Why is there 0 VAT to pay on all my seller fees
Hi Guys,
I imagine that this may have been asked before, however im still struggling to get my head around Amazons seller Fees and the applicable VAT.
I get monthly emails from Amazon saying my VAT invoice is ready to view (we are a VAT registered business, based in the UK). However, when i go to Reports –> Tax Document Library -> Seller Fee Invoices (tab) there is never any VAT being charged, why is this?
The always useful seller support answer is that Amazon dont charge VAT on B2B transactions, which is what Amazon considers this to be, and as a result are not charging us VAT. Which again makes zero sense, becuase whenever we deal with other businesses in our usual course of business we always charge VAT to them on invoices, so why is Amazon unique from this requirement?
Im asking because we need to include VAT on seller fees in our quarterly VAT returns
Why is there 0 VAT to pay on all my seller fees
Hi Guys,
I imagine that this may have been asked before, however im still struggling to get my head around Amazons seller Fees and the applicable VAT.
I get monthly emails from Amazon saying my VAT invoice is ready to view (we are a VAT registered business, based in the UK). However, when i go to Reports –> Tax Document Library -> Seller Fee Invoices (tab) there is never any VAT being charged, why is this?
The always useful seller support answer is that Amazon dont charge VAT on B2B transactions, which is what Amazon considers this to be, and as a result are not charging us VAT. Which again makes zero sense, becuase whenever we deal with other businesses in our usual course of business we always charge VAT to them on invoices, so why is Amazon unique from this requirement?
Im asking because we need to include VAT on seller fees in our quarterly VAT returns
Seller_7VbclcPFFRTnc
You should be able to just use the summary function then in date range reports
Income box is net and tax box bottom right is vat on sales
Expenses invoices are in tax document library. All bar advertising should be 0% rated.
Advertising is 20% which can be claimed back
21 replies
Seller_qZO3ZCjoBXEeL
Because you are VAT registered the VAT on the Amazon invoices is reverse-charged (it says that at the bottom of the invoice - saying you are responsible for the VAT).
I forget the specifics but you essentially account of it as both input and output so net zero to pay.
Seller_7VbclcPFFRTnc
Hopefully you have an accountant who is correctly processing the reverse charge on your vat returns?!
Seller_VJFloi7Cs0iaR
This is one of the main reasons prices are going through the floor on a lot of popular products, relatively new sellers not completely understanding the economics of selling on Amazon therefore pricing too low, assuming they can claim back VAT that they haven’t paid, thus destroying any margin they thought they had when the VAT bill comes in.
Seller_eSb5BPO9vbzff
So to give a hypothetical,
Lets say we sell a product costing £36 (inc vat) £30 (ex vat)
Am i right in making the below assumptions
The output vat, £6, must go to the HMRC, leaving us with £30.
From which we must deduct Amazons seller fees, which do not include any VAT and thus nothing can be claimed back.
For example Amazon fees:
Amazon Launchpad Referral Fee
-£1.80
Commission:
-£5.51
FBA fulfilment fee per unit:
-£2.63
Is that correct or am i way off here?
Seller_7VbclcPFFRTnc
you don’t deduct the seller fees when calculating the VAT - you are looking at 2 different things I think
have you got an accountant and if not, how long have you been processing your own VAT returns for ?
Seller_qZO3ZCjoBXEeL
If you mean that you deduct the Amazon fees from the £30 then yes.
in your example:
Price sold £36.00
VAT on Sale £6.00
Amazon Fees £9.94
VAT on Fees £0.00
In the example Amazon will remit to you £36.00-£9.94=£26.06
From that you must give HMRC £6.00
Your net revenue is £20.06 before any other overheads and expenses and the cost of goods of course.
As a VAT registered business it is likely that you have other input VAT that can be claimed, such as VAT on the acquisition of the goods, VAT on the shipping of the goods to Amazon FBA, VAT on other items and services used for your business.
As always your accountant will be able to go through it with you. I would strongly suggest using an accountant to do your VAT until you are more familiar with the details.
Seller_eSb5BPO9vbzff
Sorry i should be clearer, there is 2 questions i’m asking.
-
Yes im trying to work out what figures to send to our accountant at the end of the quarter in terms of input and output VAT. My current understanding is that you cannot claim any vat back on amazon seller fees, however you do need to submit vat gained from sales to HMRC (in this case £6)? In other words nothing to claim back, only
-
The second question im asking is really an attempt to work out our profit from sales, thus the calculation above, where i have removed the seller fees from the net price (given there is no point accounting for £6 of VAT that will go to HMRC)
Does that make sense?
P.S appreciate everyone’s answers
Seller_qZO3ZCjoBXEeL
I would strongly suggest you do not try to ‘filter’ anything you are sending your accountant re VAT. For instance the £0.00 reverse-charge invoices from Amazon must still be accounted for on your VAT return even though they are £0.00
Any invoice that you receive that has VAT written on it should be passed to the person handling your VAT accounting.
Based on your questions hopefully you are passing the raw data and invoices to your accountant or bookkeeper to handle your VAT returns?
Seller_eSb5BPO9vbzff
Ok fantastic, that makes a lot of sense and really appreciate you laying that out so clearly (much clearer than seller central has been able to do thus far).
So to confirm, in order to work out our profit from sales, (thus the calculation above), i have removed the seller fees from the net price (given there is no point accounting for £6 of VAT that will go to HMRC)
Seller_tRuvBEHDedp4q
Basically because Amazon are based outside the UK, then the service they provide the VAT is reverse charged.
If Amazon were based in the UK, you would see the VAT added as normal to claim back.
You do have to account for the VAT as if it were paid though on your VAT return
So, for example, If total Amazon fees were £100 in the quarter, VAT on this would be £20
I cannot remember the exact box numbers you enter this into but you add that £20 to 2 boxes - 1 for VAT paid, the other for VAT claimed - so in effect they cancel each other out. This is the reverse charge mechanism.
