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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.
0 replies
Seller_8pu1BcITpOjUp
can anyone tell me what happens if you are not VAT registered as you fall under the threshold? does this mean that FBA and seller fees will be 20% extra and that because we are not registered for VAT this will be an additional cost that we cannot recover?
Seller_nRhZxElkqUPAM
So how about if you are UK based but have accounts in DE.
Will you reclaim for UK and DE in the UK have to do them separately?
Seller_a7KfTOsGyRvnj
How do we get a proper statement from 1st August showing VAT on fees?
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_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
Seller_d8YGbIjNqwFxn
You are not on a 20% VAT scheme with Amazon.
For all your sales on Amazon you will still pay 7.5% of your turnover to HMRC. There is no difference here.
The fees will be charged at 20% VAT the same as you are charged on any business purchases made. As you are on the flat rate scheme you can't claim this 20% VAT back.
You will therefore be slightly worse off for each transaction.
You may want to consider if moving away from the flat rate scheme is the way to go.
Seller_To2rVOO7HpWE7
Hi guys, Im VAT exempt due to being below the threshold, I have noticed after making changes on Selleramp SAS to my vat setting changing it from not applicable to not registered meaning I will now be charged 20% on fees, my profit margin decreases by 10% on all products! Does this sound accurate or is my Selleramp wrong. If this is the case everyone will have to increase prices to make a profit and as a result the customers take the hit!
Seller_H21r8VhzHXPvN
This only effects non vat registered sellers and flat rate scheme? As full rate vat can claim these fees back right?
Seller_76AUwmqvSyRIM
You're overthinking it.
Right now, you are receiving several invoices from all the countries you sell in. Your accountant or you records them in your accounts. The change will mean that when those same invoices are recorded, they will show a vat portion that you can reclaim in your VAT return.
There is no effect to your profitability. You weren't paying VAT before and you won't now after it gets reclaimed.
The only downside is the effect on cash flow which can't be underestimated. But it is what it is. If you were buying stock from a UK supplier, it would be just the same. ebay is the same.
Seller_zuGbx58zvj0ek
Does anyone know what happens if you also sell on Amazon US from your UK Ltd company, will VAT fees be added back there, I know it sounds silly but I remember previously if VAT numbers were not applied to your US SS account, there was a 'tax' VAT on transactions in the US as well. Will that reappear in August or is that staying as is?
Seller_0msMReDTskp1Y
When they say VAT will be "deducted" surely they mean added?
Example: I make a sale and the fees are £1. Currently no VAT involved because of reverse charging. From August that same fee will be £1 plus 20% UK VAT, which I can reclaim, = £1.20.
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