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.
Amazon has announced a change in the VAT treatment of fees for UK/EU sellers, effective from 1 August 2024. If you’re a UK/EU seller, this may impact your data and require some updated tax mappings.
Who does this change impact?
VAT will be charged on Amazon Fees for:
Companies established in the UK, Germany, France, Italy, Spain, Netherlands, Poland, Belgium, or Sweden.
For companies established outside the above countries there will be no change in VAT application.
Please note: This change does not impact you if you sell in the UK/EU but are registered in a country outside of the UK/EU.
What are the changes?
Previously, UK VAT-registered sellers paid VAT only on UK advertising fees billed from London, with other fees billed from Luxembourg under the Reverse Charge Mechanism. Now, Amazon will bill all fees from within the UK, meaning sellers will be charged VAT directly and need to reclaim it on their VAT returns.
This change affects FBA fees, merchant seller fees, and subscription fees, requiring sellers to adjust their cost considerations, cash flow management, and VAT reporting according to HMRC regulations. Find out more about the changes from Amazon here.
What do I need to do?
If you sell on Amazon marketplaces in the UK or EU, you will need to update your tax mappings on the impacted transactions to reflect the new VAT charges.
For all other Amazon marketplaces outside of the UK and EU (for example, Amazon.com, Amazon.jp), no action is required.
Here is a video that walks you through the Amazon VAT Changes for Xero in A2X:
Here is a video that walks you through the Amazon VAT Changes for QuickBooks in A2X:
You will need to update your tax mappings on the impacted transactions. Here is a guide showing the impacted transactions, their current tax rate mapping and what their new tax rate might be from 1 August 2024.
Transaction group | Tax rate mapping prior to 1 August 2024 | Tax rate mapping from 1 August 2024 |
FBA Fees | Reverse Charge Expenses (20%) | 20% (VAT on Expenses) |
Merchant Seller Fees | Reverse Charge Expenses (20%) | 20% (VAT on Expenses) |
Subscription Fees | Reverse Charge Expenses (20%) | 20% (VAT on Expenses) |
Amazon Shipping fees (with the exception of 3rd party shipping providers) | Reverse Charge Expenses (20%) | 20% (VAT on Expenses) |
These tax rates are a guide for UK VAT-registered sellers. We recommend you check all tax mappings with your accounting professional.
What do I need to do for settlements before 1 August 2024?
Settlements before 1 August 2024 should be posted as normal. You will only need to update your mappings for data after 1 August.
What do I need to do for settlements after 1 August 2024?
Before posting settlements from 1 August onwards, you will need to update your tax mappings to the new rate. Settlements can then be posted; refreshing not necessary.
How to manage split settlements that cover July and August?
For settlements that include July and August portions, for example, if the Settlement covers 23 July to 13 August, there are a few extra steps you will need to take to ensure your data is accurately posted for each period.
Before changing mappings, post all settlements prior to 1 August, including the entry that covers 1 August.
2. Log into your accounting software and find the invoices you’ve just posted.
3. Delete just the August invoice from your accounting software.
4. In A2X, update your mappings for the applicable transactions
5. Repost the settlements which covers 1 August
6. Back in your accounting software, this time you will delete the invoice/journal for the period prior to 1 August.
Useful link
What about future settlements?
Going forward, with your new mappings you won’t need to delete entries. All future invoices posted to your accounting software after 1 August will have the new mappings applied.
Assisted setup
As of 1 August, Assisted setup will apply a 20% VAT-inclusive tax mapping for applicable fees. If you use assisted setup, you can click "reset" on the mappings page in order to update mappings for entries you want to post 1 August onward.
We’re here to help
If you have any questions, please reach out to our Customer Success team via the blue chat icon in the bottom right of your screen, or via contact@a2xaccounting.com.
If you would like additional assistance, we are offering one-off support calls to review your new VAT mappings with you.