Complete Guide for Reclaiming VAT on Amazon Seller Fees

Selling on Amazon can be a highly profitable venture for UK businesses, but it comes with its own set of financial and tax responsibilities. If your business is VAT-registered, one question often arises: can you reclaim the VAT charged on Amazon seller fees? The answer is yes—but understanding how to do it correctly can be more complicated than it initially seems. From subscription fees to fulfillment charges, VAT can be hidden in different components of your seller account, and reclaiming VAT properly requires careful attention to invoices, records, and VAT compliance.

This article will walk you through everything you need to know about VAT on Amazon seller fees in 2025. We’ll explain how VAT is applied, what qualifies for reclaim, common challenges to watch for, and how Sterling & Wells can help you maximise your VAT recovery while staying fully compliant.

Understanding VAT on Amazon Seller Fees

VAT, or Value Added Tax, is a tax on consumption applied to most goods and services in the UK. As a VAT-registered business, you collect VAT on sales and can reclaim VAT paid on business expenses. Amazon, as a platform, charges sellers for a range of services, and many of these fees are subject to VAT.

Since 1 August 2024, Amazon has simplified its approach for UK-based sellers by applying the standard 20% VAT directly on applicable seller fees. This change replaced the previous complexity where many fees were billed through Amazon’s Luxembourg entity, often requiring sellers to apply the reverse charge mechanism themselves on their VAT returns. Now, UK VAT-registered sellers can see the VAT charged directly on invoices, making it easier to reclaim as input tax, provided all the proper documentation and compliance steps are followed.

Understanding exactly which fees include VAT is essential. Without this knowledge, you might miss legitimate input tax claims or make errors on your VAT returns, potentially triggering HMRC queries or delays in reclaiming money you are entitled to.

Which Amazon Fees Include VAT?

Not all Amazon fees are subject to VAT, and knowing which ones are recoverable is crucial for accurate accounting. Fees typically charged with VAT include Fulfillment by Amazon (FBA) fees, merchant seller fees, subscription fees such as selling plans, and shipping charges billed by Amazon.

For example, if you use FBA to store and ship your products, Amazon will charge fees for storage, order handling, and fulfillment. On these fees, the 20% VAT can usually be reclaimed as input tax. Similarly, monthly subscription fees for professional seller plans or other optional services, as well as shipping costs charged by Amazon directly, are generally subject to VAT.

By reclaiming this VAT, your business effectively reduces the cost of selling on Amazon, improving cash flow and freeing up capital that can be reinvested into inventory, marketing, or other operational needs.

Why Reclaiming VAT Matters for Your Business

Reclaiming VAT on seller fees is more than just a compliance exercise—it directly impacts your bottom line and cash flow. Every pound of VAT reclaimed represents money you have already paid but can recover from HMRC. Failing to reclaim this VAT means leaving money on the table, effectively subsidising your business platform costs.

Additionally, reclaiming VAT keeps your accounts accurate and up-to-date. HMRC increasingly scrutinises VAT returns in the e-commerce sector, particularly for Amazon sellers who may operate cross-border. Ensuring that input VAT is properly recorded and reclaimed protects your business against errors, late payment surcharges, or potential audits.

Essentials for Reclaiming VAT on Amazon Fees

To reclaim VAT legitimately, there are several key requirements your business must meet.

First, you must be VAT-registered. In the UK, registration is mandatory when taxable turnover exceeds £90,000 in a rolling 12-month period. Businesses with turnover below this threshold can also register voluntarily, particularly if input VAT is expected to be significant. Ensuring that your VAT registration number is correctly entered in your Amazon Seller Central account is critical so that invoices reflect the VAT charged properly.

Second, you need valid VAT invoices. Amazon provides VAT invoices through Seller Central under the “Tax Document Library” section. It is essential to download and securely store these invoices, as the amount of VAT you reclaim must exactly correspond to the figures on the documented invoices.

Third, maintaining accurate bookkeeping is vital. Your accounting records must match your invoices and VAT returns. This is particularly important when integrating sales data from Amazon, as manual entry errors can easily occur. Using a proper accounting software combined with the right automation tool, ensures that transactions are categorised correctly, VAT is recorded accurately, and reconciliations are smooth.

Finally, VAT reclaims must be included on your VAT returns. Input VAT from Amazon fees reduces your total VAT liability to HMRC and can generate a refund if input VAT exceeds output VAT collected. Filing returns with accuracy and consistency is therefore crucial to maximise reclaim potential and remain compliant.

The Process of Reclaiming VAT on Amazon Fees

Reclaiming VAT on Amazon fees is straightforward once you follow the correct process. Start by regularly checking and downloading VAT invoices from your Seller Central account. Confirm that your VAT registration number is correctly recorded and that Amazon is charging VAT as required.

Next, accurately record the VAT charged on your fees as input VAT in your accounting system. This includes all applicable charges such as FBA fees, subscription plans, and shipping fees. When it comes time to file your VAT return, include these amounts under input VAT, ensuring that the totals match your invoices and supporting documentation.

For sellers operating in multiple countries, especially across the EU, the process can become more complex due to differing VAT rules. Businesses may need to register for VAT in other jurisdictions and follow additional reclaim procedures. Expert guidance from Sterling & Wells can help navigate these multi-jurisdictional requirements, reducing compliance risks and simplifying reporting.

Common Challenges & How to Avoid Them

Many Amazon sellers encounter issues when reclaiming VAT. Missing or incomplete invoices, incorrect VAT numbers, and errors in VAT return filings are among the most common problems. Additionally, the complexity of cross-border VAT rules can create confusion, particularly for sellers operating in multiple countries.

By working with experts like Sterling & Wells, you can proactively address these challenges. Our team reviews your VAT setup, ensures documentation is complete and accurate, and helps you file precise returns. This reduces the likelihood of errors, late filings, and HMRC inquiries.

How Sterling & Wells Supports Amazon Sellers

Sterling & Wells specialises in providing VAT guidance and accounting services tailored to e-commerce businesses. For Amazon sellers, this includes VAT registration support, reclaiming VAT on Amazon fees and other business expenses, and integrating Amazon sales data with your accounting software for seamless reporting.

Our team also offers personalised advice on both UK and international VAT rules affecting your business. If HMRC raises queries or conducts an audit, Sterling & Wells can represent your business and provide the expertise needed to respond accurately and promptly. The goal is to maximise VAT recovery opportunities while ensuring compliance, freeing you to focus on growing your Amazon business.

Leveraging Tools for VAT Management

Manually matching Amazon fees with VAT amounts can be time-consuming and prone to errors. There are software to integrate directly with Amazon and popular accounting software, automating the import of sales, fees, and taxes data. These tools categorise transactions for correct VAT treatment and generate detailed reports to support your VAT returns.

Automation significantly reduces administrative burdens, minimises human error, and gives you greater confidence that your VAT reclaims are accurate. For sellers managing high volumes of transactions, such tools are invaluable in saving time and improving financial accuracy.

Staying Ahead with VAT Changes

VAT rules are constantly evolving, particularly in the fast-changing e-commerce sector. Brexit and new international tax regulations have already altered the landscape for online sellers. Staying informed is essential to ensure compliance and optimise VAT recovery.

Sterling & Wells keeps abreast of legislative changes and advises clients on strategies for VAT compliance and reclaim optimisation. This proactive approach allows sellers to plan ahead, avoid penalties, and fully leverage available VAT recovery opportunities.

Conclusion: Keep VAT Reclaim in Focus

Reclaiming VAT on Amazon seller fees is a practical way to improve cash flow, reduce costs, and keep accounts accurate. By understanding which fees are subject to VAT, maintaining organised records, and leveraging expert advice and automation tools, UK-based Amazon sellers can reclaim the tax they are entitled to and focus on scaling their business.

Sterling & Wells provides tailored support to simplify the VAT reclaim process, offering peace of mind, accuracy, and compliance. Whether it’s UK-only operations or multi-country sales, professional guidance ensures that every eligible VAT pound is reclaimed, helping your business thrive in the competitive e-commerce environment.

For businesses ready to optimise VAT recovery on Amazon seller fees, Sterling & Wells offers comprehensive solutions designed to make VAT management efficient, accurate, and stress-free.