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Amazon FBA Re-imbursements (amount paid & VAT uncertainty)

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I have one product of a variety of products that I sell Amazon FBA for £22.99 ...Amazon have just informed me that they've damaged one at their Amazon warehouse.

Amazon have re-imbursed me to the tune of £17.69 ... Anyone know how they derived that figure?

Ok, so I now have to account this in my accounts software (Quickbooks), so I've set amazon up as a customer....& have showed they've paid me £17.69 for the product ....but should the price they've given me include or exclude VAT. So in other words, should I enter it at

£17.69 zero rated (not VAT)

or £14.74 + £2.95 in VAT = £17.69 total

Since VAT is a consumer tax, I'm figuring that the money that Amazon re-imburse me with for the damaged product should be free of VAT....but I wait to be corrected!

Edited by: PHT on Nov 5, 2014 10:04 AM

If a supplier refunds you for goods damaged they do so for total including VAT in the UK. You may see it on your invoices if you ever get any problem stock.

The amazon refund is usually item price less what amazon fees would have been if item had sold. Does this work out for you?
If so its the same as if you had sold the item - just in this case its amazon buying it from you.

But Amazon aren't my supplier in this instance (& I'm not an end consumer)...I gave them the goods, they damaged them, they reimbursed me. Have they included VAT in the re-imbursement? (I don't see any VAT applied on my FBA reports against the re-imbursement - like I say I am VAT registered, so my reports have no VAT component).

I'm wondering here if I've 'sold' to Amazon EU (vs. Amazon UK ....therefore zero rate VAT on account they're an EU based business with a valid EU ID)

Edited by: PHT on Nov 5, 2014 4:21 PM

PHT wrote:

You make a good point! (& just in case you're wondering....I do calculate VAT on all Amazon sales to customers!)

So what of VAT wrt re-imbursements from other marketplaces? (I store my products in Amazon UK, but occasionally get re-imbursed by Amazon.fr & Amazon.de)

Edited by: PHT on Nov 5, 2014 4:24 PM

I think you are getting confused here by looking at the VAT aspect.

The item if sold was priced at £22.99 including VAT.

Amazon have refunded you the price of the item less their fees-so they have given you the same amount as if the item had been sold on your behalf.

You should account for VAT in exactly the same way as if the item had been sold, and not damaged at the warehouse. The figures involved are exactly the same either way.

Does that help?

This is not a sale of goods so the transaction is not subject to VAT. Amazon is not a customer. They are providing a service, which in this case went wrong, so they are paying compensation. Think of it like an insurance receipt.

So who own the items? The seller still?

+ "This is not a sale of goods so the transaction is not subject to VAT. Amazon is not a customer. They are providing a service, which in this case went wrong, so they are paying compensation. Think of it like an insurance receipt"+

So, I haven't 'sold' the item (because the item is damaged it's unsellable to anyone ...including Amazon), but have instead been compensated for my loss

Ok, I'm liking your angle (& at least having a different take makes it reassuring that I'm not the only one that thinks such a reimbursement should be outside the scope of VAT!) . It's an important point, think how many reimbursement to VAt registered people most be going on....& think (potentially) all the VAT being paid out - perhaps unnecessarily!)

How to account for such an amazon reimbursement in an accounting package though?


Edited by: PHT on Nov 5, 2014 10:59 PM

Have you asked HMRC about the VAT?

My past history calling HMRC is neither pleasurable nor (quite often) that fruitful!

Since this is an Amazon seller forum, and lot of sellers use FBA....and when using FBA re-imbursements is par for the course, I figured I'm not the only one to ponder this issue....and I've not being do this that long, so figured the problem would have a standard answer on here!

Just one other thought (which may not even be that significant)....when amazon re-imburse, in their payment report they don't list the re-imbursement along with other 'customer' sales (i.e. under transactions), but put the re-imbursement under 'other'....so perhaps not regarding the re-imbursement as a 'sale' at all avoids the whole VAT question?

At the risk of talking to myself, I'm going to put these all down as 'outside the scope of VAT'...on account the item has been damaged, not sold....and the money amazon are reimbursing me with is compensation ....in the knowledge that VAT is an 'end consumer tax', if the item has been damaged, then it can't be used, therefore there is no end consumer.

You could view it as compensation if you like, but it still includes an amount equivalent to the VAT that would have been charged on the sale no matter how you look at it. You could end all this speculation by calling your local VAT office and get a definitive answer?

Yes they are approachable.
And if you get it wrong do you really want to pay fines on top of what they claim you owe?