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How does Amazon Seller VAT Work? A Comprehensive Explanation

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Selling on Amazon’s European markets, such as Amazon U.K., and the sites gives your business a lot of chances to grow. However, for sellers outside Europe, understanding value-added tax (VAT) can be as difficult as reading an old script. While some sellers seek help from an Amazon Seller Account Management Service so that they can escape all the technicalities, others prefer to do all the heavy lifting themselves. Worry not because this guide will cover everything you want to know about Amazon Seller VAT.  

What Is VAT?

Value Added Tax (VAT) may look like a complicated term at first, but it really means something simple. As a product moves through a supply chain, it gains value at each step, from the raw materials to the finished product that is brought to the customer’s door. VAT is a tax that is put on the value that is added at each link in this chain. 

Key Concepts of Amazon Seller VAT

VAT Registration Thresholds: You don’t have to sign up for VAT in every place where you sell your goods. In each country, there is a different level of VAT registration. If you sell more than this amount to a certain country in a year, you have to sign up for VAT in that country. For instance, in the U.K., the latest figure for VAT registration is £85,000. Moreover, find out ahead of time what the VAT registration thresholds are for the countries you want to do business with so you don’t have any unpleasant tax responsibilities.

VAT Rates: In the E.U. and U.K., VAT rates are not all the same. So, it would help if you kept up with the latest VAT rates in the countries you sell to, as they can have a big effect on your price strategy and profit margins. Furthermore, you might want to add a VAT rate calculator to your process to make sure that your prices are correct for customers in different areas.

Charging and Collecting VAT: After you’ve registered for VAT, it will be your job to collect VAT on all sales made in that area and send it to the right tax authority. Besides, Amazon takes care of collecting VAT at checkout for most sales, which makes things easier for sellers.

Claiming Input VAT: The great thing about VAT is that you can get the VAT back on stuff you bought for your business. For example, let’s say you’re registered for VAT in Germany and buy goods from a seller who also charges VAT. You can get back the VAT you paid on those purchases, which will cancel out the VAT you charge on your sales. 

Avoiding VAT on Your Amazon Store 

If you are a small seller, you might be tempted to forget about VAT. But there are big risks that come with it. At first, you might get away with it, but tax authorities are getting stricter with foreign sellers who don’t follow the rules. Consequently, all e-commerce sites are being monitored because governments want to get back the money they’re due and make things fair for sellers in their own countries.

HMRC has been going after foreign Amazon sellers who haven’t registered for VAT in the U.K. properly. If you do not meet HMRC’s standards, Amazon could suspend your ability to sell until the problems are fixed. Also, as soon as your product arrives at an FBA warehouse in the U.K., you become taxable there and need to sign up for VAT. There is no minimum amount; you need to register for VAT right away.

VAT Implications When Choosing Products

It can be exciting to add more products to your store, but the VAT effects can be different for each type of product. Find out how much VAT different types of goods cost in the countries you want to sell to. You can use this information to help you choose which products to sell and maybe even find the best mix of goods to make the most money.

You can turn this possible problem into a smart stepping stone on your way to Amazon’s e-commerce success by following these detailed instructions and always learning more about VAT. Remember that if you take a smart approach to VAT compliance, you can confidently handle the global market and use it to its fullest potential for your business.


Hopefully, this guide helps you at least to get a basic understanding of Amazon Seller VAT and lets you expand your business across borders. Also, if you’re looking to avoid all this hassle, you should hire an Amazon Seller Account Management Service. Services4Amazon is one such management service that provides expert help for your various ecommerce needs on Amazon. So, please feel free to reach out to them at info@services4amazon.com or visit their website at services4amazon.com.

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