EU VAT legislation change = Ebay fee hike

RFW

Not really Ebay's fault but the changes on January 1st 2015 will see another fee hike for non Vat registered sellers.

Where now fvfs are 10% including 15% Luxembourg VAT they will then be 8.7% plus 20% UK VAT.

ballisticbrian

Works out another 4.4 pence on a £10 item if I'm correct. Doesn't sound a lot but when you add up all the other things that keep chipping away like fees on postage.

RFW

ballisticbrian wrote: »

Works out another 4.4 pence on a £10 item if I'm correct. Doesn't sound a lot but when you add up all the other things that keep chipping away like fees on postage.

Indeed. Assume another postage price hike some time early in the new year and that's another ten pence an item. Add in a few more new sellers who think turnover is profit and the margins go.

All us sellers should move to Luxembourg or do as Ebay and Amazon do and hire an office there with a bloke shuffling paperclips.

ballisticbrian

There is something slighty contradictory and worrying in the wording of the announcement:


"All business sellers based in the UK will be invoiced excluding VAT (net pricing) from 1 January. On your first invoice of 2015 you will see net pricing applied to transactions on or after 1 January which will appear as a slight reduction in the total invoice amount."


"Register your VAT ID on eBay. Our records show you currently don’t have a valid VAT ID registered with eBay. Your VAT ID is the best evidence that you’re a business."


errr, no it's not, the best evidence is that we are a business is that we are registered with eBay as a business.



What this reads as is, "we can clearly see you are a business, but we are only going to apply the net vat pricing to vat registered users."

RFW

ballisticbrian wrote: »

There is something slighty contradictory and worrying in the wording of the announcement:


"All business sellers based in the UK will be invoiced excluding VAT (net pricing) from 1 January. On your first invoice of 2015 you will see net pricing applied to transactions on or after 1 January which will appear as a slight reduction in the total invoice amount."


"Register your VAT ID on eBay. Our records show you currently don’t have a valid VAT ID registered with eBay. Your VAT ID is the best evidence that you’re a business."


errr, no it's not, the best evidence is that we are a business is that we are registered with eBay as a business.



What this reads as is, "we can clearly see you are a business, but we are only going to apply the net vat pricing to vat registered users."

I wouldn't know the stats but I'd assume most businesses in the UK, and certainly on Evay, aren't VAT registered since the threshold started to be raised. It used to be almost a necessity in setting up a business to register.

SkintOAP_2

Hi Everyone,

In spite of being a long time recipient of MSE Newsletters I have only just signed up to the forum, and I'm happy to be a member of this great community :j

No doubt all you eBay sellers have received the same message I received today regarding changes to VAT on eBay fees (eBay will stop adding VAT to fees for UK business sellers from next January).

Although I am registered as a business seller and give the taxman his share of my meagre net profit, I am not VAT registered as my turnover is way below the VAT threshold. So I'm wondering if there's anything I need to do. Or will business sellers who are not VAT registered just not pay VAT anymore? (I can't see Mr Osborne being happy with that arrangement!)

As I fill in my own self-assessment form I don't have an accountant who can advise me so any information from fellow business sellers or any tax experts out there would be greatly appreciated. Thank you in advance

mrcol1000

I am in the same boat as you. I read it that you will have to pay UK 20% VAT on your Ebay fees rather than Luxembourg 15% at present. If you are VAT registered however then you pay no VAT at all.

RFW

As above, if you're registered for VAT you will pay 8.7% as now. If you aren't registered then you'll pay 8.7% plus 20% VAT. It's just short of a half a percent fee increase. There's no need for any accounting changes.

If you do need free advice your local tax office are a good source. These days they're helpful and friendly, I can still remember when they were scary.

soolin

I have merged two threads to keep discussions on this new change together.

JasonLVC

The 2015 changes are to stop big firms like ebay and Amazon basing their e-sales in a low VAT country like Luxemburg.

Previously, for e-sales/downloads, VAT was charged where the business (ebay) was based (Lux), but from 2015 VAT is charged based on where the customer is, customer being you. So Amazon and iStore downloads will also go up in price.

Now, if the customer is in business AND registered for VAT, then ebay does not charge VAT to you. The test is the VAT registration, not whether you are in business or not. You can of course be in business and not VAT registered but in that situation you are treated as not being a business....for VAT purposes.

ebay and their like have to submit special returns where the customer has not provided a VAT number, these returns force ebay to charge the VAT in whatever country the customer is in (ie, UK = 20%). If you do provide a VAT number, that transaction doesn't go on the special VAT return, it goes on ebays normal VAT return where no VAT is charged to VAT registered businesses.


UK has high VAT registration limit of £81k but most of Europe has Nil or thresholds as low as 10,000 euros and so most EU ebay business are already VAT registered, but as we have a high threshold before needing to register, the change is slightly more annoying for us than anyone else.

RFW

JasonLVC wrote: »

Now, if the customer is in business AND registered for VAT, then ebay does not charge VAT to you. The test is the VAT registration, not whether you are in business or not. You can of course be in business and not VAT registered but in that situation you are treated as not being a business....for VAT purposes.

That's a bit confusing, I know what you're trying to say but that last sentence is misleading. HMRC will treat you as a business no matter what, also Ebay has slightly different charges between private and business sellers, irrespective of VAT registration.

The threshold went up to encourage small business and also because it was costing as much to chase small turnover business for VAT returns as they were getting back in revenue. If it was cost effective low turnover businesses would still be registered for VAT.

It is also worth pointing out that any business below the threshold can register for VAT, in some cases it can be beneficial.