VAT for UK Based Sellers Trading on USA Marketplace

I've been trading on Amazon.com for the past 7 years as a sole trader based in the UK. I trade exclusively on Amazon.com. Amazon's fulfilment and advertising services are provided for the USA marketplace. Products are sourced and sold to customers exclusively within the USA. During that time Amazon have been charging me VAT on Seller Fees, Fulfilment Fees and Advertising Fees. I'm not VAT registered as I have no trade in the UK and all business expenses are USA related. I'm led to believe that Amazon have been incorrectly charging me as a uk based seller VAT on all their fees as they are invoiced from head office in Seattle, US. for USA exclusive services. Is that correct? I believe one way to avoid fees going forward would be to voluntarily register for VAT as a sole trader even though I don't trade in the UK. Would there be any way of reclaiming past VAT charges if they have indeed been incorrectly issued?

It may be that Amazon.com are seeing you as an individual (a person) rather than a business (sole trader business). If you were say ABC Ltd, Amazon would recognise you as a business because you are a Ltd. The place of supply of digital services such as those supplied by Amazon USA to you would be :- 1. if you/customer is a business, Amazon would not charge VAT on their invoice and the customer would reverse charge. 2. if you/ customer is a consumer/man on the street/joe public, Amazon would charge UK VAT to the customer. The problem often is a sole trader does not have a trading name, a Mr Smith can be Joe Public just selling a bit of stuff from his garage as a side hustle (not trading/not a business) or Mr Smith could be a sole trader operating a serious business but as a sole trader....so how does Amazon differentiate between Mr Smith a member of the public and Mr Smith a sole trader? When you setup the MarketPlace account with Amazon, was there an option to identify yourself as a business, a box to tick to state you were trading? Did it ask for a VAT number or other form of proof you are "in business"? You need to liaise with Amazon.com to have them amend their historical VAT invoices and refund you the VAT they charged in error/or in error as a result of not realising you are a business. You cannot register for UK VAT or apply for the flat rate scheme because you appear not to be making any taxable sales in the UK? A requirement of VAT registration is that you make or intend to make sales in the UK.

Hi Thank you for your reply. I have operated since registration on Amazon.com as a sole trader (or sole proprietorship). I have also submitted tax returns to show that my business is trading under a trading name as a sole trader. However Amazon still charges VAT. I have been fighting tooth and nail with them over the last 6-9 months regarding the interpretation of my UK VAT status and UK - USA Tax treaties. Amazon believe they are correct in charging UK vendors VAT on all digital services provided in the USA Marketplace. The only way they will stop VAT charges is for vendors to register for VAT and submit their VAT registration. This seems crazy to register for UK VAT as I have zero VAT liability in the UK and therefore by UK tax laws not required to do so as a sole trader. I guess it comes down to what is the official ruling on 'Place of Supply' in relation to digital services provided between US suppliers to UK vendors/merchants and whether Amazon's interpretation of those rules are correct in my situation. Amazon Europe (Based in Luxembourg) cover my situation and recognise VAT is not charged to non VAT registered business's: Amazon Services Europe Business Solutions Agreement S-6(b) prior to Jan 2021 If you are in business and established in a European Union country, but you do not have a VAT registration number issued by one of the European Union countries, then you will be able to provide Amazon with other evidence that you are in business. Acceptable evidence is a copy of a recent corporate tax return or an official document issued by a government agency proving that you are in business. Once your evidence is reviewed and accepted by Amazon, VAT will not be charged by Amazon on the fees hereunder provided you are not established in Luxembourg. If Amazon Europe are recognising non-VAT registered businesses are not liable for VAT payments why aren't USA? Surely the same situation applies here?

Hi,

If you are operating as a business and have your principal place of business in the UK then any charges by Amazon in the US would normally be subject to the reverse charge procedure. You can see guidance here:

Reverse charge

You would need to contact the marketplace as any VAT refunds would need to be arranged by them.

Thank you.

Gavin. Thanks for the extra information. I feel your pain, as you have stated, Amazon Europe understand the rules and recognise a sole prop/sole trader as a business and Amazon Europe also recognise that the VAT registration threshold across UK/EU is variable so it is entirely possible for a legitimate sole trader to be trading/selling but not have a VAT number. Your battle remains with Amazon USA, the same rules/logic applies....a USA business making electronic supplies to a UK or EU business is not subject to VAT, the customer applies reverse charge (as per HMRC's link/post), but if the customer is a consumer then Amazon USA must register for and charge VAT to that individual. You appear to have all the evidence to prove you are a business sole proprietor and not a consumer, persist with Amazon USA and once they see sense they should then refund you the VAT they've overcharged you. Amazon is a machine, it often treats marketplace traders poorly.