Calculate VAT from your Amazon selling price

Updated on July 20, 2022

Contents

UK Accountants for Amazon FBA Sellers

We get a slew of VAT questions every day as UK-based CPAs who specialize in working with Amazon Sellers. An Amazon seller may rapidly calculate how much VAT they should collect from customers by using their final sales price, which is the subject of this short article.

If you’re interested in learning more about Amazon Seller VAT basics, check out this post.

Amazon VAT Problem

One issue that sellers on eBay and Amazon confront is that their final sales price is all that customers see when they offer their products (although this has changed slightly with the introduction of Amazon for Business and Amazon VAT calculation services).

Suppose a product is offered for £10 on Amazon, but the seller does not have the ability to charge that amount plus VAT. Sellers on Amazon and eBay can only see the price they want to charge customers.

Solution

Divide your final sales price by 6 to find out how much of your profit margin is truly VAT in these situations.

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For instance:

To make the method easier to understand, consider selling a product for £10 plus VAT.

VAT is added to the total, so £10 becomes £12 in total.

As a result, we know that VAT is being charged in this example to be £2 (because 20% of £10 is £2). If you sell a product for $12, how do you figure out how much VAT to charge if you don’t know how much VAT was charged in the first place?

How to do this is simple: Simply multiply the sale price by 6.

Again, let’s take the £12 retail price as an example. What do you get if you divide 12 by six? 2!

Since the formula (Sales Price/6 = VAT) is so easy, it should be clear to you that you can always figure out your gross sales price’s VAT amount (assuming that the VAT rate is 20%) by dividing your Amazon sales price by 6.

VAT Calculator

To see how the above works in practice, use the VAT calculator provided below.

  • About this form: this form assumes your product is Standard (20%) rated for VAT. For ecommerce business we are yet to see someone selling Reducued (5%) rated products, e.g. energy, in which case the calculation above would be slightly different.

    Amazon VAT Accountants

    Because we work with Amazon FBA sellers from all over the world, we’re a team of accountants. In order to ensure that Amazon sellers are VAT-compliant, we work with our clients. Using the Instant Quote function, you can get in touch with us if you’re an Amazon Seller who needs help with VAT.

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