Selling through Amazon or Shopify can make VAT look simple: goods sit in a warehouse, an order is placed and the seller ships it. In reality, VAT depends on more than stock location. The customer’s delivery country, the seller’s business establishment, whether Amazon facilitates the sale and the value of the consignment can all change who charges VAT and where it is reported.
For UK ecommerce businesses, the biggest mistakes often arise when Amazon sales, Shopify sales, UK stock, overseas fulfilment and international customers are mixed together in one set of accounts.
Why Location Changes the VAT Answer
For goods, VAT analysis starts by identifying:
- Where the seller is established
- Where the goods are located when sold
- Where the customer receives the goods
- Whether the customer is a consumer or VAT registered business
- Whether the sale is through Amazon or direct through Shopify
- Whether the goods are being imported and the consignment value
Amazon and Shopify do not have the same VAT role. Amazon can be an online marketplace that is treated as making certain supplies for VAT purposes. Shopify is normally a website platform, so the merchant usually remains the seller responsible for VAT registration, pricing and reporting.
Amazon and Shopify Compared
| Situation | Amazon sale | Shopify sale |
|---|---|---|
| UK established seller sells UK held goods to a UK customer | Seller normally accounts for UK VAT if registered | Seller normally accounts for UK VAT if registered |
| Overseas seller sells UK held goods to UK consumers | Amazon may be deemed supplier and account for VAT | Overseas seller normally registers and accounts for UK VAT |
| Goods outside the UK, consignment worth £135 or less, sold to Great Britain consumer | Amazon is normally liable for UK VAT at point of sale | Overseas seller normally charges and accounts for UK VAT |
| UK seller ships goods from UK to EU consumers | May require overseas VAT analysis depending on fulfilment model and customer location | May require EU VAT registration or OSS analysis |
| UK seller stores stock in an EU fulfilment centre | Local VAT registration may be needed where stock is held | Local VAT registration may be needed where stock is held |
For overseas sellers, online marketplaces are liable for VAT on goods located in the UK at the time of sale to UK consumers and, in certain cases, low value goods located outside the UK. Where a sale is made directly through a seller’s own site, the overseas seller generally remains responsible.
The £135 Rule for UK Sales
The £135 threshold applies to the intrinsic value of the whole consignment, not an individual item. It is particularly important where stock is shipped from outside the UK to a customer in Great Britain.
For consignments worth £135 or less, UK VAT is charged at the point of sale rather than collected as import VAT. If Amazon facilitates an eligible sale, Amazon normally accounts for that VAT. Where an overseas seller sells direct through Shopify, the seller normally needs to register, charge and account for UK VAT.
For goods above £135, import VAT and any customs duty usually arise when the goods enter the UK. The contractual delivery terms determine who acts as importer, which can affect whether the seller or customer faces the import cost and paperwork.
Customer Delivery Address Matters
A customer’s delivery address determines whether a sale is a UK domestic sale, an export, an EU distance sale or another international supply. HMRC confirms that a UK customer is identified by the final delivery address, rather than their billing address.
For example, a Shopify seller may operate from the UK and hold stock in Manchester. A sale delivered to Birmingham will normally follow UK VAT rules. A sale delivered to Paris requires analysis of EU VAT and customs rules. The warehouse has not moved, but the destination country has changed the compliance position.
Selling to EU Consumers
UK sellers shipping goods to EU consumers need to consider customs declarations, import VAT, local VAT and whether the business needs an EU VAT registration or can use an EU or Northern Ireland One Stop Shop arrangement.
Where goods are dispatched from Northern Ireland to EU consumers, the EU wide distance selling threshold is €10,000 per calendar year. Once relevant cross border B2C sales exceed this level, VAT is generally due in the customer’s EU member state. The One Stop Shop can allow qualifying businesses to report the VAT through one quarterly return instead of registering in every destination country.www+2
For goods shipped from Great Britain into the EU, the seller should not assume that a UK VAT return solves the EU position. Importer arrangements, marketplace rules and local registration obligations should be checked for the countries involved.
Stock Location Still Matters
Customer location can drive the sales VAT treatment, but stock location remains important. Holding inventory in another country often creates a local VAT registration obligation because the business has taxable stock movements and domestic sales there.
Amazon FBA sellers need to know each country in which Amazon stores their stock. Amazon may move inventory under a fulfilment programme, creating VAT obligations even if the seller has not personally arranged each movement.
A Shopify merchant using a third party fulfilment centre faces the same issue. Before using overseas fulfilment, confirm where goods will be stored, who imports them and which VAT registrations are required.
A Practical Example
A UK VAT registered brand sells a product for £120 plus delivery.
| Order | Platform | Stock location | Delivery address | Main VAT issue |
|---|---|---|---|---|
| Order 1 | Shopify | Birmingham | Leeds | UK VAT charged and reported by the seller |
| Order 2 | Amazon | UK fulfilment centre | London | UK seller generally accounts for VAT if it is their own UK established business |
| Order 3 | Shopify | Shenzhen | Bristol | Low value import rules apply. The seller must consider UK VAT at sale and UK registration |
| Order 4 | Shopify | Birmingham | Berlin | EU import and destination VAT analysis required |
| Order 5 | Amazon | Germany | Munich | German VAT and Amazon FBA obligations may apply |
The accounting system needs more than one sales account. It should identify the platform, ship from country, delivery country, VAT treatment, marketplace VAT collected and import related costs.
Common Accounting Errors
Treating Amazon Payouts as VAT Inclusive Sales
Amazon deposits are net of fees, refunds, marketplace VAT collections, storage charges and other adjustments. Record gross sales and the correct VAT position from Amazon settlement reports, not simply the bank payout.
Applying UK VAT to Every Shopify Order
A Shopify checkout can accept orders worldwide. Tax settings should not be treated as legal advice. Review the ship from location, delivery country, import model and customer type before applying VAT.
Missing VAT on Marketplace Reports
Amazon may collect VAT as a deemed supplier in certain cases. This does not mean the seller can ignore the transaction. Reports must still be reconciled correctly to avoid declaring marketplace collected VAT twice or failing to record sales for turnover, accounts and other tax purposes.
Ignoring Import VAT and Duty
Import VAT can be recoverable for a VAT registered business where the conditions are met and the business holds suitable evidence. Customs duty is normally a cost of stock, not recoverable VAT. Keep import entries, postponed import VAT statements and courier documentation with the purchase records.
Record Keeping Checklist
- Match every sale to the delivery country, not only the billing address
- Record where inventory was stored when the customer placed the order
- Separate Amazon marketplace facilitated sales from direct Shopify sales
- Reconcile gross sales, refunds, fees, VAT and reserves to settlement reports
- Retain import declarations, duty evidence and postponed VAT accounting statements
- Review Amazon FBA stock movement reports by country
- Check VAT registrations before sending stock to overseas fulfilment centres
- Obtain advice before launching an overseas Shopify campaign or delivery service
How UK Ecommerce Accountants Help
International ecommerce VAT cannot be managed safely from bank payouts alone. Amazon and Shopify data must be reconciled to stock movements, customer destinations, marketplace reports and VAT registrations.
UK Ecommerce Accountants help sellers build a clear VAT process that supports accurate reporting, pricing and growth across multiple sales channels.
- Review Amazon, Shopify and payment provider data for VAT reporting
- Identify the VAT impact of customer delivery countries and stock locations
- Reconcile Amazon settlements, marketplace VAT, fees, refunds and reserves
- Configure accounting systems to separate UK, EU and overseas sales
- Review low value import transactions and the £135 rules
- Support UK VAT registration, returns and VAT control account reconciliations
- Assess EU VAT, OSS and overseas stock holding requirements
- Review Amazon FBA reports and cross-border inventory movements
- Reconcile import VAT, customs duty and postponed VAT accounting evidence
- Provide VAT planning before entering a new marketplace or delivery country
FAQs:
Does Amazon collect VAT for every seller?
No. Amazon may be treated as the supplier for VAT in specified situations, particularly for certain sales by overseas sellers to UK consumers and low value imports. UK established sellers remain responsible for their own VAT position in many cases.www+1
Does Shopify charge and pay VAT on my sales?
Shopify can calculate tax using configured settings, but it is normally the merchant, not Shopify, that is responsible for determining the correct VAT treatment, registering where needed and filing returns.
Do I need EU VAT registration if I ship from the UK to EU customers?
Possibly. The answer depends on where goods are held, whether you act as importer, whether a marketplace facilitates the sale, the destination country and whether an OSS or IOSS arrangement is available. UK sellers should review the position before making regular EU consumer sales.
