Tax & VAT Advice for Amazon FBA Sellers

With the rise of online marketplaces consumers have become considerably more comfortable buying online and businesses have been given the ability to sell not just within their own country but overseas as well. Amazon FBA facilitates this process allowing business to reach potential customers in Germany, Italy, Spain & France. But where there is such huge expansions, tax authorities start to take notice and make legislative changes to ensure their rules keep up.  VAT on Amazon FBA is one such area which has been the subject of much discussion, change and now confusion.  So here I consider four likely scenarios that an Amazon FBA Seller may find themselves in and the VAT implication of each:

  1. UK VAT Registered Amazon Seller Planning to Use Amazon FBA in Germany, Italy, Spain and/or France;
  2. UK Amazon Seller not UK VAT Registered but Planning to Use Amazon FBA in Germany, Italy, Spain and/or France
  3. UK Amazon Seller Warehousing Your Own Product in the UK and Shipping to EU Countries;
  4. UK Amazon Seller supplying products only in the UK.

First of all let me explain a little about how VAT works within the EU and why certain changes have had to take place.

How does VAT Work on EU Sales?

VAT is a tax on consumers not businesses (unless they are not VAT registered). And VAT is a tax that exists in all EU countries, including Germany, Italy, Spain & France on Amazon FBA, albeit at different rates and with different names.

In the past when a Company supplied a consumer with a product they had to add VAT at the rate in which their business was based, not where the consumer was.  However, what this meant was large businesses were storing their stock in one EU country and then locating themselves in EU countries with lower VAT rates.  This meant they could undercut the competition by being able to charge a lower VAT rate, a practice did not go un noticed by tax authorities and led to a change in the rules.

The EU VAT Rule Change 

A business must now register & report for VAT on sales in every EU country in which it STORES stock or consignment stock regardless of business turnover and its business location.

Next: The implications for a UK VAT Registered Amazon Seller Planning to Use Amazon FBA in any or all Germany, Italy, Spain & France >>

Anita is a Chartered Accountant, turned blogger and creator of the ever popular free Go Self Employed Email Mini Course, which has been completed by hundreds of attendees all over the UK. Using her 10 years experience in accounting, tax and operations for Small Businesses, Anita is on a mission to make finance simple for the self employed, so they can stop stressing about tax & finances and focus on building profitable businesses which will give them the lifestyle they dream of.