This where you’d probably need to consult someone that really does know about VAT. My understanding is that you either shouldn’t be charged the VAT on the seller fees (because you’re registered as a business outside the EU) or if you are charged them you should be able to reclaim them as input VAT (or as @PeterB says, you should be ‘charged’ VAT - see reverse charging VAT - but them immediately reclaim it).
The VAT in your example is charged in two parts; VAT on the value of the product at the border, which is to allow it to enter the EU market and VAT on the value added. The second part should be calculated as VAT charged to customers minus the input VAT. Again using a product of £120:
- £20.00 output VAT
- £2.00 input VAT already charged at border
- £0.36 input VAT on Amazon Fee (possibly via reverse charging method)
- £0.xx input VAT on FBA fee (possibly via reverse charging method)
- £0.xx input VAT on Adverts (if this has been charged by the UK entity then it wouldn’t be via the reverse charge method)
Then separately you have your regular accounts:
- £100 profit
- minus £50 cost of product
- minus £18 Amazon fee
- minus £x.xx FBA fee
- minus £x.xx adverts
- minus other costs of business
- then you pay tax on that
@PeterB - does that sound right?