Introduction
If you plan to sell on Amazon UK or the EU in 2025, you can’t operate without a VAT-registered business. Whether you’re storing inventory locally or dropshipping, your Amazon account could be blocked without a valid VAT number.
Proven Tip:
Form your business entity and register for VAT in your target country before activating listings or shipping inventory.
Proven Tip: Register Your Business and Get a VAT ID Before You Ship
Amazon now requires sellers listing in the UK and EU to provide:
- Business registration documents
- A valid VAT number
- VAT invoice settings enabled on your account
- Proof of VAT returns (ongoing compliance)
Not registering means:
- Your listings could be suppressed
- You’ll be hit with back VAT + penalties
- Customers may cancel orders due to unpaid import tax
Tools like Amazon VAT Services, SimplyVAT, or Avalara can assist, but it starts with setting up your business correctly.
IRC Tax Code Relevance
U.S.-based sellers expanding into VAT countries must follow:
- IRC §901 – May claim a foreign tax credit for non-refundable VAT
- IRC §988 – Currency exchange reporting when receiving payments in GBP or EUR
- IRC §6001 – Maintain records of VAT filings and returns
- IRC §162 – Deductible business expenses, including registration fees, shipping, software, and VAT consulting
Relevant IRS Forms
| Form | Purpose |
|---|---|
| Form 1116 | Claim a foreign tax credit for VAT (if not refunded) |
| Form 8938 | Report foreign financial assets if using foreign bank/payment services |
| Form 5471 | If your business is structured via a foreign entity |
| Form 1099-K | Reports gross receipts from Amazon |
| Form SS-4 | For applying for an EIN to open a U.S. business before VAT registration |
Example: Seller Lost $9,000 in Q4 Due to No VAT Registration
A U.S. seller launched a toy brand on Amazon UK in Q4 2024. They failed to:
- Register a UK entity
- Apply for VAT
- Enable VAT invoicing on Amazon
By December, Amazon restricted their account. Their listings were removed during peak season, and $9,000 in expected profit was lost.
In 2025, they registered as a U.S. LLC, obtained a UK VAT number, and began filing quarterly returns through a VAT consultant. Their account was reinstated, and they scaled to €150,000 in EU sales.
Step-by-Step Guide to VAT Business Registration for Amazon in 2025
Step 1: Register a Legal Business
Choose a U.S. LLC or corporation structure. Apply for an EIN via Form SS-4.
Step 2: Choose Where You’re Selling and Storing Inventory
If selling in the UK, register with HMRC. For EU, register in your shipping destination (e.g., Germany, France).
Step 3: Apply for VAT Number
Use services like Amazon VAT Services, Avalara, or register manually via each country’s tax authority.
Step 4: Link VAT Number to Amazon
Upload your VAT ID in Seller Central. Enable invoice settings and set tax collection rates.
Step 5: File VAT Returns Timely
File returns monthly or quarterly. Keep records of all sales, VAT collected, and input VAT (fees, logistics, etc.).
Conclusion
VAT compliance isn’t optional—it’s your license to sell on Amazon UK and EU marketplaces. In 2025, Amazon is enforcing VAT rules more strictly than ever. Register your business properly and avoid sales disruption, tax penalties, or account bans.
Call to Action
Need help registering your U.S. business, applying for VAT in the UK or EU, or reporting your Amazon foreign income?
Email Anshul Goyal, CPA EA FCA at anshul@kkca.io to get your cross-border setup reviewed by a licensed international tax expert.
Disclaimer
This blog is for informational purposes only and does not constitute tax or legal advice. Consult with a licensed CPA or tax advisor for your business’s specific requirements.
FAQs
1. Do I need a UK business to sell on Amazon UK?
No, a U.S. business can register for VAT in the UK, but you must apply for a VAT number before selling.
2. What’s the VAT registration threshold in the UK?
If you store inventory or sell into the UK from abroad, registration is required from your first sale.
3. Can I deduct VAT registration and consulting fees?
Yes, under IRC §162, these are deductible business expenses.
4. How do I claim foreign VAT on my U.S. taxes?
Use Form 1116 to claim a foreign tax credit, only if VAT is not refundable.
5. What if I sell to both the UK and EU?
You may need separate VAT numbers and registrations in each region depending on where inventory is stored or shipped.
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S.-licensed Certified Public Accountant, IRS Enrolled Agent, and cross-border tax strategist. He helps Amazon sellers expand globally, register for VAT, and avoid costly compliance mistakes while staying profitable in international markets.
Email anshul@kkca.io to get your cross-border sales set up the right way.