FBA VAT for Amazon Sellers – What You Need to Know

3. UK Domestic FBA VAT Responsibilities

When Are You Responsible for Charging VAT on UK Sales?

If you are a UK-based Amazon FBA seller, understanding when you are responsible for charging VAT is essential to avoid compliance issues with HMRC. The responsibility hinges on your establishment status, where your goods are located, and how your sales are processed.

UK-Established Sellers: VAT Responsibility Defaults to You

For sellers with a UK VAT registration and UK-established business operations (such as a registered company and UK-based fulfilment centres), HMRC generally expects you to charge and remit VAT on domestic sales, even where Amazon facilitates the transaction. Amazon acts only as the platform, not as a deemed supplier in these cases. That means:

• Where you are VAT-registered and making taxable supplies, you are generally required to charge VAT at the appropriate UK rate (20 percent for most standard-rated goods) on eligible goods sold to UK consumers.
• You are required to issue valid VAT invoices where the VAT invoicing rules apply.
• This VAT should be accounted for in your VAT return in line with HMRC requirements.

Non-UK Sellers: Amazon as Deemed Supplier

If you are a non-UK seller storing goods in UK Amazon warehouses, the UK’s marketplace facilitator rules apply. In this case:

• Amazon collects and remits VAT on your behalf.
• Your payouts are net of VAT.
• The transaction is commonly recorded as an outside-the-scope or 0 percent coded supply in the seller’s accounting records, with Amazon issuing the VAT invoice to the customer under the deemed supplier rules.

Low-Value Imports Under £135

When non-UK sellers import goods under £135 in value into the UK, Amazon becomes responsible for VAT collection at the point of sale.

However, for B2B sales, if the customer is UK VAT-registered and provides their VAT number at checkout, the reverse charge may apply where a valid UK VAT number is provided and accepted at checkout, in line with HMRC’s VAT reverse charge guidance, in which case the buyer accounts for the VAT and Amazon does not normally collect it at the point of sale.

How to Confirm Who Collected VAT

Use Amazon Seller Central reports to confirm VAT treatment:

• Transactions marked “Marketplace Facilitator Order” or showing VAT withheld usually indicate that Amazon collected the VAT.
• If there is no such marking, this will usually indicate that you collected the VAT and would normally need to include it in your VAT return, subject to your underlying VAT analysis and accounting treatment.

Charging Output VAT and Issuing VAT Invoices

As a UK-based Amazon seller, you are responsible for charging output VAT and ensuring compliant VAT invoices are issued where required, particularly for B2B transactions.

Standard UK VAT Rates

• 20 percent standard rate: Most goods sold on Amazon.
• 5 percent reduced rate: Select categories like children’s car seats and energy-saving products.
• 0 percent zero-rated: Books, children’s clothing, and most food.

Assign correct tax codes in Amazon Seller Central to ensure the right VAT rate is applied at checkout. Misclassification is a common HMRC audit trigger.

Invoicing Requirements

Under UK VAT invoicing rules, invoices over £250 must include:

• Unique invoice number
• Seller and customer names and addresses
• VAT registration number
• Invoice and supply date
• Description of goods, quantity, unit price, VAT rate, VAT amount, and gross total

Invoices under £250 may follow simplified rules but must still include key identifiers.

If using Amazon’s VAT Calculation Service (VCS), Amazon can issue invoices on your behalf, but you remain responsible for accurate VAT treatment and reconciliation. Note: VCS is primarily designed for B2B sales and requires valid VAT registration in every country where you store inventory. If you use VCS, you are still responsible for ensuring invoices are accurate and match your VAT return.

What Goes Into a UK VAT Return?

Your VAT return should reflect all relevant sales and VAT due for the period in accordance with HMRC rules:

• Box 1: VAT due on sales and other outputs, including reverse charge VAT and postponed import VAT (PIVA).
• Box 4: VAT reclaimed on business purchases (input VAT).
• Box 5: Net VAT payable or reclaimable.
• Box 6: Total value of sales (excluding VAT).

Use Amazon’s VAT Transaction Reports and Settlement Reports to reconcile your figures (see our step-by-step Amazon Payout Reconciliation Guide for a practical walkthrough):

• Output VAT should reconcile with product VAT codes and underlying sales data.
• Input VAT includes reclaimable amounts from Amazon fees, FBA charges, advertising costs, and other eligible business expenses.

Maintain a VAT control account in your accounting software to track these movements.

How to File VAT Returns with Making Tax Digital (MTD)

Since April 2022, most VAT-registered UK businesses are required to comply with HMRC’s Making Tax Digital (MTD) requirements, as outlined in HMRC’s Making Tax Digital for VAT guidance, subject to limited exemptions:

• Keep digital records of all VAT-related transactions.
• Use MTD-compatible software (e.g. Xero, QuickBooks, FreeAgent) to file returns.
• Maintain digital links between all systems (e.g. Amazon → A2X → Xero).

Amazon sellers should integrate tools like A2X or Link My Books to automate transaction posting and ensure MTD compliance. These tools import Amazon data, assign correct VAT codes, and feed directly into accounting platforms.

Failure to comply with MTD can result in penalties and interest. HMRC may challenge or penalise VAT returns submitted via unsupported software or without adequate digital audit trails.

Reclaiming VAT on FBA Fees, Subscriptions, and Expenses

From August 2024, Amazon began charging UK VAT (20 percent) on key services including:

• Referral fees
• FBA fulfilment fees
• Monthly subscription fees
• Storage and advertising costs

These fees are generally standard-rated and input VAT may be recoverable where:

• You are VAT-registered.
• You hold valid VAT invoices.
• Fees relate to taxable business activity.

Use Xero or QuickBooks with integration tools to record:

• Fee category
• Net amount
• VAT rate (20 percent)
• Reclaimable VAT amount

Also track VAT on other business purchases such as inventory, packaging, professional services, and software tools.

Pre-Registration VAT

You may reclaim VAT on certain purchases made before you registered for VAT:

• Goods: Up to 4 years back, if still in stock.
• Services: Within 6 months before registration.

Such reclaims are typically included on the first VAT return following registration and should be supported by appropriate documentation.

Final Notes

As a UK-based Amazon seller, you are generally responsible for charging and reporting VAT on domestic sales. In practice, this usually involves:

• Charging the correct rate of VAT where applicable.
• Issuing compliant VAT invoices where required.
• Claiming input VAT only where permitted under the VAT rules.
• Filing VAT returns through MTD-compatible software where required.
• Maintaining digital records for the required retention period.

Correct VAT treatment protects your margins, keeps you compliant with HMRC, and avoids costly penalties or account suspension.

If in doubt, work with an accountant experienced in Amazon FBA and e-commerce VAT. They can help ensure accurate VAT handling and seamless MTD compliance.

4. Marketplace Facilitator Rules & Deemed Supplier Sales

The UK VAT system includes specific provisions for online marketplaces such as Amazon. These rules allocate VAT collection responsibility to platforms in defined circumstances by treating them as “deemed suppliers” under Schedule 9ZD and Section 5A of the VAT Act 1994. For Amazon FBA sellers, particularly those importing goods or selling cross-border, understanding how these rules apply is important for avoiding double-counting, missed obligations, or compliance issues under Making Tax Digital (MTD).

What Is a “Deemed Supplier” Under UK VAT Law?

A deemed supplier is an online marketplace that is treated as the supplier for VAT purposes, even though it does not own the goods. Under UK VAT law, Amazon may be treated as the deemed supplier in circumstances that include:

• Goods imported into the UK in consignments not exceeding £135 in value where the sale is B2C. Where the sale is B2B and a valid UK VAT registration number is provided and verified at checkout, the reverse charge mechanism may apply under the marketplace rules, in which case Amazon would not account for VAT at the point of sale.
• Goods sold by a non-UK seller where the goods are located in the UK at the time of sale.

Where the statutory conditions for deemed supplier treatment are met, Amazon is responsible for collecting and accounting for the VAT to HMRC..

When Amazon Becomes Responsible for Collecting VAT

Amazon acts as a marketplace facilitator and will collect VAT at checkout for certain transactions, including:

• Sales of imported goods from outside the UK where the consignment value is £135 or less.
• Sales by non-UK sellers where goods are already stored in UK fulfilment centres.

For these transactions:

• Amazon calculates and collects VAT from the customer.
• Amazon accounts for the VAT to HMRC directly.
• The VAT amount is withheld from the seller’s disbursement.

This may reduce administrative burden for the seller, but it does not remove all VAT-related responsibilities.

Understanding the Consignment Thresholds

The consignment thresholds relevant to marketplace VAT facilitation are:

• UK: £135 or less, excluding VAT
• EU: €150 or less for IOSS-eligible imports into the EU from third countries

Sales above the £135 import threshold fall outside the UK import VAT facilitation rules. However, where goods are already stored in the UK by a non-UK seller, Amazon is generally treated as the deemed supplier regardless of value. In these cases, the seller remains responsible for VAT registration and wider compliance obligations, even though Amazon accounts for the VAT on the customer sale.

What You Still Need to Do as the Seller

Even where Amazon collects and remits VAT as the deemed supplier, sellers retain compliance responsibilities, which may include:

• VAT registration where required, including where taxable turnover exceeds £90,000 in any rolling 12-month period or where registration is otherwise mandatory.
• Submission of VAT returns under the MTD regime using compatible software such as Xero or QuickBooks.
• Retention of digital records for all transactions, including those where VAT is collected by Amazon.
• Accurate recording and reconciliation of facilitator sales to ensure correct treatment in Box 1 and Box 6 of the VAT return.

How Amazon Reports Facilitator Transactions

Amazon provides VAT-related reports through Seller Central, typically on a monthly basis. These reports include:

• Transactions where Amazon is treated as the deemed supplier
• VAT collected at checkout
• Disbursements shown net of VAT

These reports are commonly used for:

• MTD-compliant bookkeeping
• Reconciliation within accounting software
• Supporting the distinction between seller-collected VAT and facilitator-collected VAT

MTD Compliance and Software Integration

For Making Tax Digital purposes:

• Transactions where Amazon has collected and accounted for VAT are commonly excluded from Box 1 of the seller’s VAT return, but treatment should reflect the underlying VAT analysis and the seller’s documented accounting policy.
• These sales are commonly included in Box 6 as net sales with a 0 percent or outside-the-scope VAT code, although reporting should follow the seller’s VAT analysis and consistent accounting treatment.
• Maintaining digital links from Amazon reports through to the VAT return is required under MTD where the digital record-keeping rules apply.

The precise treatment should be applied consistently and documented as part of the seller’s VAT process.

Tools to Simplify Compliance

Third-party tools such as A2X, Link My Books, and FreeAgent can assist by:

• Separating facilitator-collected and seller-collected sales
• Splitting fees, reimbursements, and VAT components
• Maintaining digital links between Amazon data and accounting records

Used correctly, these tools reduce the risk of common errors such as double-counting facilitator VAT or omitting facilitator sales from records.

Properly understanding and applying the marketplace facilitator rules is central to VAT compliance for Amazon sellers. While Amazon accounts for VAT in specific scenarios, sellers remain responsible for ensuring transactions are accurately recorded, reconciled, and retained in line with applicable HMRC and Making Tax Digital requirements.

5. How to Record Facilitator Sales in Accounting Software

When Amazon acts as a marketplace facilitator and collects VAT on your behalf, this does not remove the need to record those sales correctly in your accounting records. Under HMRC’s Making Tax Digital rules, UK Amazon sellers, including FBA sellers, are generally required to maintain digital records of VAT-relevant transactions and include them in VAT returns where appropriate. This section explains how facilitator sales are commonly recorded in accounting software, how this supports Making Tax Digital (MTD) compliance, and how tools such as A2X and Link My Books are typically used to automate the process.

Why You Still Need to Record Facilitator Sales

Although Amazon collects and remits VAT on certain transactions under the deemed supplier rules in Section 5A of the VAT Act 1994, sellers will generally need to record the underlying sales in their accounting system to maintain a complete digital audit trail. One reason is compliance with MTD, which requires VAT-relevant transactions to be recorded digitally and linked to the VAT return through compatible software.

Facilitator sales are not excluded from record-keeping requirements solely because Amazon accounts for the VAT. From HMRC’s perspective, the transaction still forms part of the seller’s business activity and should appear in digital records. Where these sales are not recorded at all, the digital audit trail required under MTD may be incomplete, increasing the risk of compliance issues.

Where to Include Facilitator Sales in Your VAT Return

In practice, facilitator sales are commonly treated as follows:

• Commonly excluded from Box 1, because the seller did not collect the VAT and Amazon has accounted for it directly to HMRC, subject to the seller’s documented VAT treatment.
• Commonly included in Box 6 as net sales using a 0 percent or outside-the-scope VAT code, although the precise reporting treatment should reflect the seller’s documented VAT analysis.

HMRC guidance in VAT Notice 700/12 confirms that Box 6 includes the value of zero-rated supplies. This treatment is commonly applied consistently and supported by internal documentation. Where a seller chooses to exclude facilitator sales from Box 6, this should be a deliberate policy decision with a clear rationale and supporting records. Many advisers prefer inclusion to improve transparency and ease reconciliation with Amazon reports.

Box 1 vs Box 6 and When to Exclude

Facilitator sales generally affect the VAT return as follows:

Box 1
Facilitator sales included: No
Reason: The seller did not collect the VAT. Amazon accounted for it directly.

Box 6
Facilitator sales included: Commonly yes, subject to the seller’s VAT reporting approach.
Reason: Reflects the value of sales reported at 0 percent and supports MTD digital link requirements.

Including facilitator sales in Box 1 with a standard rate would overstate VAT due. HMRC may identify this through cross-checks where Amazon has separately reported VAT on the same transactions. Conversely, omitting facilitator sales from Box 6 without supporting documentation may weaken the digital audit trail.

To manage this risk, many accountants document the chosen treatment in a short configuration note and retain it with VAT records for reference during reviews or enquiries.

Using 0 Percent VAT Lines to Maintain Digital Links

Recording facilitator sales using a 0 percent VAT code, such as T0 in Xero or a 0 percent rated code in QuickBooks, is commonly used to preserve the digital link required by MTD. In practice:

• The transaction is posted using a 0 percent VAT code.
• The value feeds into Box 6 but does not generate output VAT in Box 1.
• No manual VAT adjustment is required, which helps maintain the digital link from source data to submission.

This approach creates a traceable path from Amazon transaction data through to the VAT return. Using a no VAT or outside-scope code may, depending on system configuration, exclude the transaction from VAT return totals, which could weaken the digital audit trail if not documented appropriately.

Example scenario:
A non-UK Amazon FBA seller stores goods in a UK fulfilment centre and Amazon acts as the deemed supplier. The seller:

• Records the transaction as a sale to Amazon for £100.
• Applies a 0 percent VAT code.
• Commonly includes the sale in Box 6 but not in Box 1, in line with their documented VAT treatment.
• Retains the digital record, VAT Transaction Report, and settlement documents for six years.

This approach is commonly used to support MTD compliance without overstating VAT liability.

Automating Entries with Tools Like A2X and Link My Books

Tools such as A2X and Link My Books are designed to automate this process by categorising Amazon transactions, applying VAT codes, and posting entries into Xero or QuickBooks.

A2X

• Identifies facilitator sales using marketplace facilitator indicators.
• Requires Amazon VAT Calculation Service to be enabled.
• Allows facilitator sales to be mapped to a dedicated account using a 0 percent VAT code.
• Posts summarised data into Xero or QuickBooks while maintaining digital links.

Link My Books

• Uses Amazon Product Tax Codes to classify transactions.
• Separates facilitator sales from seller-collected sales.
• Automatically applies VAT codes and account mappings.
• Provides guided setup suitable for non-accountants.

Both tools support reconciliation against Amazon settlement reports and help distinguish between VAT collected by Amazon and VAT collected by the seller. If you are evaluating platforms to support MTD and VAT compliance, see our Best Accounting Software for Amazon Sellers (UK) for a detailed comparison of Xero, QuickBooks, and Amazon-specific integrations.

Setup Tips

• Create a separate sales account in your chart of accounts, for example “Amazon Sales Facilitator”.
• Apply a 0 percent VAT code to all facilitator transactions.
• Include references to VAT Transaction Reports or settlement IDs.
• Group transactions by VAT period to simplify reconciliation.

When configured correctly, these tools reduce manual intervention, lower the risk of coding errors, and align VAT treatment with HMRC expectations.

Summary

Recording facilitator sales accurately is an important part of VAT compliance under MTD. Even where Amazon collects and accounts for VAT, in practice many Amazon sellers should:

• Record facilitator sales using 0 percent VAT codes to preserve digital links.
• Many sellers include these sales in Box 6 of the VAT return, subject to their documented VAT reporting approach.
• Exclude them from Box 1.
• Reconcile figures using VAT Transaction Reports and settlement data.

Automation tools such as A2X and Link My Books can simplify this process and support audit readiness when used with appropriate oversight.

6. Cross-Border VAT for Amazon FBA Sellers

Following Brexit, cross-border VAT for Amazon sellers has become more complex. UK-based FBA sellers now need to consider EU VAT schemes, customs declarations, and the UK’s status as a third country under EU VAT law. This section outlines the VAT obligations that typically arise when selling from the UK to EU customers via Amazon, using practical examples and UK accounting terminology.

What Changed After Brexit for Amazon Sellers

When the UK left the EU on 1 January 2021, it became a third country for VAT and customs purposes. As a result, goods moving from the UK to the EU are treated as imports into the EU rather than intra-community supplies.

Key changes include:

• Customs declarations are required for goods shipped from the UK to the EU, together with supporting documentation.
• Import VAT may be payable by either the buyer or the seller, depending on the agreed Incoterms such as DDP or DAP.
• OSS and IOSS schemes now apply differently depending on the seller’s establishment status.
• UK-based sellers in Great Britain may use the Import One Stop Shop for B2C goods shipped from outside the EU with an intrinsic value of €150 or less, subject to appointing an EU-based intermediary.
• UK sellers in Great Britain cannot use the Union OSS scheme for sales of goods unless they are registered for VAT in an EU member state. For consignments over €150, local VAT registration in the destination country will often be required for B2C sales, depending on how the transaction and import arrangements are structured.
• UK sellers established in Northern Ireland may use OSS to report intra-EU B2C sales of goods under the Northern Ireland Protocol.
• Amazon’s Pan-EU and EFN programmes no longer link UK and EU warehouses, meaning stock is generally held separately in the UK and the EU under current programme structures. (For a detailed explanation of how stock location affects VAT exposure, see our Inventory & Cost of Goods Accounting for Amazon guide.)

The €10,000 OSS threshold applies only to EU-established sellers. For consignments under €150, IOSS via an EU intermediary is often used. For consignments exceeding €150, local VAT registration in the destination country is typically required for B2C sales.

OSS vs IOSS and the Practical Difference

OSS applies to intra-EU B2C distance sales where goods are dispatched from one EU member state to a consumer in another. Where goods are stored and sold domestically within the same EU country, OSS does not apply and local VAT registration will usually be required, depending on the seller’s structure and local rules. OSS can only be used for cross-border sales between EU member states.

IOSS applies to B2C distance sales of goods dispatched from outside the EU with an intrinsic value of €150 or less. Intrinsic value generally refers to the value of the goods themselves, excluding shipping and insurance where these are shown separately.

Example:
A UK-based seller dispatching goods from a UK warehouse to a German consumer will generally need to:

• Complete export and import customs formalities.
• Determine who will act as Importer of Record under the agreed Incoterms.
• For consignments with an intrinsic value of €150 or less, consider charging German VAT via IOSS using an EU intermediary where IOSS is adopted.

For consignments exceeding €150, IOSS is not available and local VAT registration in Germany will often be required, depending on how the import and supply are structured.

These rules can affect VAT cash flow, as VAT may be due at the point of sale or at import depending on the structure of the transaction.

When UK-to-EU Sales Are Treated as Imports

Goods crossing the UK-EU border are treated as imports into the EU. This applies to both B2C and B2B transactions.

Conditions that generally result in import treatment include:

• Goods dispatched from the UK.
• The customer being located in an EU member state.
• Delivery taking place within the EU.

From an accounting and VAT perspective, this typically involves:

• A UK export that may be zero-rated for UK VAT, subject to evidence.
• Import VAT and, where applicable, customs duty being assessed in the EU.

Example:
A UK seller ships £500 of goods to a French consumer. As the consignment exceeds €150, IOSS cannot be used. In many cases, local VAT registration in France will be required and the seller will need to account for VAT locally, depending on the import structure and contractual terms.

How Import VAT and Customs Apply to EU Sales

Import VAT is generally calculated on the CIF value, meaning cost, insurance, and freight. It is charged at the VAT rate applicable in the destination country. Import VAT and customs costs should also be reflected correctly in inventory valuation and cost of goods calculations.

Illustrative example for goods shipped to Germany:

• Product value: £1,000
• Shipping: £100
• Insurance: £50
• CIF value: £1,150
• German VAT at 19 percent applied to the import value

Customs compliance usually requires:

• A valid UK EORI number and, where applicable, EU EORI numbers.
• Commercial invoices.
• Correct Harmonised System codes.
• Clear Incoterms that define responsibility for VAT and duty.

In many standard FBA arrangements, Amazon does not act as the Importer of Record, although this depends on the specific fulfilment programme and agreed Incoterms. Sellers typically appoint a customs broker or fiscal representative to manage import formalities.

The €10,000 EU Distance Selling Threshold Explained

From 1 July 2021, the EU introduced a pan-EU distance selling threshold of €10,000 for B2C e-commerce sales.

For EU-established sellers:

• The €10,000 threshold applies across all EU countries combined.
• Once exceeded, VAT is generally charged at the customer’s local rate and reported via OSS or local VAT registrations.

For UK sellers in Great Britain:

• The €10,000 threshold does not apply.
• VAT registration obligations may arise from the first B2C cross-border sale into the EU, depending on how goods are imported and who is responsible for VAT at import and sale. Whether registration is required depends on stock location, import structure, and turnover.
• Options generally include:
• IOSS for consignments of €150 or less, using an EU intermediary.
• Local VAT registration in each destination country for consignments over €150.
• The Union OSS scheme is generally not available to UK-established sellers unless they are registered for VAT in an EU member state.

For Northern Ireland sellers:

• OSS may be used for intra-EU B2C sales of goods under the Northern Ireland Protocol.

These thresholds do not apply to B2B transactions or to situations where goods are stored in EU warehouses, where local VAT registration is usually required from the outset.

Differences Between B2B and B2C VAT Treatment in the EU

B2B sales:

• Often subject to the reverse charge mechanism where the conditions for B2B treatment are met.
• The EU customer generally accounts for VAT in their own return where a valid VAT number is obtained and the reverse charge conditions are satisfied.
• The seller should obtain and verify a valid EU VAT number in order to apply the reverse charge treatment correctly.

B2C sales:

• VAT is normally charged at the point of sale.
• For UK sellers in Great Britain, IOSS may be used for consignments of €150 or less via an EU intermediary. For consignments over €150, local VAT registration is generally required.
• For EU-established sellers, OSS may be used where eligible once thresholds are exceeded.

Example scenarios:

• A UK seller sells a £50 item to a German consumer and charges German VAT via IOSS.
• A UK seller sells a £300 item to a German VAT-registered business and issues a reverse charge invoice with no VAT charged.

Amazon’s VAT Calculation Services and related reports can assist in identifying B2B transactions and applying appropriate VAT treatment, but sellers remain responsible for ensuring the correct classification.

Understanding how cross-border VAT operates post-Brexit is essential for structuring compliant Amazon FBA operations. Incorrect treatment can result in filing errors, VAT assessments, penalties, and delays to shipments.

7. OSS and IOSS Explained for EU B2C Sales

What is the OSS (One Stop Shop) scheme?

The One Stop Shop (OSS) and Import One Stop Shop (IOSS) are EU VAT simplification schemes designed for B2C sales, as described in European Commission guidance. Following Brexit, eligibility differs depending on whether the seller is established within the EU or outside it.

For UK sellers based in Great Britain, IOSS is generally the relevant scheme for distance sales of low value goods dispatched from the UK. OSS is available only where the seller is registered for VAT in an EU member state and the goods are already located within the EU at the time of sale.

Example:
If a UK seller stores goods in an Amazon FBA warehouse in Germany and sells to consumers in France, Spain, and Italy, they will generally need to register for VAT in Germany based on the storage of stock there. Once registered as a German VAT entity, they may use OSS via the German tax authority to report qualifying cross border B2C sales. The German authority then allocates the VAT to the relevant member states.

This requires full German VAT registration and ongoing local compliance. (For more detail on stock-driven VAT registration triggers, see Storing Stock in the EU: When You Must Register Locally.) It is not a standalone OSS registration for UK sellers. In practice, many UK Amazon FBA sellers rely on IOSS for simpler cross border compliance where goods are dispatched from the UK and consignments fall within the value limits. OSS applies only to B2C transactions where goods are located in the EU and the seller is VAT registered in an EU country.

What is the IOSS (Import One Stop Shop) scheme?

The Import One Stop Shop (IOSS) is an EU VAT scheme for B2C sales of low value goods with an intrinsic value of €150 or less, shipped from outside the EU into the EU. For UK sellers, this typically means goods dispatched directly from the UK to EU consumers.

IOSS allows VAT to be charged at the point of sale, which can reduce delivery delays and unexpected charges for customers. Under current EU rules, UK sellers are generally required to appoint an EU-established intermediary to register for and operate IOSS on their behalf. The intermediary submits monthly IOSS returns to the relevant EU tax authority.

IOSS applies only to B2C consignments of €150 or less. It cannot be used for higher value consignments or for B2B sales, which are generally subject to reverse charge or local VAT rules.

When to use OSS vs IOSS as an Amazon seller

For UK sellers, the appropriate scheme depends primarily on stock location and consignment value.

IOSS is typically relevant where:

• Goods are located outside the EU, such as in the UK, and shipped directly to EU consumers
• The intrinsic value of each consignment does not exceed €150
• An EU based intermediary has been appointed to manage IOSS registration and filing

IOSS applies only to goods shipped from outside the EU. If goods are stored in any EU country, including through Amazon FBA, IOSS cannot be used for those domestic EU supplies and local VAT registration will usually be required based on stock ownership and supply arrangements.

Local VAT registration will often need to be considered where:

• Goods exceed €150 in intrinsic value and are shipped from the UK
• Goods are stored in an EU warehouse
• B2B sales are made, which are generally subject to reverse charge rather than OSS or IOSS

OSS is typically relevant where:

• The seller is registered for VAT in an EU member state
• Goods are already located within the EU
• Sales are cross border B2C supplies between EU member states

Operating both simultaneously:
A UK Amazon seller may use IOSS for qualifying orders shipped from the UK and maintain local VAT registrations for goods stored within the EU. Using OSS as a UK seller generally requires establishing VAT registration in at least one EU member state first.

OSS and IOSS eligibility and thresholds explained

For EU established sellers:
The OSS threshold of €10,000 applies across all EU member states combined. Once exceeded, VAT is generally required to be charged at the customer’s local rate and reported via OSS or, where applicable, local VAT registrations. This threshold includes cross border sales across all platforms.

For UK sellers based in Great Britain:

• The €10,000 threshold does not apply.
• VAT obligations in the EU generally arise from the first B2C cross border sale. Options typically include:
• IOSS for consignments of €150 or less using an EU intermediary
• Local VAT registration in the destination country for consignments exceeding €150

For IOSS:
Eligibility is tied strictly to the intrinsic value of each consignment. Intrinsic value excludes shipping and insurance where these are separately itemised. Orders exceeding €150 fall outside IOSS and are generally accounted for under local VAT and import rules, depending on the structure of the transaction.

How Amazon handles VAT under these schemes

Amazon may act as a deemed supplier for certain EU transactions. Where Amazon is the deemed supplier, it collects and remits VAT to the relevant EU tax authority and the seller does not report VAT on those specific transactions.

This typically applies where:

• Goods are dispatched from outside the EU and have an intrinsic value of €150 or less
• Amazon applies marketplace VAT collection under EU deemed supplier rules

UK sellers storing goods in EU warehouses should not assume Amazon will act as the deemed supplier. In these cases, the seller usually remains responsible for VAT registration, reporting, and payment.

Sellers can identify Amazon collected VAT transactions using the Amazon VAT Transaction Report in Seller Central. Transactions marked as seller responsibility no indicate Amazon has accounted for the VAT.

These transactions are commonly excluded from the seller’s own VAT returns to avoid double reporting, subject to the seller’s documented VAT treatment and local guidance.

Do I still need to register for VAT in EU countries?

In many cases, yes. OSS and IOSS do not remove the requirement for local VAT registration where goods are physically stored in an EU member state.

Local VAT registration is generally required where:

• Inventory is stored in any EU country, including under Amazon Pan EU FBA
• Third party logistics providers hold stock within the EU
• Amazon transfers stock between EU warehouses for fulfilment

Physical presence of goods in an EU country will often create a VAT registration obligation under local law, irrespective of whether OSS or IOSS is used.

In these cases:

• VAT registration is typically required in the relevant country
• Local VAT returns will normally need to be filed
• OSS may be used for qualifying cross border B2C sales once established
• IOSS cannot be used for goods stored within the EU

Failure to register where goods are stored may result in backdated VAT assessments, penalties, or marketplace compliance action depending on the jurisdiction. In some jurisdictions, additional sanctions may apply.

Summary: OSS vs IOSS for UK Amazon sellers

For many UK Amazon sellers, IOSS provides a practical route for low value consignments dispatched from the UK. OSS generally requires prior EU VAT registration and is more commonly used by sellers with established EU warehousing operations.

Regardless of the scheme used, compliant operation depends on:

• Accurate identification of stock location and consignment value
• Clear separation of Amazon collected VAT and seller accounted VAT. (See How to Record Facilitator Sales in Accounting Software for practical recording examples.)
• Consistent reconciliation using Amazon VAT reports
• Regular review of cross border activity
• Professional support where multi country VAT obligations arise

Selecting the wrong scheme or applying it incorrectly can result in VAT errors, penalties, and operational disruption.

8. Storing Stock in the EU: When Local VAT Registration is Usually Required

For UK based Amazon sellers using Fulfilment by Amazon (FBA) in Europe, storing inventory in EU warehouses will usually create VAT obligations, even where no sales are made from those countries, depending on local law and ownership arrangements. This section explains how Amazon’s Pan EU FBA programme operates, how warehouse location drives VAT registration requirements, and how sellers can remain compliant when stock is moved automatically across borders.

What Is Pan EU Fulfilment and How Does It Work?

Pan European FBA (Pan EU) is Amazon’s cross border inventory distribution programme. It allows sellers to send inventory to one EU fulfilment centre, after which Amazon redistributes stock across other EU warehouses based on operational demand.

How it works:

1. The seller ships inventory to an Amazon warehouse within the EU, commonly Germany or France.
2. Amazon determines where to hold inventory using sales history, customer location, and operational factors.
3. Goods may be redistributed across multiple EU countries.
4. Customer orders are fulfilled locally from the nearest warehouse.

Countries included in Pan EU FBA:

Mandatory markets:

• Germany
• France
• Italy
• Spain
• Netherlands

Optional additional markets:

• Poland
• Sweden
• Belgium
• Ireland

Important: As of 25 June 2025, the Netherlands became a mandatory market for Pan EU sellers. Sellers who do not maintain active listings in all mandatory countries may lose local fulfilment benefits and revert to higher cross border fulfilment fees. Fee increases vary by route and product category.

Following Brexit, the UK is excluded from Pan EU. UK sellers are required to ship inventory separately to EU warehouses, as UK and EU inventory pools are no longer linked.

When Storing Inventory in the EU Triggers Local VAT Obligations

Under EU VAT principles, holding stock in a country generally creates a taxable presence. This will often result in a requirement to register for VAT in each country where inventory is stored, depending on the supply chain structure and local rules.

Key principles:

• Physical storage of goods in a country usually creates a VAT registration obligation.
• In many cases, registration is expected from the point storage begins, although timing requirements vary by jurisdiction.
• The €10,000 EU distance selling threshold does not apply to inventory storage. For how storage interacts with OSS and IOSS reporting, see OSS and IOSS Explained for EU B2C Sales.

Example:
A UK Amazon seller sends 1,000 units to a warehouse in Poland. The presence of stock in Poland normally requires Polish VAT registration. In practice, Amazon FBA arrangements will usually trigger registration. Certain consignment or call off stock arrangements may offer limited exceptions under local law, but these are fact specific and require local advice.

Potential consequences of non compliance:

• Late registration penalties
• Backdated VAT assessments
• Interest on unpaid VAT
• Marketplace enforcement action in serious cases

Countries Where VAT Registration Is Usually Required

Sellers using Pan EU FBA will often need to consider VAT registration in each country where Amazon stores their inventory, depending on stock ownership arrangements and local VAT rules.

Typical timelines and costs vary by country and are indicative only:

Germany
• Registration time: 4 to 8 weeks
• VAT rate: 19 percent
• Fiscal representative: Not usually required
• Typical annual compliance cost: €600 to €1,500

France
• Registration time: 12 to 16 weeks
• VAT rate: 20 percent
• Fiscal representative: Often required
• Typical annual compliance cost: €1,000 to €2,500

Italy
• Registration time: 1 to 2 weeks
• VAT rate: 22 percent
• Fiscal representative: Not usually required
• Typical annual compliance cost: €500 to €1,200

Poland
• Registration time: 5 to 8 weeks
• VAT rate: 23 percent
• Fiscal representative: Not usually required
• Typical annual compliance cost: €700 to €1,500

Netherlands
• Registration time: 6 to 8 weeks
• VAT rate: 21 percent
• Fiscal representative: Not usually required
• Typical annual compliance cost: €600 to €1,400

Belgium
• Registration time: 8 to 16 weeks
• VAT rate: 21 percent
• Fiscal representative: Often required
• Typical annual compliance cost: €800 to €1,800

Sweden
• Registration time: 8 to 12 weeks
• VAT rate: 25 percent
• Fiscal representative: Not usually required
• Typical annual compliance cost: €600 to €1,300

Ireland
• Registration time: Up to 20 weeks
• VAT rate: 23 percent
• Fiscal representative: Not usually required
• Typical annual compliance cost: €500 to €1,200

Fiscal representation requirements depend on local law and the seller’s establishment status. France and Belgium commonly require fiscal representatives for non EU sellers.

EU VAT Filing Alongside OSS

Sellers participating in Pan EU FBA typically have dual filing obligations.

• Local VAT returns will generally be required in each country where stock is stored, subject to local law and the seller’s registration status. These cover domestic sales and stock movements.
• OSS returns are used for qualifying cross border B2C sales between EU member states, once the seller is established for VAT in an EU country.

Each transaction should be reported in accordance with the applicable VAT rules and the seller’s documented VAT treatment.

Example:

• A sale from a German warehouse to a French customer is reported via OSS.
• A sale from a German warehouse to a German customer is reported on the German VAT return.

How to Track Stock Movements Between EU Countries

Amazon provides limited visibility over internal stock transfers. Sellers should regularly review:

• FBA Inventory Reports showing stock by country
• VAT Transaction Reports identifying fulfilment location
• Commingling VAT reports where inventory pooling is used

When Amazon transfers stock between EU countries, sellers will often need to:

• Report a zero rated intra EU dispatch in the origin country
• Report an intra EU acquisition in the destination country
• Include movements in Intrastat declarations where thresholds apply

These stock movements also affect inventory valuation and cost of goods calculations. See Inventory & Cost of Goods Accounting for Amazon for the accounting treatment. Failure to record intra EU movements correctly is a common source of VAT adjustments and audit exposure.

EORI Numbers and Customs Requirements

UK sellers will general need:

• A UK EORI number to export goods from the UK
• Local EORI numbers in EU countries where inventory is stored, typically issued as part of VAT registration

In some jurisdictions, including France and Belgium, a fiscal representative may also be required for customs processes.

Amazon’s Customs Clearance and Shipping Services can assist with customs declarations when shipping stock to EU warehouses. These services do not remove the requirement for VAT registration or ongoing VAT compliance in countries where goods are stored.

Proceeding without valid EORI numbers can result in shipment delays, customs penalties, or inventory being held at the border.

Storing inventory in the EU under Amazon’s Pan EU FBA programme creates immediate VAT registration and reporting obligations. Sellers should ensure they understand where their goods are held, consider registration before stock arrives where appropriate, and maintain accurate records to meet compliance responsibilities.

10. Common Mistakes Amazon FBA Sellers Make with VAT

Selling on Amazon as a UK-based FBA seller involves a complex VAT framework that is frequently misunderstood. Errors around Amazon’s marketplace facilitator role, VAT registration timing, and sales recording can lead to underdeclared VAT, backdated liabilities, penalties, or enquiries. This section outlines common VAT mistakes seen in practice and explains why they matter.

Mistaking Amazon’s Role: It Does Not Handle All VAT

A common misconception is that Amazon handles VAT in all circumstances. While Amazon does collect and remit VAT in certain scenarios under the marketplace facilitator rules, many transactions remain the seller’s responsibility.

Amazon is treated as the deemed supplier only where the statutory conditions are met; in practice this depends on factors such as where the goods are located, whether the sale is B2C or B2B, and whether the £135 import rules apply.

Commonly relevant factors:

• The sale is B2C
• The consignment value does not exceed £135
• The goods are outside the UK at the point of sale and imported in a qualifying consignment
• The seller is not UK-established
• The customer is not VAT-registered

Where these conditions apply, Amazon accounts for the VAT to HMRC.

Where the deemed-supplier conditions do not apply, the VAT responsibility will often sit with the seller, subject to the specific facts of the supply. This includes situations where:

• The seller is UK-established
• The sale is B2B
• The consignment value exceeds £135
• Goods are already located in the UK
• The seller fulfils orders directly

Example:
A US-based seller sells a £200 item to a UK consumer; depending on where the goods are located at the time of sale and whether the online marketplace rules apply, VAT may be accounted for by Amazon as deemed supplier or by the seller under their own VAT registration.

Misunderstanding Amazon’s role can lead to:

• VAT being underdeclared from the correct registration date
• Late registration penalties based on the period of delay
• Statutory interest on unpaid VAT
• Increased scrutiny where discrepancies are identified
• Potential account restrictions imposed by Amazon in some circumstances

Missing the VAT Threshold Due to Multi-Channel Turnover

Another common error is assessing VAT registration solely by reference to Amazon sales.

The UK VAT threshold applies to total taxable turnover across all channels over a rolling 12-month period. This includes:

• Amazon sales
• Shopify, eBay, Etsy, and other platforms
• Direct website sales
• B2C and B2B taxable supplies
• Zero-rated and reduced-rated sales
• Shipping and handling charges

Items not counted include:

• Refunds and returns (to the extent they reduce taxable turnover for the period)
• Capital asset disposals
• Certain supplies outside the scope of UK VAT

Example:
A seller with £60,000 of Amazon sales and £35,000 of Shopify sales in a rolling 12-month period exceeds the VAT threshold and would normally be required to register, subject to HMRC’s detailed rules.

Failure to aggregate turnover across channels often results in late registration. Late registration can lead to:

• VAT becoming payable from an earlier effective date
• Penalties calculated by reference to the unpaid VAT
• Interest accruing from the original due date

Incorrectly Excluding Amazon Facilitator Sales

Where Amazon collects VAT as the deemed supplier, sellers still need to record those sales correctly in their accounting records.

Facilitator sales are generally:

• Excluded from Box 1 of the VAT return, as the seller did not collect VAT
• Often included in Box 6 as part of total sales value, depending on the seller’s documented VAT reporting approach and software configuration

If facilitator sales are omitted entirely:

• Turnover may be understated for Corporation Tax purposes
• VAT return figures may not reconcile to Amazon data
• Digital record-keeping requirements under MTD may not be met

Common compliant treatment:

• Record the gross sale value using a 0 percent VAT code
• Ensure Amazon-collected VAT does not appear in Box 1
• Reconcile settlements so gross sales, VAT, fees, and payouts align

Tools such as A2X or Link My Books are commonly used to automate this treatment and preserve digital links.

Failing to Register for OSS or IOSS in Time

For EU B2C sales, UK-based sellers do not benefit from the EU €10,000 distance selling threshold.

UK sellers may need to register for VAT locally in EU countries (for example where stock is held) or consider IOSS for qualifying consignments not exceeding €150, depending on how goods are supplied and imported.

OSS registration applies only once a seller is established for VAT in an EU member state.

Late or incorrect registration can result in:

• VAT becoming payable through local registrations
• Inability to include earlier sales in OSS or IOSS returns
• Additional compliance and filing obligations

Example:
Where OSS registration is approved after sales have already taken place, those earlier sales will usually need to be reported via local VAT registrations rather than OSS.

Poor Reconciliation Between Amazon and Accounting Records

Inadequate reconciliation between Amazon data and accounting software is a frequent source of errors.

Common issues include:

• Posting Amazon payouts as revenue
• Double-counting VAT collected by Amazon
• Differences between reported sales and bank deposits
• Misclassification of fees or reimbursements

Best practice includes:

• Reviewing Amazon VAT Transaction Reports regularly
• Reconciling gross sales, VAT, fees, and payouts
• Separating facilitator and seller-collected transactions
• Using settlement-based posting rather than bank-feed sales

Persistent reconciliation issues often attract HMRC attention, particularly where VAT return totals cannot be explained clearly.

Audit Risk Indicators for Amazon Sellers

Certain patterns are more likely to lead to queries, including:

• Box 6 totals that do not align with platform data
• Repeated late VAT returns
• Unexplained variances between sales and payouts
• Missing OSS or IOSS registrations
• Inconsistent VAT treatment across periods

Mitigation steps include:

• Maintaining complete digital records
• Reconciling platform data on a regular basis
• Registering for VAT and EU schemes when required
• Using software with appropriate VAT mappings
• Seeking advice from an accountant experienced in e-commerce VAT

Avoiding these mistakes is not only about technical compliance. It reduces exposure to backdated assessments, penalties, and operational disruption as sales volumes and geographic reach increase. For a broader overview of how VAT fits into your overall Amazon accounting system, see the Amazon Seller Accounting – Complete Guide.