Disclaimer: You may have many different scenarios within your business, this guide is purely for informational purposes rather than tax guidance. What is described in this guide may not suit your business tax accounting needs, therefore, you should always seek tax advice from your accountant or tax adviser.
If you are selling on Amazon UK/EU marketplaces you may get line descriptions appearing on your mapping page with the 'MFV' or 'Marketplace Facilitator VAT' narrative. They may look something like this:
The MFV lines relate to transactions where Amazon has both collected and remitted the VAT for you. There are a few reasons that trigger this in the Amazon system and you will see it on some but not all sales made on Amazon EU at the moment.
We have tagged the ones that have been flagged by Amazon with the MFV description to let you know that this has happened. This is why they appear on the Accounts and Taxes page of A2X.
If these lines appear they will be in the sales/refunds/shipping categories:
Most sellers are applying a zero-rated income or NO VAT rate to these lines as shown below.
For each MFV line that can be found in the above section, there will be 1 or 2 related lines in the MFV taxes section:
You can create a special current liability account in Xero and name it EU Amazon VAT remitted (or similar).
Then send any lines that either say MFV or Marketplace Facilitator VAT in the tax section to this account with a NO VAT rate.
You should see them clear each other off. This is because we get a line that comes in from Amazon and then another tax line when it goes back out again.
Please Note: You might also have lines tagged as MFT (Marketplace facilitator Tax), this is usually US Sales tax. Such lines can be allocated to our default Amazon Sales Tax Collected account.
If you have any more questions about this please feel free to contact our support team who will be happy to help you.
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