New Amazon VAT Charges: Impact on UK Sellers

Starting 1 August 2024, Amazon will implement new VAT charges on various fees, significantly impacting UK sellers. Understanding these changes is crucial for maintaining compliance and managing business costs effectively.

Overview of the New VAT Charges

Amazon’s new VAT charges will affect referral fees, Fulfillment by Amazon (FBA) fees, and more. This change aims to align with the UK’s VAT regulations, ensuring all applicable fees are taxed correctly.

What is happening?

Amazon will shift from using Amazon Services Europe S.à r.l to Amazon EU S.à r.l for invoicing. UK sellers must adjust their invoicing practices to comply with local VAT rules, ensuring all transactions are correctly documented.

Impact on VAT Registered Sellers

For VAT-registered sellers, a 20% VAT will be applied to Amazon fees. While this can increase costs initially, sellers can reclaim this VAT from HMRC. Proper documentation and timely VAT returns will be essential to maintain cash flow.

Impact on Non-VAT Registered Sellers

Non-VAT registered sellers will face increased costs as they cannot reclaim VAT. This financial strain could be significant, particularly for smaller sellers below the VAT threshold. Evaluating the business impact and considering VAT registration might be necessary.

The new Amazon VAT charges present significant changes for entrepreneurs selling in the UK. If you think you can benefit from a quick 15-minute call to discuss how this all will affect your profits, click here to get in touch.