Effective from 1st August, following a restructuring by eBay of its businesses resulting in UK customers contracting now with eBay UK rather than eBay Europe, there will be VAT applied to eBay fees.
This follows on from last years introduction of measures by the chancellor which was directly aimed at tackling what was seen as a rapidly growing VAT evasion by overseas traders that sell goods via online marketplaces such as eBay and Amazon. HMRC was provided with powers to force online marketplaces to ensure that overseas customers were correctly registered and accounting for VAT or risk being liable for that VAT themselves.
If the overseas retailer does not comply with the requirements outlined above, HMRC can issue a directive to the onlione marketplace that it will be jointly liable for VAT on future sales made by the overseas retailer if it continues to allow the trader to use the marketplace platform.
There will be a period of 30 days following the directive for the online marketplace to either ensure that the overseas trader becomes VAT registered, obtain funds from the overseas retailer to meet any future VAT liability or remove the trader from its marketplace. If the online retailer fails to take any action within the notice period then the online marketplace will automatically become liable for the VAT.
If a business is correctly registered in an EU couuntry other than the UK or Luxemourg and has provided eBAy with their vat number then there will be no VAT on eBay fees. Businesses may, however, be required to self assess VAT under their own countries domestic VAT rules known as reverse charge mechanism
For those businesses that reside outside the European Union selling via eBays european sites they will not be charged EU VAT on eBay fees however their countries VAT, GST or similar tax may apply.