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UK VAT For US Sellers

At a Glance

Changes to UK Valued Added Tax (VAT) rules mean that eBay will collect VAT on certain sales to UK buyers, and will remit this to the UK tax authorities (HMRC).

  • VAT (Value Added Tax) is a tax on consumer spending.
  • Starting in 2021 responsibility for VAT collection shifted from sellers to marketplaces in some cases.
  • While the standard UK VAT rate is 20%, lower rates may apply in some cases.

Issue in Detail

What are the VAT rates for the UK?

Goods sold in the UK are subject to UK VAT. The standard UK VAT rate is 20%, but the rates of 5% and 0% may also apply to certain items. Where goods are imported into the UK, import VAT and in certain cases customs duty will apply. The VAT rate due at import will be the same rate as would be applied if the goods were supplied within the UK. Starting on January 1, 2021 the UK introduced legislation which shifts the responsibility for collecting Value Added Tax (VAT) for online purchases from sellers to marketplaces such as eBay in certain circumstances.

For more information on UK VAT, please check out these resources:

What are eBay’s VAT responsibilities for collecting VAT on goods shipped into the UK?

  1. eBay is obliged to collect UK VAT on goods sold through eBay to UK customers in the following circumstances:
    • Goods imported into the UK, with a parcel value of up to £135 (British Pound Sterling). Note that there is no longer a VAT exemption for small consignments up to £15. Note that parcel value for VAT determination, excludes shipping.
    • Goods of any value sold by a non-UK seller and shipped from inventory stored in the UK. Sellers may still have UK VAT obligations and should consult their tax advisors for further information.
    • If an order fits either of these criteria, neither sellers nor carriers should collect VAT from UK buyers. eBay will collect the VAT from the buyer and remit it to HMRC.
  2. If a buyer requires a refund – cancellation, full refund, less than full refund, or partial refund – eBay will refund the VAT to the buyer in cases where eBay collected the VAT on the original transaction.
  3. eBay is obligated to collect UK VAT on the full value of the transaction including shipping costs, as the shipping costs are considered part of the total purchase. The VAT on the shipping charges apply at the same rate as the item(s) in the shipment.
  4. eBay will not collect UK VAT if:
    • Consignment values are above £135. In practice, the recipient pays import VAT to the shipping agent as part of clearing the package through customs.
    • The buyer is UK VAT-registered and provides their valid UK VAT registration number. In these cases, eBay will not collect UK VAT and instead the responsibility to account for VAT will switch to the UK VAT-registered customer.
    • Consignments of goods containing excise goods such as alcohol and tobacco are imported into the UK. Learn more about importing excise goods to the UK from the EU.
  5. eBay VAT calculation methodology:
    • Sellers listing on eBay.co.uk and European eBay sites have the option to provide a gross price and separate VAT rate, so that eBay can determine the net price and correct amount of VAT to collect from consumers.
    • eBay will use the values provided by you when listing your items (gross price and VAT rate) to determine the net price.
    • eBay will then calculate the VAT payable by the buyer, based on the VAT rate of the item sold in the delivery country. eBay will apply VAT to any shipping charges at the same rate as the VAT applied on the item.
    • eBay will remit the net amount to the seller, and the VAT amount to the appropriate tax authority.
    • For non-EU/UK sellers, unless you have included UK or EU VAT in your pricing calculations, the VAT rate will usually be 0% and may be left blank.
    • Margin sellers may also leave the VAT rate blank. As eBay cannot apply a margin scheme, VAT needs to be collected on the full value of the item sold. If you indicate a VAT rate, this may lead to a reduction in the net amount you receive.
    • VAT-registered seller - As shipments between the UK and EU are considered as export sales in cases where eBay is not responsible for VAT, the prices will also be adjusted to show a net price to buyers. Buyers still need to pay import VAT on delivery.
  6. When selling through the Global Shipping Program into the UK:
    • Where eBay is responsible for remitting VAT, the Global Shipping Program will collect VAT from the buyer on behalf of eBay.
    • Where the Global Shipping Program is used, but eBay is not responsible for VAT, Pitney Bowes will clear goods into the UK on behalf of the buyer. Pitney Bowes will collect the import VAT and duty from the buyer based on the value of the package and will remit the import VAT amount to HMRC on behalf of the buyer.
  7. How VAT appears to buyers:
    • All prices on eBay.co.uk will be displayed inclusive of UK VAT. UK buyers will see VAT-inclusive pricing when they view listings in search and on the listing page.
    • Where eBay is responsible for collecting VAT on orders sent to a UK delivery address, this amount will also be shown separately on the invoices issued by eBay to buyers.
  8. eBay seller tax-related responsibilities:
    • Sellers may be required to collect VAT in cases where eBay is not obliged to collect VAT, for example if you are selling goods located in the UK and the buyer is a VAT registered buyer. In these cases, eBay will provide you with the buyer's details so that VAT can be collected correctly.
    • You are responsible for listing the item and item specifics accurately and ensuring that the item location is correct. You need to ensure that your account details, including name, registered address, legal entity name, VAT identification number(s) and the location goods are shipped from are accurate and up to date.