In this article we'll summarize how to account for VAT for Amazon sellers in UK and EU. Looking for information about Shopify VAT?

Disclaimer: you should get tax advice from your accountant or tax adviser, these instructions are for technical configuration of A2X.

Typical VAT scenarios for Amazon sellers and how to configure A2X for your business

  1. Single market seller - For example a UK business selling only from the UK and only registered in the UK
  2. Multiple VAT registrations selling only from a single country  - For example a UK business selling only from the UK and registered in the UK and Germany.
  3. Selling from multiple countries with multiple registrations - For example a Pan-EU business registered in all 7 countries
  4. Manual setup - for advanced users or specific scenarios

Below we’ll cover the basic setup for each scenario, you may need to customize or tweak these based on advice from your accountant or tax adviser. The purpose of these instructions is to get accurate VAT information from Amazon into your accounting system so that your financials and your VAT return are accurate. Handling of the additional VAT registered marketplaces is assumed to be outside of your accounting system (typically in conjunction with 3rd party experts such as AVASK, Avalara, KPMG etc).

What you need to know

When setting up VAT for your Amazon accounting there’s a few key things you need to know:

  • Does your business use Amazon’s VAT calculation service often abbreviated to ‘VCS’ (i.e do you price inclusive or exclusive of VAT)
  • Is your business registered in multiple countries
  • Is your business operating from multiple countries (i.e Pan EU)

1. Single market/country

This is the simplest configuration for an Amazon seller, all of your sales are taxable only in a single country (in this example United Kingdom).

If you do use VCS, then you can enable VAT calculations, and country grouping like this:

The grouping you’d see in your settlements will then look like this:

Or, if you do not use VCS then you can simply group by country like this:

The grouping you’d see in your settlements will then look like this:

Note: You won’t see NoTax groupings as the VAT grouping is disabled

2. Multiple VAT registrations, operating from a single country

If you do use VCS, then you can enable VAT calculations, and country grouping like this:

The grouping you’d see in your settlements will then look like this:

Or, if you do not use VCS then you can simply group by country like this:

The grouping you’d see in your settlements will then look like this:

Note: There are no Tax lines in a settlement without VCS, Amazon is not calculating the VAT, so you will need to pass the sales to your accounting system and calculate the VAT there or make  manual adjustment.

3. Multiple VAT registrations, operating from multiple countries

If you do use VCS, then you can enable VAT jurisdiction tracking, VAT calculations, and country grouping like this:

The grouping you’d see in your settlements will then look like this:

If you do not use VCS, then you can enable country grouping. 

VAT jurisdiction tracking and VAT calculations require VCS. In this scenario you will typically apply a manual VAT adjustment in your accounting system after the VAT returns are calculated, because Amazon will not have VAT information to include it in the settlement. 

The settlement would look like this:

Note: There are no Tax lines in a settlement without VCS, Amazon is not calculating the VAT, so you will need to pass the sales to your accounting system and calculate the VAT there or make  manual adjustments.

4. Manual Setup

If you’re not using the VAT grouping or jurisdiction tracking you can configure the groupings in A2X manually for specific scenarios, and can take more control of the groupings for specific types of products. This is typically for advanced VAT situations and you should check with your accountant or tax adviser when using these settings.

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