VAT for eBay sellers

Value Added Tax (VAT) is charged on most goods and services sold in the UK, which means for marketplace retailers you’ll pay VAT on seller fees, and may also be required to charge VAT. With the standard VAT at 20%, it’s important that you fully understand your VAT obligations. We take a look at how VAT affects eBay sellers; when you need to register and what you’ll have to pay.

What is VAT?

VAT is a consumption tax that’s charged at 20% on most services and goods in the UK, with some items charged at a reduced rate of either 5% or zero VAT.

All businesses that exceed £85,000 VAT taxable turnover within a 12 month period, have to register for VAT with HMRC. As a retail business, once you’re VAT registered you have to charge VAT on all your products, and pay this money to HMRC in your quarterly VAT return. Businesses that are based outside of the UK need to register for VAT as soon as they start to sell goods or services to the UK, there’s no registration threshold.

The benefit of becoming VAT registered is that you can reclaim any VAT that you pay for business related goods and services, including VAT that you pay on your eBay business seller fees.

Do eBay sellers have to charge VAT to buyers?

If you’re purchasing products with the intention of reselling them, then you need to register for an eBay business account. But, initially, you may not have to charge VAT on your products, as long as your business’s turnover is less than £85,000.

Once you reach the VAT threshold, you’ll need to register for and charge VAT on all your eBay sales. You’ll then pay the VAT to HMRC when you complete your VAT return. When you’re charging VAT on eBay, it’s important that your listing prices are inclusive of VAT as you can’t add it on once a buyer decides to purchase.

International businesses selling on eBay UK to UK customers need to register for and charge VAT on all their sales.

Setting up VAT on eBay

As a VAT registered business you’ll need to provide your VAT number within your eBay account here. If you’re VAT registered in more than one country then you need to register all of your VAT numbers.

Paying VAT on eBay seller fees

All UK based eBay sellers pay 20% VAT on their seller fees. However, when your business is VAT registered you can claim back the VAT that you pay on your eBay fees. Find out more about reclaiming VAT here.  

Sellers that are based in the European Union, but not Luxembourg or the UK, can apply for an exemption from paying VAT on their UK fees after completing the business registration process.

If you’re not sure whether or not you should be VAT registered, you can read more about when and how to register here: A guide to VAT registration for your online business.