Amazon FBA Fees in the UK: Understanding and Reclaiming VAT for Non-UK Sellers
Starting August 1, 2024, Amazon made major changes to how it charges VAT (Value Added Tax) on Fulfillment by Amazon (FBA) fees in the UK. These changes especially affect non-UK sellers who use Amazon’s UK FBA services.
If you’re registered for VAT in the UK—or considering it—it’s essential to understand how these updated rules impact your business and how to properly reclaim input VAT on Amazon’s service fees.
Amazon FBA Fees 2025
As of August 1, 2024, Amazon UK applies 20% VAT to all fees it charges sellers, including referral fees, FBA fulfillment fees, storage fees, and more. This change is the result of Amazon EU S.à r.l.’s UK branch becoming responsible for invoicing, which requires VAT to be added to invoices issued to UK-based services.
Before this change, Amazon often used the reverse charge mechanism, meaning no VAT was applied if you provided a valid UK VAT number. However, with the updated system, all fees are now subject to VAT upfront, regardless of whether you’re based in the UK or not.
How to Reclaim VAT on Amazon Fees if You're UK VAT-Registered
If your business is registered for VAT in the UK, the VAT Amazon charges on its seller fees can be reclaimed as input tax on your VAT return. For example, if you’re billed £100 plus £20 VAT for fulfillment services, you would record the £100 as a business expense and reclaim the £20 as input VAT.
To support your VAT reclaim, keep digital copies of all Amazon VAT invoices, which you can download from your Seller Central account. If your business is registered for VAT in the UK, you’re eligible to recover the VAT incurred on Amazon fees via your VAT return.
However, if you’re not VAT-registered (such as a small or low-volume seller), you can’t reclaim this VAT. In that case, Amazon’s fees effectively cost 20% more, impacting your profit margin.
Previous VAT Treatment: Reverse Charge Before August 2024
Before these changes, UK VAT-registered sellers were typically not charged VAT on Amazon invoices if they provided a valid VAT number. Instead, they accounted for VAT under the reverse charge mechanism, meaning they reported both the input and output VAT on their return—resulting in a neutral effect when selling VATable goods to VAT-registered customers.
With VAT now charged upfront, the reverse charge no longer applies to Amazon’s fees. Instead, VAT is reclaimed in the usual way by including it as input VAT on your VAT return.
What About Other Online Marketplace Fees?
This change isn’t limited to Amazon. Other online marketplaces like eBay and Etsy also charge UK VAT (typically 20%) on their seller fees. These fees are similarly reclaimable as input tax if you’re VAT-registered.
Also, don’t forget to account for VAT on subscription services like the Amazon Professional Selling Plan, which also includes 20% VAT. Collect and store VAT invoices for all online marketplace and platform fees to ensure accurate VAT reporting.
Best Practices for Tracking and Reclaiming VAT
To make the VAT recovery process easier and more efficient:
- Set up separate expense categories in your accounting software (e.g., Xero, QuickBooks) for Amazon fees.
- Apply the right tax codes—mark these expenses as VAT-reclaimable so the software properly tracks VAT for reporting.
- Use automation tools which integrate with Amazon to import transactions and VAT details into your books.
When preparing your VAT return, include the total reclaimable VAT on fees in Box 4 (input tax). If any reverse charge transactions apply (for services from non-UK suppliers), include those in Box 1 (output tax) as needed.
Final Thoughts: Be Proactive About VAT Compliance
With Amazon now applying UK VAT to all seller fees, non-UK sellers must pay close attention to their VAT compliance and recovery processes. If you’re VAT-registered in the UK, you can reclaim the VAT charged on these fees—but only if your bookkeeping is accurate and you retain the proper documentation. If you’re not VAT-registered, consider whether registering could help reduce your overall costs—especially if your FBA-related fees are significant.
Prasun
Prasun Shrestha, a Chartered Accountant, specialises in property accounting, taxation, and financial management for UK clients. He conducts detailed tax research at UK Property Accountants and encourages collaboration to deliver exceptional client outcomes.