Can you sell on Amazon without VAT Registration

Can you sell on amazon without VAT registration?

If you’ve landed on this article, there’s a good chance you own an ecommerce business with a VAT taxable turnover below the UK threshold (£85,000). If so, you’re likely wondering whether or not you’re allowed to sell on Amazon as a merchant without VAT registration. 

In this article, we’ll answer that question, as well as exploring the benefits of selling on Amazon, what being non-VAT registered means for international selling and some potential pitfalls and how to avoid them.

Why ecommerce merchants choose Amazon as a selling platform

When it comes to picking out ecommerce platforms to sell on, Amazon is often a frontrunner – and for good reason too, including comprehensive sales and VAT reporting.

 

Some Amazon UK statistics for 2022:

  • Amazon.co.uk is the biggest UK online marketplace, ahead of Tesco and Argos.
  • 86% of people in the United Kingdom shop at Amazon.
  • As of May 2020, Amazon sold more than 600 million products in the UK.
  • The number of households in the United Kingdom who use Amazon Prime grew by almost 10.1 million in the third quarter of 2020.

The benefits of selling on Amazon

Below are just a few of the reasons why ecommerce merchants all around the world choose Amazon as one of their main vending outlets.

Expansive audience reach – Amazon is a colossal global marketplace, which opens your product up to an equally huge pool of established customers, including an international market.

Diversity in appetite for product – Amazon customers come in all shapes and sizes, which means there is a diverse appetite for different brands and products. You aren’t just limited to customers looking for goods in a certain category, for example.

Low maintenance logistics – As an Amazon seller, your goods are packaged and shipped for you, which significantly reduces the admin load on your team.

The power of a household name – Using Amazon as a springboard to sell from means that you don’t just have to rely on your own brand to do all of the hard work. Customers know and trust the Amazon brand already so you can piggyback off that – something which is particularly for new and less established businesses.

Do you need to be VAT registered to sell on Amazon?

The short answer to this question is: yes, you can sell on Amazon if your business isn’t VAT registered. However, there is a more complicated version of the answer too, which is important to familiarise yourself with.

Firstly, if your VAT taxable turnover is above the UK threshold, which is currently set at £85,000, you are legally obligated to register your business for VAT – Amazon or no Amazon. If your VAT taxable turnover is still below this threshold, you aren’t legally required to register for VAT, however, some businesses choose to register voluntarily.

This is the case for UK ecommerce businesses selling products within the UK. However, things start to get a little more complicated where international (non-UK) sales are concerned.

Amazon VAT registration and international selling

The great thing about Fulfilment by Amazon (FBA) is that it allows UK merchants to sell their products to customers around the world with minimal effort on their part. That said, while Amazon FBA simplifies the logistics, it’s not there to fulfil any financial obligations on behalf of the ecommerce businesses that sell through the platform.

That’s why, if you are going to sell internationally via Amazon, you need to ensure that, even if you aren’t yet legally required to register for UK VAT, you’re adhering to the VAT requirements of the countries you’re selling and storing in.

For example:

You could be a UK business, selling in the UK and earning under the UK VAT threshold and therefore don’t need to register for VAT in this country. However, if you’re storing or selling goods in Germany, you’re legally required to register for VAT immediately as there is no threshold buffer for foreign businesses selling or storing goods there.

Other countries will have their own VAT regulations that you will need to comply with if you’re storing and/or selling goods there. If you fail to do so, you could find yourself facing a hefty penalty or other consequences for your business.

Our advice on getting it right

One of the most valuable pieces of advice we can give you is to seek out the expertise of a specialist ecommerce accountant – better yet, one with experience with ecommerce merchants selling internationally. They’ll be able to ensure you’re operating compliantly when it comes to VAT and make sure that you’re doing so in the most tax-efficient way possible.

Our team of specialist Amazon ecommerce accountants is here to help! To find out more about how we can support your growing business, book your free, no-obligation consultation today.

Ben Sztejka ACA

Ben Sztejka ACA

I am an ICAEW Chartered Accountant with one core belief, make accounting as pain free as possible and focus on adding value to businesses.

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