UK VAT

Amazon Marketplace Facilitator VAT Explained

When Amazon collects the VAT itself, what it looks like in your settlement report, and how to book it in Xero.

Last updated: 19 September 2026

Short answer: Marketplace Facilitator VAT is VAT that Amazon collects from the customer and pays to the tax authority itself, because the law treats Amazon as the seller for VAT purposes on certain orders. In your settlement report you'll see the VAT charged (a Tax row) and the same amount taken back (a MarketplaceFacilitatorVAT-Principal or -Shipping row). For a UK seller, the order is booked as a zero-rated sale of the price without VAT, and no VAT is due from you on it.

When Amazon collects the VAT

Online marketplaces are "deemed suppliers" in several situations. The ones that matter most to sellers are:

Low-value parcels sent from the UK to customers in the EU (€150 or less). Amazon charges the customer the VAT of their own country and pays it through the EU's import scheme.
Low-value parcels sent into the UK (£135 or less) by sellers based outside the UK — Amazon charges UK VAT.
Goods already in the UK sold by an overseas seller to UK consumers — Amazon accounts for the UK VAT.
Several other countries, such as Norway, have similar rules.

For a UK-based seller, the first case is the common one: small orders from Amazon.co.uk or EU marketplaces shipped from a UK warehouse to EU customers. Sales to UK customers from UK stock are not Marketplace Facilitator orders — you account for that VAT yourself.

What it looks like in the settlement report

A Marketplace Facilitator order carries a matching pair of VAT rows. An illustrative order shipped to a customer in Ireland:

Transaction type	Amount type	Description	Amount
Order	ItemPrice	Principal	20.00
Order	ItemPrice	Tax	4.60
Order	ItemWithheldTax	MarketplaceFacilitatorVAT-Principal	−4.60
Order	ItemFees	FBAPerUnitFulfillmentFee	−3.20
Order	ItemFees	Commission	−3.00

The Tax row and the withholding row cancel, so the order adds £20.00 of sales and £6.20 of fees to the payout. Shipping works the same way with ShippingTax and MarketplaceFacilitatorVAT-Shipping. Refunds reverse all of it with Refund rows.

Watch for partial withholding: occasionally the withheld amount isn't exactly equal to the Tax row. Always add the Principal, Tax and withholding rows together rather than assuming they cancel — the result is what you actually received for the sale.

How to book it

Add together the Principal, Tax and MarketplaceFacilitatorVAT rows for these orders.
Post the result as its own sales line, e.g. "Sales — Marketplace VAT Responsible".
Use Zero Rated Income (ZERORATEDOUTPUT) in Xero. It's a zero-rated supply from you, so it belongs in Box 6 but adds nothing to Box 1.
Keep these orders separate from UK standard-rated sales so it's clear why no VAT was charged.

The two costly mistakes

Treating it as a normal UK sale. Posting the order at 20% means you pay VAT to HMRC that Amazon has already paid to another tax authority.
Posting the Tax row without the withholding row. Your Xero invoice is then higher than Amazon's deposit by exactly the withheld VAT, and the settlement won't reconcile.

How TrueBooks handles it

TrueBooks spots Marketplace Facilitator orders from their withholding rows, adds each order's price, tax and withholding together (so partial withholding comes out right), and posts the result to a separate zero-rated line. Its VAT audit view shows the effect on each box of your return. See the Amazon Xero integration.

General information based on HMRC and EU marketplace rules as at September 2026, not tax advice. Check your position with your accountant.

Frequently asked questions

What does MarketplaceFacilitatorVAT-Principal mean in my Amazon settlement?

It is the VAT on the product price that Amazon charged the customer and then kept, because Amazon is responsible for paying that VAT to the tax authority. It appears as a negative ItemWithheldTax row that cancels the positive Tax row on the same order. MarketplaceFacilitatorVAT-Shipping is the same thing for the shipping charge.

Do I include Marketplace Facilitator VAT in my UK VAT return?

Not as VAT due. Amazon pays that VAT, so it doesn't go in Box 1. The value of your sale still counts as zero-rated turnover in Box 6.

Is Marketplace Facilitator VAT the same as US Marketplace Facilitator Tax?

It's the same idea in a different tax. In the US, Amazon collects state sales tax as a marketplace facilitator and the rows are named MarketplaceFacilitatorTax. The effect for the seller is similar: the tax is collected and paid by Amazon, not by you.