The team at Link My Books are happy to provide users with technical assistance in applying tax rules to their Link My Books setup. We are not Tax Advisors and so our advice and suggestions on the application of tax rules cannot be construed as tax advice. We highly recommend that users seek advice from qualified accountants for their tax compliance.
Who is this article for?
"Post-Breixt" refers to the end of the Brexit transition period on 31/12/2020 at 11pm UK time. That is when the UK formally left the customs union and became a "3rd country" in the eyes of the EU.
But what does it mean for UK businesses and Amazon Fees?
This entire article is written from the prospective of a UK business submitting a UK VAT return for a period after the Brexit transition period ended.
*For Pre-Brexit see this article.*
For the full article on Amazon tax rates on fees see this article.
For the full article on ALL Amazon tax rates (sales, fees and other transactions) see this article.
Following the UK leaving the EU VAT regime on the 31st December 2020 there has been some confusion amongst businesses selling on Amazon as to whether or not Amazon fees are still Reverse Charged or are they now Zero Rated.
In this post we will address this and provide some of our own understanding of how it works. This is not tax advice so as always check this with your accountant.
Which fees are we talking about?
For businesses based in the UK Amazon fees are mostly billed from Amazon Services Europe S.à r.l. with the exception of Advertising fees which are billed from the local entities for each of Amazon's marketplaces.
The following fees are typically billed from Amazon Services Europe S.à r.l.:
Merchant Fees (subscription fees and referral commissions)
Fulfilment by Amazon fees (FBA fulfilment fees, storage fees and inbound transport fees)
The following fees are typically billed from local marketplace entities:
Sponsored Products fees (advertising fees)
Why does the entity Amazon uses matter?
When Amazon provides the service from Amazon Services Europe S.à r.l. this is a Luxembourg entity. If your business is established in the UK then the supply is determined as Intra B2B Supply of Services and is subject to the reverse charge mechanism.
The same applies when Amazon uses any other EU entity to invoice you for fees.
The exception is when Amazon invoice you for fees such as Sponsored Ads from the UK marketplace entity Amazon Online UK Limited. With this being a UK entity and your company also being a UK entity the normal 20% VAT rules apply.
The reverse charge rules have remained unchanged post Brexit so the Reverse Charged tax rate still applies when accounting for your Amazon fees supplied form EU entities.
Does it matter if I have given Amazon my GB VAT number or not?
Yes - it's a big difference.
For services there are different rules depending on if the customer of the service is a consumer or a business customer.
If you have not provided Amazon your VAT number then they will be treating you as a consumer. Different rules apply for services provided to consumers.
As a UK consumer Amazon will be forced to charge UK VAT on all fees, regardless of the entity they invoice you from.
Once you provide your VAT number to Amazon they start treating you as a business customer and then the reverse charge rules apply for services provided from EU entities to your UK company.
So does reverse charge still apply?
Yes. Fees that were previously subject to reverse charge prior to Brexit are still following the same reverse charge rules.
Avalara have a really concise but technical guide on post Brexit VAT on services that you might want to have a read of too.
Can Link My Books help me automate all of this?
Link My Books hooks up directly to your Amazon seller central account and your Xero or QuickBooks account. Each time you receive a payout from Amazon we automatically download the data from Amazon, check each and every transaction that makes up that payout and correctly group them.
Link My books ensures that you accurately account for all your Amazon sales, refunds, fees and VAT by breaking down each payout and creating a summary invoice to be sent to your accounting platform.
Not only does this save you countless hours versus doing it all manually but most sellers actually see an increase in accuracy and therefore a reduction in previously overpaid VAT by separating out all of the sales revenue that should not incur 20% VAT.
Start a 14-day free trial of Link My Books today and see just how much time and money you could save.
Do I need to think of anything else?
VAT is complicated, so of course this is just a brief overview and only from the UK VAT prospective too.
It's always a good idea to speak with your accountant for all things VAT so involve them when you are setting up Link My Books and if you are they have any questions then don't hesitate to get in touch with our support team.
You can reach the support team via the blue message icon at the bottom of any page or by email via firstname.lastname@example.org