Guide
The Amazon-Xero integration explained: the 14-day settlement cycle, Marketplace Facilitator VAT, HMRC VAT boxes, and how to automate the whole thing.
Last updated: 18 September 2026
Amazon settlement reconciliation is the process of matching the lump-sum bank deposit Amazon pays roughly every 14 days back to the underlying sales, refunds, fees, advertising, storage and tax adjustments that produced it, then posting an accurate entry to your accounting system. An Amazon Xero integration automates that matching and posts the result straight into Xero as a single invoice that ties to the deposit.
Amazon doesn't pay you per order. It nets everything — sales, refunds, referral fees, FBA fulfilment and storage fees, advertising spend, promotions, and any VAT it collects and remits on your behalf — into one settlement, then pays the net balance to your bank roughly every 14 days (weekly or monthly at the extremes of order volume). Your Xero bank feed only ever sees that final number. Without the settlement report behind it, you can't tell how much of it was actually revenue versus how much Amazon deducted in fees, and you have no basis for a VAT-accurate invoice.
Amazon's settlement report (available in Seller Central, or programmatically via the Selling Partner API) is a flat file listing every transaction line for the period, typically including:
A busy seller's settlement can run to hundreds or thousands of lines across a dozen-plus transaction types — which is why classifying it by hand, correctly, settlement after settlement, becomes impractical past a fairly low order volume.
Two UK-specific mechanics catch most Amazon-Xero reconciliations out if they aren't handled explicitly:
For cross-border EU/UK marketplace orders, Amazon itself collects and remits the VAT directly to HMRC — the seller never touches it. Those order lines need to post as zero-rated on the seller's books (the Principal routes to a “Marketplace VAT Responsible” line, not standard output VAT), with the matching MarketplaceFacilitatorVAT withholding row reconciled back into the same bucket so the totals net correctly. Post it as a normal standard-rated sale instead, and you'll overstate the VAT you owe.
Until 31 July 2024, Amazon billed UK sellers' fees from its Luxembourg entity — a non-UK, business-to-business supply, which UK VAT rules require the seller to reverse-charge (self-account for as both output and input VAT, net effect zero on the amount payable, but it has to appear on the return). From 1 August 2024, Amazon moved that billing to its UK Branch, a UK-resident supplier — so from that date the same fees carry ordinary UK input VAT instead, reclaimable via Box 4 in the normal way. A settlement period that straddles the cutover date needs both treatments applied correctly within the same reconciliation.
| Box | What it means | Driven by |
|---|---|---|
| Box 1 | VAT due on sales and other outputs | Standard-rated Amazon sales (non-MF orders) |
| Box 4 | VAT reclaimed on purchases and inputs | FBA fees, advertising, storage, selling fees |
| Box 5 | Net VAT to pay HMRC or reclaim | Box 1 minus Box 4 |
| Box 6 | Total value of sales, excluding VAT | All order Principal/Shipping/Promotion lines |
| Box 7 | Total value of purchases, excluding VAT | All fee/advertising/storage lines |
Getting these right depends on every settlement line landing on the correct Xero tax code — commonly OUTPUT2 (standard-rated sales), INPUT2 (standard-rated purchases), ZERORATEDOUTPUT (MF-responsible sales) and REVERSECHARGES (pre-August-2024 Luxembourg-billed fees, or genuinely cross-border FBA charges).
A very low-volume seller can, in principle, work through a settlement report by hand in a spreadsheet — mapping each transaction type to the right account and VAT code, then posting a manual journal to Xero. In practice, most sellers move to a dedicated Amazon-Xero integration once volume makes that error-prone or time-consuming, because the classification rules above (MF VAT, the 2024 cutover, reserved-balance carry-over between settlements) are easy to get subtly wrong at scale. Three tools that automate this end to end are TrueBooks, A2X and Link My Books — see our comparisons at TrueBooks vs A2X and TrueBooks vs Link My Books if you're evaluating which fits your setup.
TrueBooks connects to Amazon Seller Central via SP-API and to Xero, both with a click-to-authorise OAuth flow — no developer account or API keys needed. Once connected, it:
You can see this working with your own data on a 30-day free trial — start free, no card required — or read the full mechanics in our help centre, including what a settlement report contains and how UK VAT and MF orders are handled.
An Amazon settlement is a report Amazon issues roughly every 14 days (sometimes weekly or monthly at very low/high volumes) that lists every transaction behind the single lump-sum deposit paid into your bank account — sales, refunds, FBA fees, storage fees, advertising spend, promotions, and tax adjustments. Reconciliation means matching that bank deposit back to the settlement lines that produced it.
A bank feed only sees the final deposit amount — one number, no detail. It can't tell you how much was sales versus fees versus VAT, so you can't post a VAT-accurate invoice or trust your management accounts from the bank feed alone. You need the underlying settlement report, which Amazon makes available separately via Seller Central or its Selling Partner API (SP-API).
Under Marketplace Facilitator rules, Amazon itself collects and remits VAT directly to HMRC on certain orders (typically cross-border EU/UK marketplace sales), instead of the seller doing so. Those orders need to be posted differently — the Principal amount routes to a zero-rated line rather than standard-rated output VAT, and the matching MarketplaceFacilitatorVAT withholding rows have to be reconciled back into the same buckets, or your VAT return will overstate what you actually owe.
A UK Amazon seller's settlement typically touches Box 1 (VAT due on sales), Box 4 (VAT reclaimed on purchases — FBA fees, advertising, storage), Box 5 (net VAT to pay or reclaim), Box 6 (total value of sales) and Box 7 (total value of purchases). Getting the underlying Xero tax codes right (OUTPUT2, INPUT2, ZERORATEDOUTPUT, REVERSECHARGES) is what makes those boxes come out correct on the return.
On 1 August 2024, Amazon moved UK seller-fee billing from its Luxembourg entity (Amazon EU S.à r.l.) to its UK Branch. Before that date, UK seller fees were a business-to-business service from a non-UK supplier and had to be reverse-charged (self-accounted for as both output and input VAT). From that date, the UK Branch is a UK-resident supplier, so the same fees now carry standard UK input VAT instead. A settlement spanning the cutover date needs both treatments applied correctly within the same reconciliation.
You can, but a settlement report commonly runs to hundreds or thousands of lines across a dozen-plus transaction types, and getting the VAT treatment wrong on Marketplace Facilitator orders or the 2024 billing cutover is easy to miss by hand. Most sellers past a low order volume use a dedicated Amazon-Xero integration (TrueBooks, or alternatives like A2X and Link My Books) to classify every line automatically and post one invoice that ties to the bank deposit.
TrueBooks connects to Amazon Seller Central (via SP-API) and Xero with a click-to-authorise OAuth flow, pulls each settlement report automatically, classifies every line — Principal, Promotion, FBA fees, storage, advertising, refunds, MF VAT, retroactive tax adjustments — against the correct UK Xero tax code, and posts one AUTHORISED invoice per settlement that reconciles to the bank deposit to the penny. Nothing posts without your review, and every posting is reversible.
TrueBooks is an independent third-party solution and is not affiliated with, endorsed by, or sponsored by Amazon.com, Inc. or Xero Limited. This guide reflects UK VAT rules and Amazon mechanics as understood as of September 2026 and is not a substitute for advice from a qualified accountant.