Last updated: 4th June 2024
This article will be updated as we find out more about Amazon’s changes. This article should not be considered as tax advice, speak to your accountant about your taxes.
Amazon announced on the 30th May 2024 that they would be changing the legal entity that they use to provide services from for their Amazon Europe seller accounts for sellers based in some countries.
“Effective August 1, 2024, Selling on Amazon, Fulfillment by Amazon, and all other services previously supplied by Amazon Services Europe S.à r.l. (ASE) will be supplied by Amazon EU S.à r.l. (AEU).”
Source: Amazon Seller Central News
Key Takeaways from this Post
Am I affected by the Amazon VAT on fees change?
If your business is established in countries in which AEU has a branch (UK, Germany, France, Italy, Spain, Netherlands, Poland, Belgium, and Sweden) then you are affected by these changes.
You will be invoiced by your local AEU branch from August 1, 2024. As a result, local VAT rules will be applied to Amazon fees, where required by law.
Which fees are affected by the August 2024 Amazon VAT change?
As far as we can see so far, it looks like any fees currently billed via the Amazon Services Europe S.a.r.l (ASE) entity will now be instead billed from the UK branch of Amazon EU S.a.r.l (AEU) instead.
Fees currently billed from ASE now are:
Merchant VAT Invoice (Amazon seller fees)
Fulfilment by Amazon Tax Invoice (Amazon FBA fees)
As you can see in this screenshot, the Invoice Numbers contain "ASE" meaning from the 1st of August 2024 these will be affected:
However in this screenshot, you can see that Product Ads VAT Invoices are not currently billed from ASE:
Therefore we assume that sponsored ads will continue to incur 20% VAT in the UK marketplace and continue to be reverse charged in other European marketplaces as they are now.
What is the impact of these changes for UK VAT registered sellers?
For VAT registered sellers based in the UK this means Amazon will apply 20% VAT to seller fees and FBA fees and you’ll need to reclaim this from HMRC on your VAT return.
This is obviously a big hit for your cash flow since these expenses will now increase by 20% in cost and you’ll need to wait until your next VAT return to reclaim the VAT.
What is the impact for non VAT registered sellers?
Non VAT registered sellers can currently claim an exemption from Amazon to ensure they don't pay VAT on any of their fees. They can also claim a VAT refund on Amazon fees too.
It’s not yet clear if Amazon will still exempt sellers who are not VAT registered from these new VAT updates but as we learn more we will update this article.
How will this affect flat rate sellers?
Unfortunately for flat rate sellers things don't look very bright. We think that flat rate sellers will probably end up having to pay 20% VAT on the Amazon seller and FBA fees from the 1st of August 2024 and will unfortunately not be able to reclaim the VAT on the VAT return due to being on the flat rate scheme.
It may be worth you speaking to your accountant and asking them to work out if it is still beneficial for you to be on the flat rate scheme from August. You could use the Analytics section in Link My Books to see you Amazon seller fees and FBA fees for the past 12 months and work out what you would have paid in VAT to help them with their advice.
What do I need to do to ensure I accurately account for these changes in my bookkeeping?
Right now you’re probably accounting for all Amazon fees using the Reverse Charge Expenses tax rate (except Amazon.co.uk Sponsored Ads costs which are billed with UK VAT at 20% already).
This will change on 1st August. As far as we know (we’ll update this article if things change) Amazon Seller Fees and FBA Fees will become taxable in the UK at 20% VAT.
This means you will need to adjust the tax rates you apply to these fees in your bookkeeping platform from 1st August 2024 onwards to ensure that you correctly reclaim the VAT on your VAT returns.
I’m using Link My Books to automate my Amazon bookkeeping - what do I need to do?
If you’re already using Link My Books to automate your bookkeeping from Amazon to Xero or Amazon to QuickBooks then no action will be required.
We are already working on an update to our systems to account for these new tax rates on fees and that will be ready in time for the changes on the 1st of August 2024.
We’re planning to update both our setup wizard and our account & tax rates mapping page to allow separate tax rates to be applied to Amazon fees for Pre Aug 2024 and Post Aug 2024.
Here’s a sneak peak of what we’re planning for the wizard:
We’ll be sending out emails to all UK customers once we have this in place to inform them of the changes but no action will be required from you.
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