What Amazon Sellers Ought to Know In regards to the New UK VAT Guidelines in 2021


As you might have heard, there are new UK VAT guidelines in 2021 that each Amazon vendor ought to learn about.

Efficient January 1, 2021, the UK (UK) has applied elementary adjustments to the value-added tax (VAT).

This isn’t simply restricted to accounting and reporting necessities for companies with a direct-to-consumer channel but in addition relevant to on-line sellers and marketplaces. 

Related VAT adjustments within the European Union (EU) will take impact on July 1, 2021.

The newly applied guidelines will supersede the present preparations for gross sales of products to shoppers within the UK and from the UK into the opposite international locations underneath European Union (EU) (e.g., underneath the EU distance gross sales VAT regime).

As anticipated, these adjustments will have an effect on many companies together with:

  • Any enterprise promoting items to shoppers in an EU Member State and/or the UK, instantly or by means of an internet market
  • Any enterprise utilizing a business-to-consumer (B2C) gross sales channel
  • Any on-line market (OMP) that facilitates the sale of B2C items
  • Freight forwarders, postal operators, and categorical carriers, amongst others
  • Any enterprise importing items into the UK with a consignment worth of lower than £135 on the market to UK prospects each on business-to-business (B2B) and B2C gross sales

Companies affected by these adjustments should weigh and rise above the problem. Related techniques, tax, industrial, contractual, and pricing implications have to be considered quick and fast.

New UK VAT Guidelines 2021

Because the new ruling in VAT is now in impact, the next are the principles sellers should be careful for:

  • Termination of low-value consignment reduction for items underneath £15
  • All items imported into the UK can be topic to UK VAT (on the related charge 0%, 5% or 20%).
  • Items in consignment imported into the UK is valued at lower than £135 

Additionally, it is necessary that the vendor or the one facilitating the sale is VAT registered for them to cost UK VAT.

If the shopper is VAT registered, its VAT registration quantity needs to be obtained by the vendor.

On this case, the shopper ought to apply the reverse cost (account for VAT itself on behalf of the vendor).

On-line marketplaces

On-line marketplaces should not an exemption to the brand new rule. OMPs (no matter the place they’re established) may even be chargeable for UK VAT on the next transactions:

  • Sale of imported items valued at lower than £135 by UK or non-UK sellers
  • Sale of products (any worth) by non-UK sellers if the products are positioned within the UK on the time of sale

From July 1st, 2021, an Import One Cease Store can be used for consignments valued at underneath €150. Be aware that the EU distance promoting threshold is not going to apply to gross sales by UK sellers. These gross sales will develop into exports from the UK as an alternative and imports into the UK by the shopper.

New UK VAT Guidelines | Data from Amazon Vendor Central

To guarantee that Amazon calculates tax accurately, it is vitally vital that you simply preserve your account particulars correct and up to date. Failure to take action could end in incorrect VAT calculations and extra prices to what you are promoting. At least requirement Amazon can have you present them together with your:

Settings > Account Data > Enterprise data > Enterprise deal with

Your online business deal with is the place you have got registered what you are promoting and the place its administration is positioned. For non-business prospects, that is your traditional place of residence.

Be aware that Amazon could carry out id checks to verify what you are promoting belongs and operates from this deal with so it is necessary that the deal with you present should signify your major administrative center.

If Amazon is unable to confirm what you are promoting deal with, this might result in the suspension of your account till Amazon can efficiently confirm your particulars.

Settings > Account Data > Tax data > VAT calculation settings

VAT registration quantity could be very important. It is best to present your VAT registration quantity issued in the identical nation as what you are promoting deal with and it will mark as major. Additionally, you will have to offer VAT registration numbers belonging to what you are promoting in international locations exterior of what you are promoting deal with nation.  Failure to offer this VAT registration quantity may end in incorrect VAT costs.

In sure areas, native legal guidelines and/or laws dictate that Amazon should collect the native VAT registration quantity(s) for the places the place you retailer your stock or the place you have got gone past sure gross sales thresholds. Amazon may require particulars of your different VAT registration numbers so as so that you can take part in sure Amazon packages.

Settings > Account Data > Transport and returns data > Transport settings > Basic delivery settings > Default delivery deal with

Your online business deal with is simply as vital as this deal with since they may decide the ‘deliver-from’ deal with for sellers taking part in VAT Calculation Companies (refer additionally to FAQ 4).

The deal with you present should signify the first deal with from which you self-fulfill orders and Amazon will use it to find out the originating jurisdiction on your gross sales. 

Essential Be aware: The data talked about above is supplied for normal reference functions solely. It’s not tax, authorized, or different skilled recommendation and should not be used as such. It is best to seek the advice of your skilled advisers when you have any questions or want additional element.

What occurs if I do not need an up-to-date enterprise deal with?

Retaining what you are promoting deal with up to date will make you have got clean transactions. Failure to offer the proper enterprise deal with might result in incorrect VAT charging being utilized in your Amazon charges and in your market transactions the place relevant.

If Amazon is unable to confirm what you are promoting deal with, this might additionally result in the suspension of your account till Amazon can confirm your particulars.

If I modify my enterprise deal with, will it set off an EU Marketplaces Know Your Buyer (“KYC“) evaluate (a.okay.a. Vendor Qualification Audit)?

Amazon is legally required to carry out KYC checks for anti-money-laundering functions. A change of enterprise deal with could set off KYC evaluate if the up to date deal with is a brand new deal with to Amazon. You might also be required to offer extra data associated to this new deal with.

What are Market Facilitator laws and the way can these have an effect on my enterprise?

It is very important preserve what you are promoting deal with up-to-date primarily as a result of this is without doubt one of the components wanted within the affirmation of what you are promoting deal with. Some international locations are implementing Market Facilitator laws which solely signifies that underneath sure circumstances  Amazon is liable to gather and remit VAT from prospects in respect of your market transactions. 

What occurs if I supplied a default ship-from deal with which isn’t my precise ship-from deal with?

One of many components that has an amazing impression on tax calculation is the default ship-from deal with. In case your precise ship-from deal with is in a unique nation, this will likely result in VAT calculation errors so the significance of conserving your ship-from deal with could be very excessive. When Amazon calculates taxes for market transactions, the overall worth (together with VAT) is exhibited to the shopper at try. This calculation is predicated in your VAT inclusive listing worth. 

Ultimate Ideas

Once you open or function a Promoting on Amazon account, it’s important that you simply present Amazon with up-to-date details about who you might be and the place what you are promoting is positioned. These particulars are vital to calculate tax in your Amazon charges accurately and may use to calculate tax in your gross sales transactions if you happen to signed as much as the VAT Calculation Companies program.