VAT on marketplace fees and shop subscriptions
Budget each selling fee and shop subscription as the fee plus any VAT you cannot recover. Track cash payments separately, verify the invoicing entity and evidence, and check overseas services for reverse-charge and registration implications. Review the goods sourcing budget alongside these selling costs with Cambridge China Bridge.
Build a fee budget before setting your selling price
List selling commissions, listing charges, shop subscriptions and advertising separately. Save the platform’s fee schedule and check whether each quoted charge includes VAT. Record what the commission applies to, including delivery charges or discounts where relevant. Keep these selling costs separate from the imported goods’ landed cost.
Budget subscriptions across the period you expect to sell the batch, including time before launch. Allocate shared subscriptions using a documented method and test what happens if sales are slower than expected. Use China order profit and cash planning to bring the goods and selling budgets together.
Identify who supplies each service
Download a fee invoice and subscription invoice rather than relying on the platform’s brand or website address. Compare the supplier’s legal name, address and VAT number with the seller agreement and billing settings. Check that the customer details identify your business. Ask which establishment actually supplies the service if the group operates across countries.
Ask the platform to confirm its treatment of each charge, including any change of invoicing entity. A UK VAT number does not itself rule out an overseas-service reverse charge: HMRC says it can apply when the supplier belongs outside the UK even if it has a UK VAT registration number.
Confirm recovery before removing VAT from cost
VAT-registered businesses can reclaim VAT on purchases for business use, subject to the recovery rules. Ask your accountant to confirm the recoverable amount for your fees, considering your accounting scheme, any private use and any exempt activities. Until that review is complete, show an unresolved VAT allowance rather than assuming full recovery.
For invoiced VAT, HMRC says an invalid invoice or statement cannot support a reclaim. Obtain the fee VAT invoice and match it to the subscription payment or settlement deduction. Check the service description, billing period, net charge and VAT shown. Keep overseas reverse-charge calculations separately from VAT charged by the supplier.
| Confirmed position | Pricing budget | Cash plan |
|---|---|---|
| Invoiced VAT fully recoverable | Fee excluding recoverable VAT | Gross payment and expected recovery timing |
| Invoiced VAT partly or wholly unrecoverable | Fee plus unrecoverable VAT | Gross payment and any confirmed recovery |
| Overseas service requiring reverse charge | Fee plus any unrecoverable self-accounted VAT | Supplier payment and net VAT payable to HMRC |
Check overseas fees even when no VAT is billed
If the service supplier belongs outside the UK, ask your accountant whether the fee or subscription falls within the business-to-business general rule or an exception under HMRC’s place-of-supply guidance. An invoice showing no VAT is a reason to check the treatment, rather than assume there is no VAT work to do.
Where the reverse charge applies, you account for VAT yourself and recovery follows the normal rules. Full recovery offsets the self-accounted VAT; any unrecoverable amount belongs in your cost and tax-payment budget. Overseas business-to-business general rule services also count towards taxable turnover. If you are unregistered, include their value in your registration review alongside marketplace VAT and registration.
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Replace estimates with invoice evidence
Before approving your selling price, give your accountant the agreements, sample invoices, billing settings and fee budget. Ask for a recorded decision on invoiced VAT, recovery and overseas services. Query unexpected VAT or a supplier change with the platform and request corrected documentation where appropriate. Keep unresolved amounts visible in the budget.
After launch, replace estimates with actual fee invoices and credit notes. Match each charge to its payment route so a payout deduction and its invoice do not become separate expenses. Follow first marketplace payout reconciliation for that process. Cambridge China Bridge’s staff in China can help review factory-side batch costs alongside your selling-cost budget.
Frequently asked questions
Should I add VAT to every marketplace fee?
Check whether the quoted fee includes VAT and who supplies the service. Budget the fee plus VAT you cannot recover, while keeping gross cash payments separate.
Can I reclaim fee VAT from a payout statement?
A statement cannot support a claim for invoiced VAT. Obtain the fee VAT invoice, match it to the deduction and confirm recovery eligibility. Keep overseas reverse-charge calculations separately.
Does a UK VAT number rule out reverse charge?
No. HMRC says the reverse charge can apply when the supplier belongs outside the UK even if it has a UK VAT number. Check the actual service supplier and applicable place-of-supply rule.
Do overseas subscriptions affect VAT registration?
Overseas business-to-business general rule services count towards taxable turnover. If you are unregistered, ask your accountant to include eligible subscriptions and fees in your registration review.