vat reporting ecomledger

Etsy Connection coming in Q2 2022

How Brexit has impacted VAT on fees for Amazon sellers

How Brexit has impacted VAT on fees for Amazon sellers
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook

No matter where you stand on the matter, it’s an unavoidable fact that Brexit has changed the way many of us do business. This includes ecommerce entrepreneurs such as Amazon, eBay and Etsy sellers who now face changes to numerous processes and regulations as the UK exists independently from the EU.

In this article, we hone in on Amazon sellers specifically and shine a spotlight on one area in particular: post-Brexit Value Added Tax (VAT). We share our knowledge and advice on the following topics to help ecommerce businesses and accountants navigate this previously-uncharted territory:

• How VAT on Amazon fees has been affected by Brexit
• Important changes to look out for on Seller Invoices
• How eComLedger can help simplify Amazon VAT reporting

How have VAT on Amazon fees been affected by Brexit?

The VAT rate applied to Amazon fees is now dependent on whether or not you have entered your VAT number into Seller Central – the web interface used by brands and merchants to sell their products on Amazon. So, now, let’s delve a little deeper into the two possible scenarios.

For those who HAVE entered their VAT number into Seller Central:

Using Xero and QuickBooks as examples, for sellers who have input their VAT number into Seller Central, VAT rates on the various Amazon fees typically follow this structure:

• Amazon Seller Fees (shown in a Merchant VAT Invoice):

Xero – Reverse Charge Expenses (20%)
QuickBooks – Reverse Charge Services (20%)

• Amazon FBA Fees (shown in a Fulfilment by Amazon Tax Invoice):

Xero – Reverse Charge Expenses (20%)
QuickBooks – Reverse Charge Services (20%)

• Advertising Fees (shown in a Product Ads VAT Invoice):

Xero – VAT on Expenses (20%)
QuickBooks – Standard (20%)

• Advertising Fees for all Marketplaces excluding UK (shown in a Product Ads VAT Invoice):

Xero – Reverse Charge Expenses (20%)
QuickBooks – Reverse Charge Services (20%)

 

For those who HAVE NOT entered their VAT number into Seller Central:

You will know if you have entered your VAT number into Seller Central or not by checking your Seller Fee Invoices page. If you have already input your VAT number, it will appear in the Payer Registration column. If you haven’t, this column will be blank.

For those brands and merchants who haven’t input their VAT number in Seller Central, Amazon will apply VAT to all fees. This is because where Amazon can’t confirm your VAT number, it can’t categorise its fees as B2B Supply of Services and will therefore need to incur UK VAT across all fees.

That said, you are able to stop Amazon charging VAT on your Seller Fees in just a few simple steps

Other important information to note on the Seller Invoices page:

‘Amazon Services Europe S.a.r.L.’ will now appear in the Supplier Name column for Amazon Tax Invoices, Merchant VAT Invoices and Product Ads VAT Invoices (for non-UK marketplaces). This will also now show a Luxembourg VAT number, which is why these particular fees have the Reverse Charge Expenses (20%) tax rate applied to them. This is due to them being B2B Purchase of Services.

You’ll also notice that the Amazon.co.uk Product Ads VAT Invoice has a UK VAT number attached to it, which explains why these fees have the 20% (VAT on Expenses) tax rate applied to them.

A final point to note is that despite the UK no longer being included with the European Union post-Brexit, the reverse charge mechanism is still applicable on B2B services between the EU and the UK.

How eComLedger can help simplify the Amazon VAT process

We developed the eComLedger Amazon VAT reporting tool to combat the outdated, automated software that is overloaded and limited in reporting capabilities. It is also designed to provide a refreshing alternative to the arduous process of manually requesting Amazon VAT and sales reports from clients.

Below are just some of the ways in which eComLedger can help streamline the Amazon VAT process, so that accountants can better support their ecommerce clients.

Negate the need for time-consuming manual reporting – After connecting eComLedger to Amazon, you’ll never need to ask your clients to manually download reports again.

Accurate, HMRC-compliant Amazon reporting – Easily reconcile Amazon sales and VAT reports to generate clear Excel workings, without the need for complicated automatic journals.

Better understand the VAT treatment of each transaction – Also gain a much clearer understanding of the costs associated with each item.

Easy integration with any accounting system – From Quickbooks and Sage, to Xero or VT transactions, eComLedger is equipped to work wherever you do.

Sign up and try it out today

 

Ben Sztejka ACA

Ben Sztejka ACA

I am an ICAEW Chartered Accountant and owner of Your Ecommere Accountant. I created eComLedger to give other accountants access to accountant focused software for UK eCommerce clients.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn