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This article applies to selling in: United Kingdom

UK VAT on eCommerce legislation

The UK is due to formally exit the EU’s Single Market and Customs Union on January 1, 2021 (“Brexit”). From this date, the UK is expected to introduce a new set of VAT rules which may change the way that VAT is accounted for on your sales to UK customers.

Overview

From January 1, 2021, Amazon will be responsible for collecting UK VAT on the following sales of goods delivered to customers in the UK where ordered through any Amazon storefront:

  1. Goods delivered from inventory stored outside the UK with a shipment value of up to £135; and
  2. Goods delivered from inventory stored in the UK, irrespective of value, where you, the selling partner, are not established in the UK.

Where either of these supplies take place, Amazon will calculate and collect UK VAT from the customer at checkout and remit this directly to the UK Tax Authorities. You will not receive the UK VAT amount in your disbursements and will not be required to remit these amounts to the UK Tax Authorities.

Please note that the current VAT exemption for sales of goods under £15, where goods are delivered to UK customers from inventory stored outside of the UK, will also be removed from January 1, 2021 – UK VAT will be calculated and collected by Amazon on these sales irrespective of their value.

You will remain responsible for accounting for any UK VAT on any other supplies including supplies to UK VAT registered business customers. Please read the following information regarding this change and the implications for your business.

Further information on this law is available from the UK Tax Authorities here.

Preparation for this change

In order to best prepare your business for this change in the collection of UK VAT on sales to customers in the UK, the following actions are recommended:

1. Review and update your Seller Central account details

Please ensure that your Seller Central account VAT details are accurate by reviewing:

  • Your business address – Amazon will use this information to identify your primary place of business. Please visit Business address.
  • Your default shipping address – Amazon will use your default ship from address to display accurate VAT inclusive prices to customers. Please visit Shipping Settings to review and update.
  • Your VAT registration numbers for the countries in which you hold inventory – Amazon will use your European VAT registration information to ensure that accurate reporting and documentation is created to support your VAT compliance for those countries. Please visit VAT calculation settings.

It is recommended that you regularly review this information to ensure it remains up to date. Further information on the details to be provided and how Amazon uses these details for calculating VAT on your transactions and Amazon fees is available here.

2. Review your list prices on Amazon’s European storefronts to ensure these are inclusive of VAT

Please review your pricing settings to ensure these include applicable VAT. You are required to provide list prices that are inclusive of all applicable taxes, including VAT, for that storefront. If your supplies were previously under the VAT exemption for sales of goods under £15 then you may not have included VAT in your prices previously. Please visit Manage Inventory.

3. Review and update your VAT invoicing and reporting details

Please ensure that your UK VAT compliance processes are ready by confirming the changes in:

Amazon VAT Transactions Report (AVTR):

We will introduce two new columns to AVTR in order to help you identify transactions where Amazon is responsible for reporting VAT:

  • Tax Reporting Scheme: This column identifies the tax legislation concerning the transaction.
  • Tax Collection Responsibility: This column identifies the party responsible for collection and remittance of tax (VAT) to the authorities. Where it states “Marketplace” then Amazon will remit the VAT to the authorities. If it states “SELLER” then you remain responsible for any VAT due.

You can see the detail of the AVTR field definitions here.

VAT Calculations Report (VCR):

We will introduce two new columns to VCR in order to help you identify transactions where Amazon is responsible for reporting VAT:

  • Tax Reporting Scheme: This column identifies the tax legislation concerning the transaction.
  • Tax Collection Responsibility: This column identifies the party responsible for collection and remittance of tax (VAT) to the authorities. Where it states “Marketplace” then Amazon will remit the VAT to the authorities. If it states “SELLER” then you remain responsible for any VAT due.

VAT invoicing:

Amazon will issue VAT invoices to your customers where Amazon is liable to report the VAT. You must not issue invoices for these supplies. Where Amazon is liable to report the VAT you will be able to download two separate invoices from Seller Central: (1) Invoice between you and Amazon for your tax filing purposes (2) VAT invoice from Amazon to your customer. Amazon is required to issue the second invoice to the customer and this is not needed by you for tax filing purposes. You will be able to download the invoices in Manage your Orders in Seller Central as you download your invoices today.

4. Provide confirmation of your actual ship-from address when confirming shipment

Where you ship goods to the customer directly, you will be required to provide the actual Ship-from address when you confirm shipment through the Confirm Shipment page on Seller Central, Shipping Confirmation Template, or Order APIs. In case you use Orders API to confirm shipment, you will need to update your system to provide and view Ship-from address through the API. Visit the help pages for more details.

5. Make sure to ship each order received from your customer in a separate single shipment

Please ensure that each order received under a single order # is shipped separately to the customer if you ship goods to the customer directly. You must not split a single order # into multiple shipments or combine multiple order #s into a single shipment.

Frequently asked questions

What will change with this new VAT rules?

If you deliver goods to UK customers, who are not registered for UK VAT:

  • From inventory stored outside of the UK:
    • Amazon will be required to collect and remit UK VAT on these sales if the shipment value of these goods does not exceed £135; and
    • If the shipment value exceeds £135, you will still have to remit VAT and any import duties yourself as you are doing today.
  • From inventory stored inside the UK, and your primary place of business is outside of the UK, Amazon will be required to collect and remit UK VAT on these sales.

If you deliver goods to UK customers, who are registered for UK VAT (B2B customers):

  • From inventory stored outside of the UK:
    • You will not be required to charge UK VAT on these sales if the value of these goods does not exceed £135 and Amazon is not required to collect and remit – Your B2B customer will self-calculate and remit this VAT through their UK VAT return.

Please note that the current VAT exemption for sales of goods under £15, where goods are delivered to UK customers from inventory stored outside of the UK, will also be removed from January 1, 2021 – UK VAT will be calculated and collected by Amazon on these sales.

The UK Government is expected to publish the legislation for these changes during Q4 2020. We will keep you updated on any changes to current expectations. We are here to help you prepare for these changes.

Who is impacted?

The new VAT rules in the UK are expected to affect your business if you are either:

  • Delivering goods to UK customers, who are not registered for UK VAT, from outside of the UK; or
  • Delivering goods to UK customers from inventory stored in the UK, who are not UK VAT registered, and your place of establishment is outside of the UK.

The changes only affect supplies to be delivered to customers, who are not registered for UK VAT, in the UK. Supplies to UK VAT registered customers are not affected.

Selling Partners still remain liable to meet any VAT registration obligations in the UK and account for any UK VAT due on sales, purchases and importations outside of the above supplies.

How will Amazon calculate VAT on these sales?

In order to comply with the new VAT regulations, Amazon will calculate and remit the applicable VAT due on your sales that meet the above qualifications.

a. UK Marketplace (.co.uk)

Prices listed on the UK marketplace will be treated as inclusive of UK VAT. Amazon will calculate the UK VAT due on your sale and withhold this from the amount collected from the customer.

For shipments fulfilled from outside of the UK, Amazon will calculate the VAT exclusive value of the customer order to determine if the shipment value is above or below the threshold of £135. If the value is at or below this threshold, Amazon will calculate the UK VAT payable and withhold this from the amount collected from the customer. If the value exceeds £135, Amazon will not withhold any amount from the customer.

If you are enrolled in VAT Calculation Services, Amazon will not use any product tax codes you have provided for this calculation. Your product tax codes will continue to be used for supplies where you are liable to account for the VAT due.

b. EU Marketplace (.de, .fr, .it, .es, .nl, .se)

Prices listed on an EU marketplace will be treated as inclusive of VAT for that marketplace country. Amazon will (i) calculate the VAT exclusive price by removing VAT of the marketplace country and (ii) apply UK VAT which will be withheld from the amount collected from the customer.

For shipments fulfilled from outside of the UK, Amazon will calculate the VAT exclusive value of the customer order to determine if the shipment value is above or below the threshold of £135. If the value is at or below this threshold, Amazon will calculate the UK VAT payable and withhold this from the amount collected from the customer. If the value exceeds £135, Amazon will not withhold any amount from the customer.

If you are enrolled in VAT Calculation Services, Amazon will not use any product tax codes you have provided for this calculation. Your product tax codes will continue to be used for supplies where you are liable to account for the VAT due.

c. North American Marketplaces (.com, .ca)

Prices listed on the North American marketplaces are exclusive of any taxes. Amazon will apply UK VAT which will be withheld from the amount collected from the customer.

For shipments fulfilled from outside of the UK, Amazon will use the list price of the customer order to determine if the shipment value is above or below the threshold of £135. If the value is at or below this threshold, Amazon will calculate the UK VAT payable and withhold this from the amount collected from the customer. If the value exceeds £135, Amazon will not withhold any amount from the customer.

d. Japan Marketplace (.co.jp)

Prices listed on the Japan Marketplace are deemed inclusive of Japanese Consumption Tax. Where Amazon is required to calculate and remit VAT it will (i) remove Japanese Consumption Tax to establish the tax exclusive price and (ii) apply UK VAT which will be withheld from the amount collected from the customer.

For shipments fulfilled from outside of the UK, Amazon will use the tax exclusive value of the customer order to determine if the shipment value is above or below the threshold of £135. If the value is at or below this threshold, Amazon will calculate the UK VAT due and collect this from the customer. If the value exceeds £135, the full list price will be collected from the customer.

What is the definition of “shipment value”?

The shipment value is defined as the intrinsic value at a consignment level, of the goods when sold for delivery to the UK customer. This is equal to the price that the goods are sold for excluding:

  • Any shipping and insurance costs where charged separately to the customer and stated separately on any invoice; and
  • Any VAT or customs duties payable upon delivery in the UK.

For example, if you ship one shipment which include three items, the shipment value is the total price paid by the customer for these three items exclusive of VAT, customs duties and any shipping or insurance costs separately charged.

How will this change impact my VAT registration obligations?

You remain responsible for compliance with your VAT registration obligations, including where goods are held in the UK, and for declaring any UK VAT on transactions outside of the UK VAT on eCommerce legislation including supplies to VAT registered customers.

Please visit our dedicated VAT Education pages to understand more about your VAT obligations. If you need help with VAT Registration and filing in the UK, Germany, France, Italy, Spain, Poland and Czech Republic, visit VAT Services on Amazon to sign up today.

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