VAT on Amazon fees after Brexit

VAT on Amazon fees after Brexit

***DISCLAIMER***

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 ALL Amazon tax rates (sales, fees and other transactions) see this article.

What tax rates should I use for my Amazon fees?

The rate of VAT Amazon charges on their various types of fees differs depending on if you have entered your VAT number into Seller Central or not.

If you have entered your VAT number into Amazon Seller Central then your tax rates on Amazon fees usually look like this:

Amazon Seller Fees (Merchant VAT Invoice):

Xero - Reverse Charge Expenses (20%)

QuickBooks - 20.0% RC SG (Reverse Charge Services 20%)


Amazon FBA Fees (Fulfilment by Amazon Tax Invoice):

Xero - Reverse Charge Expenses (20%)

QuickBooks - 20.0% RC SG (Reverse Charge Services 20%)


All Marketplaces except UK Advertising Fees (Product Ads VAT Invoice):

Xero - Reverse Charge Expenses (20%)

QuickBooks - 20.0% RC SG (Reverse Charge Services 20%)


Amazon.co.uk Advertising Fees (Product Ads VAT Invoice):

Xero - 20% (VAT on Expenses)

QuickBooks - 20.0% S (Standard 20%)


If you have not entered your VAT number on Amazon Seller Central then they will be applying VAT to all of your fees so your tax rates would be:

Xero - 20% (VAT on Expenses)

QuickBooks - 20.0% S (Standard 20%)


You can double check the above and confirm that the above tax rates are correct by navigating to:

Reports > Tax Document Library > Seller Fee Invoices

The above page in Seller Central looks like this:

In the above screenshot you will see that this example seller has entered their VAT number into seller central as it appears in the "Payer Registration" column.

You will also notice that the Fulfilment by Amazon Tax Invoices, Merchant VAT Invoices and Product Ads VAT Invoice for non Amazon.co.uk marketplaces are all invoiced from the supplier name "Amazon Services Europe S.a.r.L." with a Luxembourg VAT number.

This is why these fees all usually incur the Reverse Charge Expenses (20%) tax rate as they are B2B Purchase of Services.

The Amazon.co.uk Product Ads VAT Invoice is however invoiced from Amazon Online UK Limited with a UK VAT number and therefore includes VAT at 20%, hence why these fees usually incur the 20% (VAT on Expenses) tax rate.

If you have not entered your VAT number into seller central it won’t appear in the "Payer Registration" column and therefore Amazon cannot deem their fees as B2B Supply of Services from their end and will be forced instead to charge UK VAT on all of your fees.

Even though the UK is not a part of the EU any longer the reverse charge mechanism is still in place for B2B services provided from the EU to the UK.

Can Link My Books help me automate all of this?

Yes! 🙌

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 support@linkmybooks.com

About the author

Dan Little
Dan Little
Co-Founder and CEO of Link My Books located in Newcastle, United Kingdom.
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