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Where Taxpayers and Advisers Meet

VAT threshold and liability - Ebook sales via Amazon

Duckling
Posts:5
Joined:Sat Aug 13, 2016 3:52 pm
VAT threshold and liability - Ebook sales via Amazon

Postby Duckling » Thu Aug 25, 2016 5:35 pm

I'd be interested/grateful for anyone's take on this.

1) Ebook sales are made via Amazon's self-publishing platform (KDP)
2) Amazon handles all sales to the consumer (sales, returns, payments, VAT charges where applicable. They set the terms and conditions of sale). The author does not even know who the consumer (reader) is
3) Amazon pays author (in this case a limited company) a royalty based on sale (approx 70% of sale price)
4) Amazon sells through it's various country-specific stores - ie UK, US, Germany etc
5) A separate royalty payment is made to the author from each of the country-specific stores.

I have a three questions, please:

a) For the purposes of deciding if the limited company (author) should register for VAT, are the royalty payments taken into account - ie are these seen as 'sales'?
I've seen numerous discussions about this. Some suggest that the author is making a B2B sale to Amazon. Others suggest that the royalty payment isn't a 'sale' at all.
b) Assuming that the income from the royalty payments should be taken into account when considering the threshold for VAT, then is it only the income from the UK Amazon store that is relevant or is it the total of all the EU stores or is it the total income.

eg:

Amazon US royalties = £85k
Amazon UK royalties = £10K
Amazon (All EU) royalties = £20K
Amazon total royalties = £115K

Which figure would determine whether the threshold has been reached?

c) Assuming that the company does have to register for VAT, would the royalty payment for sales through UK/EU stores be deemed to have a VAT component.
eg if the royalty payment was £10K would that mean that it was actually a payment of £8333 + VAT?

Additional info: Amazon do not request/require invoices . They simply issue remittance advices for the royalty amounts due.

LozaACCS
Posts:1504
Joined:Wed Aug 06, 2008 3:55 pm

Re: VAT threshold and liability - Ebook sales via Amazon

Postby LozaACCS » Thu Aug 25, 2016 8:24 pm

It is complicated, this issue has come up a few times on the forum, I wish more contributors would express a view.
My own view is that if the contract is between Amazon and the UK supplier, then it is a B2B supply of services, so the general rule applies, ie the place of supply is where the customer belongs, in the case of Amazon, the place of supply is normally outside the UK so VAT is outside the scope.
If the contract is between the UK supplier and the end user (who is not in business) then the place of supply is the UK, the supplier may be required to register in each and every country he trades with according to the registration threshold in each country, unless he opts into the MOSS facility.
There is clearly a legal issue to be clarified before the tax treatment can be determined, a shambolic state of affairs in my opinion.

Duckling
Posts:5
Joined:Sat Aug 13, 2016 3:52 pm

Re: VAT threshold and liability - Ebook sales via Amazon

Postby Duckling » Thu Aug 25, 2016 8:44 pm

I couldn't agree more.

Like you, I always assumed this was a B2B sale by the author to Amazon. However, others are of the mind that the author doesn't actually make a 'sale' as such. The author simply receives a royalty which is revenue/income but not a sale. All sales are dealt with by Amazon (including all VAT accounting).

In other words the author is granting Amazon the licence to make sales rather than selling Amazon ebooks (B2B) which Amazon then sells (B2C)

I have had so many discussions on this subject including with tax professionals (ex HMRC) and feel like I'm no wiser.

les35
Posts:635
Joined:Wed Aug 06, 2008 3:09 pm

Re: VAT threshold and liability - Ebook sales via Amazon

Postby les35 » Fri Aug 26, 2016 8:38 am

Have you looked at the Amazon merchant's VAT guidance? Does that help?


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