With Deferred Transaction Adjustments enabled, the fee amounts in your settlements may not match Amazon's monthly VAT invoices. Fees are charged at one point and appear in settlements at another, and recognition settlements move them again into the month of activity. For most sellers the difference is small and the default treatment is fine.
If you need the VAT on Amazon fees to be exact for your return, some of our larger customers use the approach below.
Before you change anything
⚠️ Do not switch your fee tax rates to Zero Rated Expenses unless you follow all three steps below every month. Step 1 on its own removes the VAT on fees from your return; step 2 is what puts it back.
This approach applies only if Deferred Transaction Adjustments is enabled. It is not our default VAT treatment for Amazon fees.
Default tax rates are set per fee type in the Accounts & Taxes wizard and vary by fee type, region and the date Amazon invoiced the fee. See Amazon account and tax rate mappings for UK VAT registered businesses for the current defaults, and check the mappings on your own account.
If you are not sure this is right for your business, confirm it with your accountant first.
The approach
In the Accounts & Taxes wizard, assign the Zero Rated Expenses tax rate to all Amazon fee categories.
At the end of each month, create a manual journal in Xero or QuickBooks recording the correct VAT on fees, using the figures from your Amazon Tax Invoices (Seller Central → Tax Document Library).
Attach the Amazon tax invoices to the journal for an audit trail.
Your VAT return then reflects the fees Amazon actually invoiced, and your settlements still reconcile to your payouts as normal.
For what Deferred Transaction Adjustments does and how to read the results, see Amazon Deferred Transactions & Revenue Recognition.