This is general information, not tax advice. VAT rules depend on where your business is established, where your stock is held, who you sell to and how you sell. They also change. Before you register, list products or file a return, talk to an accountant who works with marketplace sellers.
If you sell on Amazon.co.uk or Amazon.de, VAT touches every price you set and every margin you calculate. You don't need to become a tax expert. You do need to understand the main ideas well enough to plan your numbers and ask your accountant the right questions. This guide covers them in plain English.
What VAT is
VAT (value added tax) is a tax on consumer spending. Each VAT-registered business charges VAT on its sales (output VAT) and reclaims the VAT it pays on business purchases (input VAT). It pays the difference to the tax authority, usually through a regular VAT return. The final consumer can't reclaim it, so they carry the cost.
For a seller, that means two things:
- The VAT in your selling price is not your money.
- The VAT you pay on stock and services can usually be reclaimed if you are registered.
Prices include VAT
In the UK and the EU, prices for consumers are shown including VAT. The standard rate is 20% in the UK and 19% in Germany. Some products have a reduced or zero rate, such as children's clothing in the UK or books in Germany, so check the rate for your product.
To find the VAT inside a price: VAT = price × rate ÷ (100 + rate). At 20%, that is one-sixth of the price.
| UK | Germany | |
|---|---|---|
| Price on Amazon | £19.99 | €19.99 |
| VAT rate | 20% | 19% |
| VAT in the price | £3.33 | €3.19 |
| Price excluding VAT | £16.66 | €16.80 |
Always calculate your margin on the price excluding VAT. Our Amazon FBA profit guide shows where VAT fits into profit per unit.
The US works differently. There is no VAT. States charge sales tax at checkout, and in states with marketplace facilitator laws, Amazon collects and pays it for you.
When you need to register
This is where your own circumstances matter most. In general:
- Businesses established in the UK must register for UK VAT once their taxable turnover goes over the registration threshold, and can register voluntarily below it. Check the current threshold on GOV.UK.
- Businesses established in Germany charge VAT unless they qualify for the small-business scheme (Kleinunternehmerregelung), which has its own turnover limits.
- Sellers established outside the country are treated differently. A business not established in the UK usually gets no threshold: it must register as soon as it makes taxable sales there, for example by selling stock held in the UK. In the EU, sellers established elsewhere generally can't use the local small-business scheme either, so they often need to register from their first sale.
- Storing stock in a country usually means you need a VAT registration there. If you use Amazon FBA in Germany, or a programme that spreads your stock across several EU countries, you will usually need a VAT number in each country where your goods are stored. Moving your own stock from one country to another also has to be reported for VAT.
Some EU countries require businesses from outside the EU to appoint a fiscal representative. Amazon also asks for your VAT details in Seller Central, and it can restrict your listings when a required registration is missing.
Marketplace rules: when Amazon collects the VAT
In some cases the law treats the marketplace as the seller for VAT purposes. This is called the deemed-supplier rule. The marketplace then charges and pays the VAT on the sale to the consumer. The main cases are:
- UK: sales to UK consumers by sellers established outside the UK when the goods are already in the UK, and imported consignments worth up to £135.
- EU: sales to EU consumers by sellers established outside the EU when the goods are already in the EU, and imported consignments worth up to €150.
Even then, you may still need your own registration, for example to import stock, to reclaim import VAT, or for sales the rule doesn't cover. The deemed-supplier rule changes who pays the VAT on the sale. It doesn't always mean you have nothing to file.
The EU One-Stop Shop (OSS)
When you ship from stock in one EU country to consumers in another EU country, that is a distance sale. Above a low EU-wide threshold, which doesn't apply to every seller, VAT on distance sales is due in the customer's country at that country's rate.
Without OSS, you would need to register in every country you ship to. The One-Stop Shop lets you declare and pay that VAT through a single quarterly return in one EU country.
Two limits to know:
- OSS covers sales to consumers, not sales to businesses.
- OSS doesn't cover goods you store in a country. Selling from a warehouse in Germany to a German customer is a domestic sale, and storing stock in Germany normally needs a German registration.
There is also an Import One-Stop Shop (IOSS) for low-value goods sent to EU consumers from outside the EU.
VAT on imports
When goods enter the UK or the EU, import VAT is charged at the border, usually on the customs value plus duty. If you are VAT-registered and import goods for your taxable sales, you can usually reclaim it as input VAT.
Practical points:
- Postponed VAT accounting. In the UK, many registered importers declare and reclaim import VAT on the same return instead of paying it at the border. Some EU countries have similar schemes.
- Import in the right name. Generally only the importer can reclaim import VAT. Make sure your business is the importer and your forwarder uses your registration details. If a supplier ships delivered duty paid and pays the VAT itself, you may not be able to reclaim it.
- Keep the evidence. In the UK, that is usually your monthly postponed VAT statement or an import VAT certificate (C79).
Until you reclaim it, import VAT ties up cash, which matters on a large first order. Our guide to landed cost shows where it fits in your product's cost.
A simple VAT return example
Here is a UK-registered seller's quarter, simplified and illustrative only:
| Line | Amount |
|---|---|
| Sales including VAT | £12,000.00 |
| Output VAT (one-sixth of sales) | £2,000.00 |
| Import VAT paid on stock (reclaimable) | −£600.00 |
| VAT on fees, software and services (reclaimable) | −£350.00 |
| VAT to pay for the quarter | £1,050.00 |
The £2,000.00 of output VAT was never part of your revenue. A seller who treats the full £12,000.00 as income gets a surprise bill at the end of the quarter. How VAT appears on Amazon's own fee invoices depends on where you are established, so ask your accountant how to treat them.
A checklist before you sell
- Write down where your stock will be held and where your customers are.
- Ask an accountant which registrations you need, and get them before your first sale where required.
- Add your VAT details in Seller Central.
- Set prices on a VAT-exclusive basis, then add VAT. Our guide on how to price a product shows how.
- Set aside the VAT you collect, so the return doesn't drain your cash.
- Keep import documents and fee invoices for your returns.
Where Ecomtoro fits
Ecomtoro removes VAT from UK and German prices at the standard rate before it calculates profit per unit, net margin, ROI and break-even ROAS for Amazon FBA, Shopify and TikTok Shop, and it adds import duty to your landed cost. Its numbers assume you are VAT-registered and reclaim import VAT. It does not register you for VAT, file returns or give tax advice; that is your accountant's job.
Frequently asked questions
Do I need a VAT number to sell on Amazon UK or Amazon Germany?
Often, yes. Sellers established outside the country, and anyone storing stock there, usually need to register from their first sale, while local businesses register above a turnover threshold. An accountant can confirm what applies to you.
Does Amazon pay the VAT for me?
In some cases. Under the deemed-supplier rules, Amazon charges and pays the VAT on certain sales, mainly by sellers established outside the UK or EU and on low-value imports. In other cases you charge and pay the VAT yourself.
Can I reclaim import VAT?
Usually, if you are VAT-registered, your business is the importer and the goods are for your taxable sales. Keep your postponed VAT statements or import VAT certificates as evidence.
What is the EU One-Stop Shop?
An EU scheme that lets you declare VAT on distance sales to consumers in other EU countries through one return in a single EU country, instead of registering in each. It doesn't cover goods you store in other countries.
