As a VAT registered internet retailer trying to fathom out what VAT you can claim back on fees can be confusing. Just looking at the 3 biggest platforms you can see that each one has a different VAT situation. Below is a summary how to reclaim VAT from eBay, PayPal and Amazon.
Please remember you always need a VAT invoice to reclaim VAT.
From 1 August 2017 eBay started charging VAT on their fees as they moved their operations to the UK. If you are VAT registered in the UK then you should have noticed that your eBay fees went up by 20%. The good news is that you can reclaim this VAT on your VAT return (providing you have a copy of your VAT invoice from eBay).
Amazon charges VAT on their services. If you are VAT registered you can supply them with your VAT registration details and they will stop charging you VAT under the Reverse Charge scheme. You need to put this through as reverse charges on your VAT return though so it shows VAT charged on sales and then the equal amount reclaimed on purchases. See more on how the Reverse charges works on HMRC’s website.
If you haven’t supplied Amazon with your VAT registration details then you can simply reclaim VAT on their fees. But you must have a VAT invoice from Amazon to do this.
PayPal doesn’t charge VAT on their services so there is no VAT to reclaim. Why? Because PayPal are a payment service provider.
While we are on the subject of PayPal, next week's blog will be on how to get your PayPal data into Xero and Quickbooks and reclaim VAT on purchases. A common error we see is businesses accounting for receipts from PayPal as sales. But the receipt from PayPal is just a transfer of money. You need to properly account for every transaction that is going through PayPal as it is a bank account in it’s own right. We have tips on how to make this as quick and painless as possible.