UK VAT registration is mandatory once your taxable turnover crosses £90,000 in any rolling 12-month period (raised from £85,000 in April 2024). For UK Amazon sellers, that threshold is reached far more often than the seller realises — because reverse-charge fees, EU sales via FBA storage, and IOSS-scheme sales all count. Misreading any of those is the most common backdated VAT bill we untangle for new e-commerce clients.
What counts toward £90k
The £90,000 threshold is taxable turnover — supplies that would be standard-rated, reduced-rated or zero-rated if you were registered. It includes:
- UK B2C sales of goods to UK customers
- UK B2C sales of goods that are then exported to the EU under the OSS scheme
- Reverse-charge services from non-UK suppliers (Amazon’s EU-based fees, software subscriptions, ad spend) — treated as your turnover for the threshold test
- Distance sales to the EU under the IOSS scheme (low-value consignments under £135)
The reverse-charge rule catches almost every Amazon seller. A seller doing £75k in physical sales but spending £18k/year on Amazon advertising and FBA fees from Amazon’s Luxembourg entity is at £93k for VAT-threshold purposes. They’re already over.
OSS — the One Stop Shop scheme
If you sell goods stored in the UK to consumers in the EU, you’re making distance sales. Each EU country has its own VAT rate. The OSS scheme lets you register once (in any EU member state) and file a single quarterly return covering sales across all 27 EU members at their local rates. Without OSS, you’d need 27 separate VAT registrations.
UK sellers typically register for OSS via Ireland (English-language, easier portal). The threshold for OSS is €10,000/yr of distance sales to the EU. Below that, you can charge UK VAT (or 0% if you’re not UK-registered). Above that, you must use OSS or register locally in each destination country.
IOSS — for low-value imports
If you’re shipping goods directly from outside the EU to EU consumers — typically dropshipping from China, or fulfilling from a non-EU warehouse — and the consignment value is under €150, the Import One Stop Shop (IOSS) scheme lets you collect VAT at point of sale and file a single monthly return. Without IOSS, your customer has to pay the VAT on import (which destroys conversion rates).
UK sellers typically register for IOSS via an EU-based intermediary — there are several specialist providers charging £40–£80/month.
The Amazon FBA EU-storage trap
If your goods are stored in an Amazon EU warehouse (under the Pan-EU FBA programme or EFN), you have a deemed presence in that country and must register for VAT there locally, regardless of OSS. Pan-EU FBA storage in DE, FR, IT, ES, PL, CZ — that’s 6 separate VAT registrations and 6 quarterly returns, each in local language and currency.
Many sellers turn on Pan-EU FBA without realising this — and then get a “you owe €30,000 of backdated German VAT” letter from Bundeszentralamt für Steuern 14 months later.
A worked example
UK FBA seller of beauty products. 2025 turnover:
- UK Amazon sales: £62,000
- EU Amazon sales (via Pan-EU FBA): £35,000
- Amazon FBA fees + ad spend: £21,000 (reverse charge)
UK VAT-threshold turnover: £62k + £35k + £21k = £118k. Already £28k over the threshold — should have registered by mid-year.
Plus required: OSS registration in Ireland for the £35k EU sales, and local VAT registrations in Germany, France, Spain, Italy, Poland and Czechia (because Pan-EU FBA stores stock there). 6 local registrations plus OSS plus UK VAT = 8 ongoing returns.
Without intervention, backdated UK VAT alone is £62k × 20%/120% = £10,333. Plus penalties (15–30%) and interest. Plus equivalent backdated VAT in 6 EU countries. Expected total exposure: £40k–£60k.
Practical playbook for getting it right
- Audit your trailing-12-month turnover monthly, including reverse-charge fees. Set a tracker that alerts at £75k.
- If you’re using Pan-EU FBA, register for VAT in every storage country before your first sale ships from there.
- Use OSS for EU distance sales (one return covers all 27).
- Use IOSS for low-value imports if you’re dropshipping into the EU.
- Keep marketplace facilitator rules straight — Amazon collects VAT at the till for B2C imports under £135, but you’re still liable for B2B sales and over-£135 consignments.
When to stay below £90k deliberately
If your business is under £90k and growing slowly, deliberately staying under the threshold (e.g. by closing pre-orders) buys you the 20% margin you’d otherwise lose to VAT. But this only works if your customers are non-VAT-registered consumers — B2B customers don’t care since they reclaim VAT anyway.
Key takeaways
- UK VAT registration: mandatory at £90,000 rolling 12-month taxable turnover. Reverse-charge Amazon fees count.
- OSS — single quarterly return for EU distance sales. Register via Ireland.
- IOSS — point-of-sale VAT collection for low-value imports under €150.
- Pan-EU FBA storage triggers local VAT registration in each storage country — separate from OSS.
- Audit your rolling 12-month turnover monthly. Alert yourself at £75k. Don’t wait for the year-end discovery.
FAQ
Do I need OSS if I only sell in one EU country?
You can still register in that single country’s VAT system instead of OSS. OSS becomes more efficient when you sell into 2+ EU countries — one quarterly return covers all 27 instead of 27 separate registrations.
What about sales outside the EU?
Sales to non-EU consumers are zero-rated UK VAT (for goods exported with proof). Imports into US, Australia, etc. follow each country’s import rules — you may need to register for sales tax / GST locally.
Does Amazon FBA collect VAT for me?
For pan-EU FBA, Amazon collects VAT on EU consumer sales under the marketplace facilitator rules. You still need OSS or country registrations because Amazon’s collection covers the marketplace, not your direct sales.
Running a UK Amazon, Shopify or marketplace business and not 100% sure about your VAT position? Book a free 20-min review — we’ll audit your trailing 12 months in 20 minutes and tell you exactly where you stand. Specialist accountants for UK e-commerce sellers.
