Overview

Following the United Kingdom's departure from the European Union and the subsequent overhaul of VAT regulations across both jurisdictions, Amazon sellers face a significantly changed tax landscape. New rules that took effect in 2021 determine when Amazon collects and remits VAT on behalf of sellers, and when sellers remain directly responsible. Understanding these rules is essential for any merchant selling to customers in the UK or EU through Amazon's marketplace.

Key Points / What Sellers Need to Know

• UK VAT changes took effect January 1, 2021 - When the UK formally left the EU's VAT framework, a new set of domestic e-commerce VAT rules replaced the previous EU-aligned system, directly affecting how tax is handled on sales to UK buyers.
• Amazon now collects UK VAT on certain transactions - For goods shipped from outside the UK to UK customers in consignments valued at or below £135, Amazon is responsible for collecting and remitting VAT at the point of sale rather than at the border.
• EU VAT reforms launched July 1, 2021 - The EU introduced its own e-commerce VAT package, which changed how VAT is collected on cross-border sales to consumers across all EU member states.
• €150 threshold for imports into the EU - Amazon collects VAT on goods delivered from inventory stored outside the EU to B2C customers when the shipment's intrinsic value does not exceed €150.
• Non-EU sellers with EU inventory face automatic collection - When goods of any value are delivered from inventory stored within the EU and the seller is not established in the EU, Amazon collects VAT on those transactions.
• Sellers must review their VAT obligations - Depending on where inventory is stored, where customers are located, and whether the seller is established in the UK or EU, different rules and responsibilities apply.

How the UK VAT Rules Work

Since January 1, 2021, the UK has treated online marketplaces like Amazon as the deemed supplier for VAT purposes in specific scenarios. When overseas sellers ship goods to UK consumers in consignments worth £135 or less, Amazon calculates, collects, and remits VAT directly to HM Revenue and Customs. For shipments exceeding this threshold, the existing import VAT rules still apply, meaning the buyer or their customs agent typically handles the duty and VAT at the border. Sellers who store goods within the UK and are registered for UK VAT continue to be responsible for their own VAT accounting on domestic sales. The key change is that Amazon's role as a deemed supplier has shifted much of the compliance burden to the platform itself for low-value imports, simplifying the process for many overseas merchants.