that VAT from HMRC in the standard way.
Seller_rCJ7QkwtaCHwv
Hello, Could you please clarify what happens if you are on the flat rate scheme? On the flat rate scheme you cannot re-claim vat so it would not be right for Amazon to take the 20% as the sellers cannot reclaim the difference from HMRC. I am assuming Amazon will have a filter for flat rate companies where we can input out rate? Say, 7.5%. Or, this will be left as is and the rules not affect flat rate vat sellers? Looking forward to your reply so we can better prepare for the changes ahead.
Seller_QugeC1a8fXpYs
Your choice of VAT program is unlikely to be Amazon's concern. They have to charge 20% if they invoice you from UK entity and there is no way around it.
It might feel unfair but in fact it levels the playing field where everybody will incur the same costs.
Cashflow hit is most definitely not something anybody is looking forward to though.
Seller_MT8rt0A2OpbCx
I am sure it will be the same as any other purchase you make for goods in the U.K. or expenses, so 20%. HMRC wouldn't allow a different rate for different people for Amazon U.K.
Seller_d8YGbIjNqwFxn
I believe you will still be charged 20% on Amazon Fees
You maybe better moving off the Flat Rate Scheme
Seller_rCJ7QkwtaCHwv
I just don’t see how Amazon will get away with that. The whole point of the flat rate scheme is to help smaller UK businesses that turnover under 230k per year [second year], it helps keep their price competitive to the larger companies who can buy in bulk at discounted rates and overseas sellers. If legally you're on a 7.5% vat rate, how can Amazon decide to put you on a 20% rate, it’s lawfully wrong surly? Amazon should let you input your VAT rate and send HMRC that amount as per HMRC rules and the scheme you are part of.
Some might say, you can claim it back via HMRC but under a flat rate scheme, you cannot reclaim VAT. Therefore, if we are charged 20%, we cannot retain the 12.5% difference, based on a 7.5% rate.
Could Amazon confirm what they will do in this instance?
Seller_rCJ7QkwtaCHwv
This should definitely be a concern for Amazon. Legally, sellers using the flat-rate scheme with HMRC cannot simply be charged 20% VAT. If a seller is on a 7.5% rate, charging them 20% means they would be 12.5% worse off. Amazon should implement a system to verify if a company is on the flat-rate scheme and remit the appropriate amount to HMRC accordingly.
Seller_wAn7LAlr0jsID
This will be of no concern to Amazon.
Under this new arrangement Amazon is legally obliged to charge all sellers 20% VAT.
The FLR scheme means you as a business make a decision whether to be on the scheme or not. All supplies from a VAT registered company must legally invoice with a 20% rate (unless they sell zero rated goods/supplies).
If you are on the FLR you have no say on how other companies invoice you. You have to swallow it.
Check with you accountant.
Seller_kKOdRZuhZIPPS
The flat rate is 7.5% of turnover paid to HMRC - nothing to do with VAT on fees. That isn't changing and is nothing to do with Amazon.
The sellers worse off will be those on the flat rate scheme and those that declared themselves VAT exempt (because the invoices were from Luxembourg). These sellers will now have to pay 20% VAT on fees that they weren't paying before.
VAT registered sellers will just have to account for it like any other expense invoice (because the reverse charge wont apply)
Seller_MT8rt0A2OpbCx
Personally, I think this is fairer for VAT registered sellers. Currently, if you are VAT registered, we pay 20% of profits to HMRC. For non VAT registered, they can keep that 20% plus, essentially, have another 20% off Amazon selling fees.
Seller_csTrTfxUTAzYa
Hi,
I am a UK based business operating out of the UK.
I am VAT exempt due to turnover below the threshold.
As far as I can see I am already paying VAT on my fees.
Below relates to my seller fees on a £52.95 FBA item
Amazon fees
Commission:
Base amount -£7.61
Tax -£1.52
FBA fulfilment fee per unit:
Base amount -£6.37
Tax -£1.27
Is this correct and will my seller fees now be 20% higher after the 1st August?
Thank you :)
Seller_76AUwmqvSyRIM
I'd like to agree with you but I fear that's a long way off.
Seller_76AUwmqvSyRIM
Nothing will change for you. You were probably unaware of the opportunity to stop paying VAT on your Amazon fees by declaring your VAT exemption to Amazon so you have been paying it unnecessarily.
I'm sure you're not the only one. It's not well publicised or known and Amazon certainly don't go out of their way to let you know about it.
I believe the only way to reclaim the VAT you have paid is by becoming registered. You can reclaim VAT paid on many of your purchases over the previous few years, not sure exactly how long.
Seller_wUU01kBOwvNzv
hello dear
I am right now under threshold £85000, I got VAT exemption.
can you pls explain me be practically for this
MY SELLING PRICE ARE £3.89
Referral Fee £0.60
Amazon Fulfilment £2.36
I get amount back £0.93
what i will get after 1 august 2024 pls explain me in details
thank you
