Key takeaways
- VAT registration is essential for Amazon sellers who exceed country-specific thresholds or store goods in other countries via FBA—especially post-Brexit.
- Amazon and Taxually offer VAT tools to automate calculations and generate reports, and Taxually handles filings, reducing compliance risks and saving time.
- Staying compliant requires ongoing effort, including monitoring sales thresholds, issuing correct invoices, and adapting to evolving VAT rules in the UK and EU.
In short: Amazon sellers must register for VAT when their sales pass a country’s threshold, such as £90,000 in the UK. They must also register when Amazon FBA stores their goods in another country. Once registered, Amazon sellers charge VAT at local rates, issue VAT invoices, file VAT returns and pay the VAT due on time.
Selling on Amazon gives businesses a great chance to reach more customers and grow sales. But you can’t ignore Value Added Tax (VAT). Amazon sellers need to understand their VAT obligations to avoid penalties and run their business well. This guide covers everything you need to know about VAT when selling on Amazon in the UK and Europe.
What is VAT?
VAT is a consumption tax on the sale of goods and services. VAT is usually charged at each stage of the supply chain, from production to the point of sale. The end consumer pays the cost of VAT in the end. But businesses must collect VAT and pay it to the tax authorities.
When do you need to register for VAT?
Amazon sellers need to register for VAT when their sales pass a country’s VAT threshold or when they store goods in another country. The rules below explain the thresholds and how Amazon FBA affects VAT registration.
What are the thresholds for VAT registration?
UK sellers: If your taxable turnover is more than £90,000 in a 12-month period, you must register for VAT with HM Revenue and Customs (HMRC). This UK VAT threshold applies to sales of both goods and services.
EU sellers: Each EU country has its own VAT registration threshold. For example, the threshold is €25,000 in Germany and €85,000 in Italy. If your sales in a country are above its threshold, you must register for VAT there.
What are the distance selling thresholds?
Distance selling within the EU: Since July 1, 2021, the EU distance selling threshold is €10,000. This is the total of your cross-border sales to consumers in all EU Member States. If you go above this threshold, VAT is due in each customer’s country. You can register for VAT in each country or use the One Stop Shop (OSS).
Post-Brexit changes: Brexit changed how VAT works between the UK and the EU. UK sellers now need to consider VAT rules in EU countries. EU sellers need to understand UK VAT rules when selling to UK customers. For a closer look, see Empowering Amazon Sellers - A Deep Dive into Tax, VAT, and EPR for European Expansion.
How does Amazon FBA affect VAT registration?
Fulfillment by Amazon (FBA): With Amazon's FBA service, Amazon stores your goods in its warehouses in different countries. This often means you must register for VAT in each country where your goods are stored. For example, if your goods are in Amazon’s German and French warehouses, you need to register for VAT in both Germany and France.
How do you register for VAT?
Amazon sellers can register for VAT online with each country’s tax authority, or use the One Stop Shop for EU sales. The steps vary for the UK, the EU and OSS.
How do you register for UK VAT?
You can register for UK VAT online on the HMRC website. You will need to give details about your business. These include your business registration number, turnover, business activities and bank details.
How do you register for EU VAT?
The EU VAT registration process varies by country. But generally, you can register for EU VAT online or by post. You will need to send documents such as proof of identity, proof of business activities and details of your sales. You may also need the VAT number from your home country.
How does One Stop Shop (OSS) registration work?
You can also choose to register for the One Stop Shop (OSS). OSS is an EU-wide VAT scheme. It lets you register for VAT in one EU Member State and file a single quarterly VAT return there for all your EU sales. You can register online with the tax authority of the Member State you choose. Read more in our guide: Shopify VAT: Everything Sellers Need to Know.
How do you stay VAT compliant on Amazon?
To stay VAT compliant on Amazon, you charge the right VAT rate, issue correct VAT invoices, file VAT returns and pay VAT on time. Each step is explained below.
How do you charge VAT?
Standard VAT rates: Once registered, you need to charge VAT on your sales. The standard VAT rate in the UK is 20%, but rates differ across EU countries. For example, the standard rate is 19% in Germany and 20% in France.
Reduced rates and exemptions: Some products may qualify for reduced VAT rates or exemptions. For example, books and children's clothing often have lower VAT rates or are VAT-exempt in certain countries.
What should your VAT invoices include?
Issuing Invoices: Give VAT invoices to your customers. VAT invoices are often required for B2B sales, and they are good practice for B2C sales too. Your invoice should include your VAT number, the customer’s VAT number (for B2B sales), and details of the sale.
Invoice requirements: Make sure your invoices meet local rules. This includes showing the VAT amount separately and using the correct currency and language.
How do you file VAT returns?
Periodic returns: You must file regular VAT returns, usually every quarter, to report the VAT you’ve charged and paid. In the UK, you file through HMRC’s online portal. In the EU, how often and how you file may vary by country.
Accurate reporting: Report all sales, returns and VAT collected accurately. Keeping detailed records makes this easier.
How do you pay VAT?
Paying VAT: Pay the VAT due to the tax authorities. Set aside funds to cover your VAT bills. Late payments can lead to penalties and interest charges.
Payment methods: Countries may have their own methods for paying VAT. Learn the payment options and deadlines for each country where you are registered.
Can you reclaim VAT on Amazon seller fees?
Yes, VAT-registered businesses can reclaim VAT charged on Amazon seller and FBA fees. VAT doesn’t only affect your sales prices. It also has a big impact on the fees you pay as an Amazon seller. Reclaiming VAT on these fees is key to managing your business finances well.
However, third-party sellers on Amazon may be exempt from VAT. This affects the VAT treatment of their fees. It also makes it harder for these sellers to recover VAT on their business costs. Understanding these details helps you make sure you don’t miss out on VAT savings.
What VAT services does Amazon offer?
Amazon offers VAT tools to help sellers manage their VAT obligations. These include:
VAT Calculation Services
Automated calculations: Amazon’s VAT Calculation Service works out the VAT on your sales automatically, so you charge the correct rate. It can handle complex calculations based on each country’s rates and rules.
Accuracy and compliance: The VAT Calculation Service helps you apply the correct VAT rates. This helps you stay compliant and avoid errors.
VAT reporting and filing
VAT reporting: Amazon ended its VAT Services on Amazon programme, which filed VAT returns for a fee, on October 31, 2024. Amazon sellers now need a separate VAT provider to prepare and submit their VAT returns. Related reading: VAT Services on Amazon Explained.
Peace of mind: With a VAT service provider, you can focus on running your business. Your VAT obligations are still met accurately and on time.
What are Taxually's Amazon VAT services?
Taxually offers a full range of VAT services built for Amazon sellers. Taxually builds on the convenience of Amazon’s VAT tools. It adds extra features and support to help you manage VAT.
Enhanced VAT calculation services
Integration with Amazon: Taxually integrates with Amazon's VAT Calculation Service. This keeps your VAT calculations up to date and accurate.
Custom solutions: Beyond standard calculations, Taxually offers custom VAT solutions for your business’s needs. These help you stay compliant across all your sales channels.
Comprehensive VAT reporting and filing
Detailed reporting: Taxually provides detailed VAT reports that cover your Amazon sales and any other sales channels you use. This full view helps you stay compliant and file accurately.
Filing services: Taxually prepares and submits your VAT returns, which cuts your admin. We make sure all filings are correct and on time. This lowers the risk of errors and penalties.
Ongoing support and compliance
Dedicated support: With Taxually, you have a dedicated team of VAT specialists. They can answer your questions and support you whenever you need it.
Continuous compliance monitoring: Taxually tracks changes in VAT rules and keeps your business compliant with the latest requirements. This gives you peace of mind, so you can focus on growing your business.
How can you manage VAT on Amazon?
The best ways to manage VAT on Amazon are to keep accurate records, monitor thresholds, stay updated on VAT changes and get professional advice.
Keep accurate records
Detailed records: Keep detailed records of all your sales, purchases and expenses. This makes it easier to prepare your VAT returns. It also gives you documents in case of an audit.
Organized documentation: Use accounting or VAT software to keep your records organized and up to date.
Monitor thresholds
Sales monitoring: Check your sales against the VAT registration thresholds in each country where you sell. This helps you register on time. Use Amazon’s reporting tools to track your sales volumes.
Proactive registration: If you are close to the threshold, think about registering early to avoid compliance issues.
Stay updated on VAT changes
Regulatory updates: VAT laws and rates can change, so stay informed about updates that might affect your business. Sign up for newsletters from tax authorities or talk to a tax advisor to stay current.
Adjust pricing: Be ready to adjust your prices when VAT rates change, so you keep your profit margins.
Seek professional advice
Tax advisors: Think about working with a tax advisor who specializes in VAT for e-commerce businesses. They can give you personal advice and make sure you follow all the rules.
Compliance assurance: A tax professional can help you handle complex VAT rules. This matters most if you sell in several countries with different rules.
What should Amazon sellers remember about VAT?
Amazon sellers can manage VAT well by knowing when to register, following the rules and using the right VAT tools. VAT can be challenging, but the right knowledge helps. Then you can focus on growing your business while staying compliant. Stay proactive, keep accurate records and get professional advice when needed. This keeps your Amazon business smooth and profitable.
VAT compliance is not just a legal duty. It’s also a key part of running a successful e-commerce business. Follow these tips to keep your VAT processes efficient, accurate and compliant. That gives you peace of mind to focus on what you do best: selling great products on Amazon.
Do you need help with your VAT compliance? Book a free call with one of our VAT experts to find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers.
How Taxually handles this
Taxually’s CrossTax handles VAT registration, VAT, OSS and IOSS returns and fiscal representation in the countries you sell into, and checks your sales data against 250+ validation rules before each filing. OneTax then pays every tax authority with one bulk payment in your chosen currency.
Related guides
Frequently asked questions
When is VAT registration mandatory for Amazon sellers?
VAT registration is mandatory for Amazon sellers when they store inventory in an EU country or their sales exceed specific thresholds.
Can I reclaim VAT on Amazon seller fees?
Yes, VAT-registered businesses can reclaim VAT on Amazon seller and FBA fees if they meet the necessary conditions.
How do Amazon's VAT Services help with VAT compliance?
Amazon's VAT Calculation Service automates VAT calculations on your sales, helping you apply the correct VAT rates. Amazon ended its VAT Services on Amazon filing programme on October 31, 2024, so sellers now need a separate VAT provider, such as Taxually, to file VAT returns across multiple EU countries.
Are there different VAT rates across European countries?
Yes, VAT rates vary across European countries, with standard rates ranging from 17% to 27%. It's important for sellers to adapt to these rates and the local VAT laws of each country they operate in.
