With Amazon’s continuous requirements for VAT policies, many cross-border e-commerce sellers, Chinese sellers have more advantages in controlling product costs than overseas sellers, and many Made in China+ have entered the international market through cross-border e-commerce platforms . However, Chinese sellers are not as good as overseas sellers in terms of product transportation costs and goods storage. Goods entering EU countries need to pay customs duties and import VAT for customs clearance. At the same time, they must declare sales and pay sales VAT on time. This is a headache for the majority of sellers. So, let’s learn how to reduce the VAT tax on Amazon’s UK site?
According to relevant regulations, if the sales in 12 months (excluding tax) do not exceed 150,000 pounds, you can apply for a low tax rate, that is, the import VAT cannot be deducted from the sales VAT, and the low tax rate can be applied in the first year Enjoy a 1% discount, which is a low tax rate of 6.5%, and then calculate it at 7.5%.
The following is a simple formula calculation example: If the sales of an Amazon or eBay store can reach 4 million yuan (approximately 430,000 pounds) per year, calculated based on the UK standard tax rate of 20%, it may need to pay Sales VAT is: {4 million/(1+0.2)}*0.2=4 million÷670,000 RMB.
The annual sales of each store are controlled within 230,000 pounds. According to relevant regulations, the low tax rate is 6.5% in the first year. When the two stores are added together: 6.5% in the first year. : 4 million × 6.5% = 260,000 RMB; restored to 7.5% in the second year: 4 million × 7.5% = 300,000 RMB. Many sellers will think that since I chose a low tax rate, I don’t need to pay import VAT, but This approach may result in gains greater than losses and has limitations.
The above introduces the relevant knowledge on how to reduce the VAT tax on Amazon’s UK site. Although this calculation is for UK VAT, it does not mean that it can only be sold in the UK. If the warehousing is placed in the UK , it is also possible to sell remotely to Germany, France, Italy, Spain and other EU countries without exceeding the distance selling threshold. If you have good controls, you may not even need to register a VAT number in another country.