VAT Issue on IOSS Sales
So I sell childrens clothing which is zero rated in UK for VAT
I only advertise on the UK site, but my shipping settings allows sales across Europe.
Today I have sold an item at £25.99 to Ireland.
Amazon have removed VAT from the item of £4.34 so are only going to pay me £21.65. So not only have they applied VAT to a zero rated item but have also applied the Irish VAT rate of 23%
This is NOT how the IOSS VAT regulations are supposed to work. Amazon should buy from me ex VAT (as the item is zero rated in the UK there is no VAT to remove)
Where do I goto to complain?
VAT Issue on IOSS Sales
So I sell childrens clothing which is zero rated in UK for VAT
I only advertise on the UK site, but my shipping settings allows sales across Europe.
Today I have sold an item at £25.99 to Ireland.
Amazon have removed VAT from the item of £4.34 so are only going to pay me £21.65. So not only have they applied VAT to a zero rated item but have also applied the Irish VAT rate of 23%
This is NOT how the IOSS VAT regulations are supposed to work. Amazon should buy from me ex VAT (as the item is zero rated in the UK there is no VAT to remove)
Where do I goto to complain?
0 replies
Seller_ZQyopdiwkUHOZ
You’re absolutely right, but it’s how Amazon have been doing it since the start.
To be safe, I’d check the product tax code on the item and make sure it’s correct, but I’m sure you’ll find it is correct even if you do.
People have banged on this drum to Amazon previously but as far as I know, nothing beneficial has come of it.
Seller_ATuN59NWPkObT
This is why I stopped selling to the EU.
Seller_qYWBbVqeAGVy5
I have a similar issue with EU exports
Amazon charge us twice for VAT on the occasional EU export, they firstly remove 20% UK Vat rate from price so customer pays 20% less then they deduct the IOSS Vat rate of the importing country
I still have several cases open cases for this which have been under investigation for 5/6 months now with plenty of ridiculous SS replies, only one case have they so far resolved if you can all it that, they said they couldn’t see what problem was due to the fact the sale was older than 30 days! and for this reason they said they would refund me 50% of the item price, but then only refunded me 30/40%, couldn’t even get their refund correct
Seller_tRuvBEHDedp4q
Hmmm perhaps my case opened with support has had some effect as I threatened legal action via Small Claims Court
I have just sold the same item again to Ireland - and this time no tax was removed from sale or added and charged to customer. I got the amount I advertised the item for with no tax removed. Go figure.
I will keep checking though on future sales.
Seller_uP9LqiYV3yKFy
IOSS is for you the seller to charge the VAT with the sale and then forward that VAT amount onto the countries Tax office
This is exactly how it should work, you are not selling the item in UK, you are selling the item in Ireland, even though its being dispatched from the UK
Amazon are acting as the IOSS registered legal entity on your behalf, so they are collecting the VAT for the sale in Ireland from the sales proceeds
This is working as it should be
Welcome to brexit and the nightmare of an idea it was, is and will be in the future
Seller_uP9LqiYV3yKFy
If you are selling an item in an EU country then the price for that item includes the local VAT rate
Amazon will remove that VAT cost from the sale as they are the IOSS registered legal entity
I sell to EU daily, we provide all the IOSS VAT rates at the point of checkout and ship with no problems at all, at the end of each month the VAT return is submitted to our EU Accountant who then distributes to the various VAT offices
This is how IOSS works, it was designed to remove the couriers from having to collect VAT from small parcels making it almost impossible to trade
Amazon has stated you cannot offer an item to EU customers without it including the VAT rate
You cannot just state the item is 0 rated in UK therefore it sells in the EU as 0 Rate - that is WTO regulations
We do not have WTO rules when trading with EU, wished we did, it would be easier but we dont and this IS! how it works
Seller_uP9LqiYV3yKFy
Lets see where the confusion lies
IOSS has removed the the VAT rate being applied in the country of sale for all the EU - UK and I think the EEC countries, Norway - Switzerland but not sure about them
The VAT rate pre July 1st 2021 was the sellers rate - if you were based in the EU
For UK this was before brexit also, but from Jan 1st the VAT rate was applied to the country of the buyer if based in the EU, outside the EU and UK it is 0 Rated VAT - this is the deal we did with EU
WTO rules state if export VAT is removed yes, but we are not working on WTO rules
Amazon like all other online marketplaces were asked to be responsible for the collection of all the VAT on all EU Sales
So they stated that if you sell in an EU country the sales price needs to include the local VAT rate of the buyer
There is no points for where you are based anymore
When the sale is made, Amazon will remove their fees and the VAT and disburse what is left
Even within the EU, some countries were missing out on huge sums of VAT because sales were being made from sellers in other EU countries, now every country collect the VAT on the sale made when the buyer is in their country (EU)
They simplified the system and called it the Import One Stop Shop - you import something into your own country, you pay your own local vat rates
Seller_uP9LqiYV3yKFy
No I dont see any difference at all, as said we seem to be able to post and customs clear numerous parcels a day
If you are saying there is a setting within amazons VAT system that is not correctly being applied that is a different story, but nothing to do with the removal of VAT costs as that would be done on every sale to the EU
You use the IOSS system as it simplifies the customs journey for UK sellers so they dont have higher charges with couriers collecting for them
Yes on the value of 150euros, totally agree but this discussion started with the question, why is amazon removing VAT from a sale made to Ireland for a 0 rated UK sale 23% Irish
If that is a setting that great - click and it will work, but Amazon has done everything correct here
Seller_D52kINh75QL8v
Here’s my take on this.
An Irish customer has bought from amazon.co.uk. So the sale takes place in the UK. UK VAT rules should apply.
HOWEVER…Amazon might be doing you a favour.
When you ship from the UK to Ireland it is an import and the Irish Customs can charge whatever VAT rules apply there PLUS the carrier will charge a premium for dealing with the Customs people.
So a £100 item might have an additional customs charge of £23 + £10 admin. £33!!
In theory the customers SHOULD pay this as they ordered from a foreign seller (you).
However consider this …
- Customer will be upset - they don’t want to pay extra.
- The Customer may refuse to pay duty and expect a full refund
- The customer may raise an A_Z with all that headache of metrics.
- Package will be late as it had to go through customs.
- Remember Amazon will always side with the customer.
Being pragmatic it may be better the way they have implemented it.
- Package will arrive swiftly. Without delay or customs fees.
- No extra fees.
- Customer happy. Amazon Happy. You happy?
My advice - take advantage of the fact that most sellers have pulled out of the EU. Put up your prices (Within reason) to compensate for the VAT being deducted…
Seller_r1BWHFE9Q49m3
After Brexit I removed all of my old custom shipping templates so I had UK-only shipping applied to all of my inventory. That seemed to work with switching off EU sales. But this year when I brought my Christmas items back on sale I’d accidentally left an old UK-plus-international shipping template as the default for one of my items. Ooops.
As a result I’ve ended up having to send a £5.99 product to Ireland, for which Amazon stung me with a £1.22 VAT charge. By the time I’d posted the chuffing thing I was lucky not to have made a loss on it. I’m not VAT-registered because I’m selling via Amazon Handmade and my turnover for this business is currently below the VAT threshold. So apologies in advance if the assumptions below are completely wrong because I am completely ignorant of VAT rules, but I’m trying to get my head around what to do for future sales. (At the moment I’m just selling to UK-only.)
As with @All_Pretty_Things_UK and others, I feel like the above application of tax is incorrect in my case. I can (just about) understand Amazon subtracting VAT ‘at source’ from VAT-rated sellers, but I am not a source of VAT! I would argue that by subtracting it at this stage they have basically magicked up some pretend VAT at my expense.
@MonkeyBoy I note that you say it’s the action of exporting the item attracts the VAT, but in that case Amazon should be the ones to add it to the product’s price. Of course, Amazon would then want to recoup that amount from somewhere. Are they able to reclaim VAT? If not, I see that they could presumably either recoup the cost by adding it to the customer’s bill (which customers wouldn’t like, therefore Amazon wouldn’t like), or could bill me as the seller. But if they bill me, I would need to add the equivalent of VAT to international orders to anticipate Amazon charging me. But that feels like extremely dodgy practice if Amazon are basically forcing me to add an invisible tax-equivalent to my product’s price, just so that they can cover their magically-created VAT revenue. Surely HMRC would not be OK with a business that creates pretend VAT revenues?!
Please feel free to shoot holes in my logic 
