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 eBay across the EU you may get line descriptions appearing on your mapping page with the 'MFT' or 'Marketplace Facilitator Tax' narrative. They may look something like this:
The MFT lines relate to transactions where eBay has both collected and remitted the VAT or Tax for you. There are a few reasons that trigger this and you will see it on some but not all sales made into the EU.
We have tagged the ones that have been flagged by eBay with the MFT 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. You'll need to expand each section by clicking on the orange plus sign and identifying the transactions that are labelled MFT. They still go to a revenue account it's just tax vat or tax rate you're checking.
For each MFV line that can be found in the above section, there will be 1 or 2 related lines in the tax section.
You can create a special current liability account in Xero, we can create this for you as a default named eBay Sales tax Collected.
Then send any lines that say MFT or Marketplace Facilitator Tax in the tax section to this account with a NO VAT rate.
But what about the sales made to the EU that have not had eBay collect and remit the VAT? You can separate these out into their own sales account so that you have a gross figure that can be used on an EU VAT return or an IOSS. This is done from the revenue sections of the mapping page. A separated tax line will not appear in the tax category for these transactions.
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