The first point to consider is UK VAT registration. For VAT purposes goods are treated as supplied where the goods are located when they are sold. Sales of goods from stock held in the UK will all count towards the VAT registration threshold. Although once VAT registered, exports and sales of goods to VAT-registered EU businesses will be zero-rated, remember that zero-rate sales, along with standard rate and reduced rate sales, are included within taxable turnover when considering whether the VAT registration threshold has been exceeded.
Another point often missed is that the value of reverse chargeable business to business (B2B) services received in the UK by UK businesses from overseas suppliers also form part of taxable turnover for the recipient; the value of received reverse charge services is included in the registration turnover calculation. Often the Amazon business entity supplying the right to use the online platform is based outside the UK, possibly in Luxembourg. The fees for those services are deducted by Amazon before any payments they have processed on behalf of the seller are transferred into the seller’s bank account.
Care, therefore, needs to be taken to ensure that the value of sales included in the registration turnover is the full gross value before any deduction of the Amazon fees, and, that where those fees are subject to the reverse charge in the UK, the net value of fees themselves are included as taxable turnover.
Information on the reverse charges for B2B services is provided in VAT Notice 741A, Section 5.
The second point to consider is whether the client will have any VAT Compliance obligations in other EU Member States. This will depend, as mentioned above, on where the goods are located when they are sold. There are 2 areas where EU compliance requirements need to be taken account:-
- Distance Sales from stock in the UK to non VAT registered customers in other EU Member States
- Sales fulfilled by Amazon from stock held in their Fulfilment warehouses in other Member States (Pan European Fulfilment)
These areas, along with sales to EU VAT registered businesses, and export sales, have been covered in detail by my colleague Janis Kirkham in her VQOTW: DISTANCE SELLING IN THE EU, which can be found in our online library on the Croner Taxwise Website
Please share this article with your clients
Our team of experts have a wealth of experience and can also provide a written consultancy service at competitive rates.