eBay VAT Explained: Thresholds, Fees and VAT Invoices

eBay VAT for UK sellers means two things: you must charge VAT on your sales once your VAT taxable turnover passes £90,000 (or you expect it to within the next 30 days), and most eBay seller fees carry 20% VAT that VAT-registered sellers can reclaim.

This guide explains how that works for UK sellers, which eBay fees and services carry VAT, how to get VAT invoices, and how to handle products with different VAT rates.

TLDR: eBay VAT depends on whether you are VAT-registered, where your buyers are, and which VAT rate applies to each product. Link My Books connects to eBay business accounts and posts each payout, with sales, refunds, fees and VAT, into Xero or QuickBooks.

What is eBay VAT?

eBay VAT is the value-added tax that applies to sales and fees on eBay. VAT is a tax on consumer spending. When you sell goods to consumers in an EU country, VAT is generally due in the country where the goods are delivered. eBay collects that VAT itself on goods imported into the EU in parcels worth up to €150, and on goods of any value that a seller based outside the EU sells from stock held in the EU.

How does VAT work in the UK?

In the UK, VAT is a general consumption tax on most goods and services sold by VAT-registered businesses. You must register if your VAT taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days. You must register within 30 days of the end of the month in which you went over the threshold.

A VAT-registered business must include VAT in the price of its goods and services at the correct rate. It must also keep records of its transactions and report the VAT it charged customers and the VAT it paid to other businesses on regular VAT returns. The aim is to balance the VAT you collect against the VAT you pay out.

How does eBay VAT work for private sellers?

Selling your own unwanted items on eBay is not trading, and HMRC says there is no new tax rule for it, so those sales do not count towards the VAT threshold. VAT registration applies to businesses. If you buy goods to resell or make goods to sell, those sales count towards your taxable turnover, and you must register once it goes over £90,000 in the last 12 months. After registering, you charge VAT on your sales and submit VAT returns to HMRC.

Taxable turnover is the total value of everything you sell that is not VAT-exempt or outside the scope of VAT. It includes:

• zero-rated goods
• reduced-rated goods
• standard-rated goods
• goods you hired or loaned to customers
• business goods used for personal reasons
• goods you bartered, part-exchanged or gave as gifts
• services you received from businesses in other countries that you had to reverse charge
• goods and services subject to the domestic reverse charge
• building work over £100,000 that your business did for itself

Keep detailed records of your sales, the fees you pay eBay, packaging costs and other related expenses. Accurate records let you calculate your tax liability correctly.

eBay does not manage VAT for sellers directly, except in specific cases that fall under the marketplace facilitator VAT rules. As a seller, you calculate VAT as a percentage of the sale price of the goods you sell. Link My Books connects to eBay business accounts, and you can start a free trial.

VAT charges in different countries

For sellers based in the EU, a single EU-wide threshold of €10,000 a year applies to sales of goods to consumers in other EU countries. Above it, VAT is due in each buyer's country, and the seller can declare and pay it through the One Stop Shop (OSS) by registering in one EU country.

The €10,000 threshold does not help UK sellers, because they are based outside the EU. For a UK seller on eBay, eBay collects the EU VAT on goods imported into the EU in parcels worth up to €150, and on goods of any value sold from stock held in the EU. You may still have your own EU VAT obligations, for example if you hold stock in an EU country.

EU law sets a minimum standard VAT rate of 15%, and each EU country may apply one or two reduced rates to specific goods and services. The table shows the standard rate in seven EU countries.

How to register for VAT

You register for VAT in three steps: decide when to register, gather your information, and register online in most cases.

Determine when to register

You should register for VAT when your business's taxable turnover, the total value of your sales, passes the threshold set by your country. The threshold varies by country, so check the rules where you operate. Some countries allow voluntary registration below the threshold, which can help if you want to reclaim VAT on business expenses. The UK has voluntary registration.

Gather the necessary information

You need the following information to register for VAT.

• Business details: your business name, address and contact information.
• Bank account details: you need a bank account for VAT-related transactions.
• Unique Taxpayer Reference (UTR), if you have one.
• Company registration number, if you are a limited company.

Register online

Most countries let you register for VAT online. In the UK, you sign in to HMRC's online service, and you can create sign-in details the first time if you do not have them. Depending on your business type, you may need to complete extra forms.

Sometimes you cannot register online. These cases include:

• applying for a registration exception because your taxable turnover went over the threshold temporarily
• joining the Agricultural Flat Rate Scheme
• registering the divisions or business units of a body corporate under separate VAT numbers
• registering a limited liability partnership as the representative member of a VAT group

In these cases you register by post using form VAT1.

After you register, you receive:

• a 9-digit VAT registration number, which you must include on all invoices you raise
• information on setting up your business tax account, if you do not have one
• guidance on when to submit your first VAT return and payment
• confirmation of your effective date of registration

You can appoint an accountant or agent to handle VAT tasks for you. Even then, consider setting up an online VAT account to stay informed. Specifics vary by country, so check with your local tax authority or one of our trusted partners. Link My Books customers can also ask our support team.

Different VAT scenarios for eBay sellers

eBay sellers face different VAT situations depending on their business structure and the products they sell. These are the most common.

Sales that cross the UK-EU border

If you sell goods in any EU country or in the UK, you may need to register for VAT and collect VAT on your sales. For cross-border sales within the EU, an intra-EU threshold of €10,000 applies. If your sales to non-VAT-registered buyers in any EU country exceed that figure, you collect VAT in all EU countries based on the delivery address. This threshold applies to sellers based in the EU.

eBay collects the VAT itself in some cases. In the UK, it does so on goods imported in parcels worth up to £135 and on goods a non-UK seller ships from UK stock. In the EU, it does so on goods imported in parcels worth up to €150 and on goods a non-EU seller sells from EU stock.

You are not VAT-registered

If you are not VAT-registered, you cannot charge VAT on your sales. That can limit your ability to sell to VAT-registered businesses or above certain thresholds. Thresholds vary by country, so check with your tax authority or a tax adviser. Sellers who pass a threshold, for example £90,000 in the UK, must register for VAT. Once you add your VAT number to your eBay account, eBay shows it on your listings automatically. Registered sellers collect and pass on VAT from customers.

Voluntary registration

Sellers below the threshold can sometimes register for VAT voluntarily. The main reason is to reclaim VAT on business costs, including eBay fees, stock and equipment. The trade-off is that you must charge VAT on your sales, which makes your prices higher for buyers who cannot reclaim it, and you must file VAT returns. Compare the VAT you expect to reclaim with the extra admin and the effect on your prices before you decide.

Flat rate scheme

Some countries offer a flat rate scheme, under which you pay a fixed percentage of turnover as VAT regardless of the VAT you collect. The rate varies by country and business type. The scheme simplifies VAT accounting but does not suit every seller. In the UK, you can join if your VAT turnover is £150,000 or less, excluding VAT. You pay a set percentage of your VAT-inclusive sales and generally cannot reclaim VAT on purchases. If your spending on goods is less than 2% of turnover, or less than £1,000 a year, you count as a limited cost business and pay 16.5%.

Zero-rated, reduced-rated and standard-rated products

Products fall into three VAT rate groups.

• Zero-rated products have a 0% VAT rate. Examples include most food, children's clothes and printed books.
• Reduced-rated products have a lower rate, usually below the standard rate. Examples include children's car seats and home energy.
• Standard-rated products make up most goods and services. The standard rate varies by country, for example 20% in the UK.

Which eBay VAT situation applies to you

Most eBay sellers fall into one of four situations. Find yours in the table.

The right row can change during the year. A seller who starts below the threshold moves to the VAT-registered row once turnover passes it, so check your turnover each month rather than once a year.

VAT on eBay seller fees

eBay adds UK VAT at the standard rate of 20% to the fees it bills to business sellers with a UK-registered address. It has done this since 1 August 2017, when those sellers began contracting with eBay (UK) Limited.

Many sellers treat this VAT as a sunk cost, but a VAT-registered business seller can reclaim it as input tax if it is entitled to deduct VAT. That includes sole traders, partnerships and limited companies. Sellers who are not VAT-registered, or who use the Flat Rate Scheme, cannot reclaim it. See how to claim a VAT refund on eBay fees for the steps.

The table shows how VAT applies to each fee type.

Reclaiming VAT on fees has a counterpart: the tax authority also takes the VAT you charged your customers. You receive a refund on the fees, but you still pay over the VAT you collected from buyers. To maximise recovery, check your invoices and account statements for the VAT component on each fee. Your monthly eBay fees VAT invoice breaks down every fee type you were charged, including the VAT. Our eBay fees guide explains the main fee types.

A worked example of VAT on an eBay sale and its fees

This example uses round numbers to show the mechanics. The figures are illustrative and are not real eBay fee amounts.

Say a VAT-registered seller sells a standard-rated item for £120 including VAT. The sale breaks down like this:

• Net sale price: £100.00
• Output VAT charged to the buyer at 20%: £20.00
• Gross sale price: £120.00

Now say eBay charges the seller a fee of £10.00 plus 20% VAT on that fee:

• Fee before VAT: £10.00
• VAT on the fee: £2.00
• Fee including VAT: £12.00

On the VAT return, the seller reports £20.00 of VAT charged on the sale and reclaims £2.00 of VAT paid on the fee. The net VAT owed on this one transaction is £18.00. The seller's profit is calculated on the net figures: £100.00 of sales less £10.00 of fees, before other costs.

A seller who is not VAT-registered cannot reclaim the £2.00. It becomes part of the cost of the fee, so the fee costs £12.00 and not £10.00. That difference is why registration can matter for sellers who spend heavily on eBay fees, even when the sales side stays small.

Real payouts bundle many orders, refunds and fees into one deposit, so doing this by hand for every order takes time. Link My Books does the same split for each payout and posts the sales, refunds and fees, with their VAT, to Xero or QuickBooks. It books eBay postage at 20% VAT, so zero-rated postage needs a monthly journal adjustment, and fees eBay bills to your card need entering as bills.

VAT invoices from eBay

eBay can generate a VAT invoice for you on each sale if you opt in, and you download it from the View order details page in Seller Hub or My eBay.

Sellers can download invoices, receipts and credit notes from the View order details page. The documents stay available for up to 18 months from the purchase or credit date, so download and keep your own copies if you need them for longer. Bulk download is not available, so you download each invoice individually.

Check your current process before you opt in. If you also use invoicing software or issue invoices manually, you can create duplicate invoices, which complicate your VAT accounting and can double your VAT liability. If that happens, you cancel your own invoice, because eBay-generated invoices cannot be cancelled.

If you are VAT-registered and do not use eBay's feature, you must issue your own VAT-compliant invoices to buyers who need them. A VAT invoice must include your VAT number and show the VAT separately. HMRC's guidance on VAT invoices lists the other details. Separately, the invoices for the fees eBay charges you are in Seller Hub: go to Payments, select Reports, then open the Invoices tab and download the summary (PDF) or detail (CSV) for the month.

Handling a mix of VAT-rated products

If you sell products at different VAT rates, categorise each product by rate and set matching rates in your accounting software. A mix of standard, reduced and zero-rated products is hard to manage by hand, so follow these steps.

1. Categorise your products by VAT rate

Identify the rate that applies to each product:

• Standard-rated (20%): most goods and services.
• Reduced-rated (5%): certain items, such as children's car seats and home energy.
• Zero-rated (0%): most food, children's clothes and printed books.

Make sure your eBay listings reflect the right VAT rate for each product category.

2. Set up the correct VAT rates in your accounting software

In your eBay accounting software, such as Xero or QuickBooks, create the VAT rate for each product type. Every sale then applies the right rate automatically, and your VAT reporting is simpler.

3. Use VAT margin schemes for certain products

If you sell second-hand goods, works of art, antiques or collectors' items, you may be able to use a VAT margin scheme. You pay VAT on the difference between what you paid for an item and what you sold it for, instead of on the full selling price. Items you bought with VAT charged on them are not eligible. Your sales invoice shows the total price without VAT and carries a margin scheme label, such as "margin scheme - second hand goods".

4. Automate VAT calculations

Connect Link My Books to your accounting platform to automate VAT across your product range. It breaks each payout into sales, refunds, fees and VAT, which reduces manual calculation time.

5. File accurate VAT returns

With several VAT rates, each rate must be reported accurately on your VAT return. Link My Books syncs your eBay sales data and categorises transactions, which makes correct returns easier to file.

Overpaying and underpaying VAT on eBay

Overpaying VAT usually happens when you put products in the wrong VAT category, for example by charging 20% on zero-rated products. You then pay more VAT than you need to and reduce your profit. To avoid it, categorise each product accurately and review your eBay sales report.

Underpaying VAT can bring fines or penalties if you do not collect or declare the correct amount. Inaccurate VAT reporting for sales in different regions can trigger audits or backdated payments. Review your VAT liabilities regularly and file accurately.

Common eBay VAT mistakes

These mistakes appear often in seller accounts. Each one is avoidable with a routine check.

Charging the wrong rate on a product

A seller who treats every product as standard-rated overpays VAT on zero-rated and reduced-rated items. Check the rate for each product category and set it once in your accounting software.

Missing the registration threshold

Turnover can pass the threshold faster than expected, especially after a busy season. Check your rolling 12-month turnover every month, because the rule also applies if you expect to pass the threshold within the next 30 days.

Not reclaiming VAT on fees

VAT-registered sellers sometimes record eBay fees at the gross amount and never reclaim the VAT. Use the monthly fees VAT invoice to split each fee into net and VAT.

Creating duplicate invoices

Using eBay's invoice feature and a separate invoicing tool for the same order creates two invoices, which can double the VAT you report. Pick one source for sales invoices.

Treating the payout as the sale

The payout from eBay is the sales total less refunds and fees. If you record the payout as income, your sales and VAT are understated. Record the gross sales, the refunds and the fees separately, then match the net amount to the bank deposit.

Mixing business and personal activity

Selling personal items through the same account as your business stock makes your turnover harder to calculate. Keep a clear record of which sales belong to the business.

VAT on eBay refunds and returns

A refund reverses part or all of a sale, so it also reverses the VAT you charged on it. A VAT-registered seller reports the sale in the period it happened and the refund in the period it was issued, which lowers the VAT owed in the later period.

Three situations come up often:

• Full refund: the whole sale and its VAT are reversed. Record a credit note for the full amount.
• Partial refund: only the refunded share of the net price and the VAT on it are reversed. Record the credit note at the refunded amount.
• Cancelled order: if the order is cancelled before the sale completes, check whether a sale or invoice was recorded at all. If you used eBay's invoice feature, remember that eBay-generated invoices cannot be cancelled, so check for duplicate invoices.

Refunds are one reason a payout rarely equals the sales total. The payout shows sales less refunds and fees, so the accounting entry has to show each part separately. Link My Books lists sales, refunds and fees as separate lines on each payout summary entry, with the VAT for each, so the refund reduces your VAT in the right period.

Other VAT considerations for eBay sellers

Beyond fees, eBay sellers must handle customs duty, import VAT and VAT remittance.

Customs duty

Customs duty is a tax on goods imported from outside the UK or EU. In Great Britain, duty applies to goods worth more than £135 and to excise goods of any value. The rate depends on the type of goods and where they came from, and duty is charged on the price of the goods plus postage, packaging and insurance. Include it in your pricing when you import goods for resale.

Import VAT

Import VAT is charged when goods enter the UK from abroad, or enter the EU from outside the EU. VAT-registered sellers can reclaim import VAT on their VAT return under the normal rules. In the UK, postponed VAT accounting lets a VAT-registered business account for import VAT on its VAT return.

Remitting VAT

As an eBay seller, you collect VAT and pay it to the relevant tax authority. UK sellers usually submit a VAT return every 3 months, showing the VAT charged on sales and the VAT paid on purchases. Account for all cross-border and domestic sales accurately to avoid penalties.

VAT for non-EU-based sellers

Non-EU sellers still have VAT obligations when they sell to customers in the UK or EU.

• Distance selling: the €10,000 threshold applies only to sellers based in the EU. On eBay, eBay collects the VAT on goods a non-EU seller sells from stock held in the EU, though you may still have your own EU VAT obligations.
• Goods stored in the EU: if you keep goods in EU warehouses, such as fulfilment centres, you may need to register for VAT in the country where your inventory sits, even if your business is based outside the EU.
• One Stop Shop (OSS): lets a seller register in one EU country to declare and pay VAT on all its distance sales of goods within the EU. It matters for UK sellers who hold stock in the EU. Goods sent from the UK to EU buyers are exports, which are zero-rated for UK VAT if you keep evidence of export.

eBay also collects and remits VAT on goods imported into the EU in parcels worth up to €150.

How Link My Books handles eBay VAT

Link My Books automates eBay accounting, including VAT on seller fees, by connecting your eBay account to Xero or QuickBooks. It imports and categorises sales, refunds, fees and VAT, which keeps your records accurate and compliant. It works with eBay business accounts only.

Each time you receive a payout from eBay Managed Payments, Link My Books creates a summary entry: an invoice in Xero or a journal entry in QuickBooks. The entry breaks down the sales, refunds, fees and VAT, and it matches the deposit that reached your bank, so reconciliation is simple.

Here is how it works:

1. Connect your eBay account to Xero or QuickBooks through Link My Books.
2. With each eBay payout, Link My Books imports the sales, refunds, fees and VAT.
3. Link My Books creates a detailed summary entry that itemises the payout into sales, refunds and fees, and assigns each to the accounts and tax rates you set up.
4. Each entry matches the bank deposit in a single click.

VAT Product Grouping simplifies VAT for different product types. It groups products into standard, reduced and zero-rated groups, and you assign each product to the right group. Link My Books also tracks import VAT, so you can reclaim it under postponed VAT accounting or a similar scheme. See our guide to eBay bookkeeping for the wider set-up.

Automate your eBay VAT accounting with Link My Books

eBay VAT comes down to knowing whether you must register, which fees carry VAT, how to get a valid VAT invoice and how to apply the right rate to each product. Link My Books automates the accounting side by breaking each payout into sales, refunds, fees and VAT, compiling the VAT data for your returns and matching each payout to your bank deposit. Start a 14-day free trial of Link My Books and see how your eBay VAT looks in Xero or QuickBooks.

We are not tax advisers, so our guidance on the application of tax rules is not tax advice. We recommend that you seek advice from a qualified accountant for tax compliance.

eBay VAT FAQ

Do I need to tell HMRC if I sell on eBay?

You need to tell HMRC if you buy goods to resell or make goods to sell on eBay, and your income from this is more than £1,000 before expenses in a tax year. Selling your own unwanted items is different: HMRC says there is no new tax rule for it. eBay shares sales data with HMRC if you sell at least 30 items or earn roughly £1,700 in a year, but that does not automatically mean you need to complete a tax return. VAT registration is a separate test, based on the £90,000 threshold.

Where do I get a VAT invoice from eBay?

You download VAT invoices for your sales from the View order details page in Seller Hub or My eBay if you have opted in to eBay's VAT invoice feature, and you find invoices for the fees eBay charges you in Seller Hub under Payments, then Reports, then Invoices. If you are VAT-registered and have not opted in, you issue your own VAT-compliant invoices to buyers.

Do I need a VAT number before selling on eBay?

No, you do not need a VAT number to start selling on eBay as a private seller. You must register for VAT, and use the number, if you operate as a business and your taxable turnover passes the VAT registration threshold of £90,000 in the UK. Registering early may let you reclaim VAT on business purchases.

Do you pay VAT on eBay?

Yes. eBay adds 20% VAT to its seller fees for UK sellers, whether or not they are VAT-registered, but only VAT-registered sellers can reclaim it. A VAT-registered seller also charges VAT on its sales at the rate for each product, and the buyer pays it as part of the price.