UK VAT regulation
Find a summary of the deemed supplier VAT regulations for partners selling in the UK and / or Northern Ireland market.
Key conditions of UK VAT regulation
As of 1 January 2021, Great Britain (GB) has introduced special Value Added Tax (VAT) regulation for the sales facilitated by online marketplaces.
The new rules are similar to the ones introduced by the European Union as of 1 July 2021 and outlined here.
Under these new rules, Zalando is to be considered as an online marketplace since it:
Sets the terms and conditions of the sales performed
Authorizes / facilitates customers’ payments
Is involved in the ordering and/or delivery of the goods
Zalando becomes the deemed supplier of the B2C partner sales made on the UK Zalando store strictly for tax purposes in the below-mentioned examples. As a result, instead of the partner, Zalando has to declare and pay UK VAT on the relevant B2C sales, as well as issue the B2C invoices.
Here we give you an overview of the related use cases and explain how the rules might affect your sales in or to the UK.
Nevertheless, your individual situation might sometimes be rather complex. In case of any unclarities, we urge you to also consult with your tax advisor.
Orders to end customers in the UK (except Northern Ireland)
Partner's country of establishment1 | Outbound warehouse location (i.e. place of dispatch) | Consignment value2 | UK Deemed supplier rules applicable? | |
|---|---|---|---|---|
1) | Non-GB | non-UK | up to GBP 135 | Yes |
2) | Non-GB | non-UK | over GBP 135 | No |
3) | Non-GB | UK | irrelevant | Yes |
4) | GB | non-UK | up to GBP 135 | Yes |
5) | GB | non-UK | over GBP 135 | No |
6) | GB | UK | irrelevant | No |
1 The term Great Britain only includes Scotland, England, and Wales in this context. The term United Kingdom includes the territory of Great Britain and Northern Ireland. Transactions to / from Northern Ireland are subject to special (deemed supply) rules.
2 For a detailed definition of the term ‘consignment’, please visit the HMRC website.
Orders to end customers in Northern Ireland
Partner's country of establishment1 | Outbound warehouse location (i.e. place of dispatch) | Consignment value2 | UK Deemed supplier rules applicable? | |
|---|---|---|---|---|
1) | Northern Ireland (NI) or GB | NI or GB | irrelevant | No |
2) | NI | EU | irrelevant | No |
3) | NI or GB | non-UK | up to GBP 135 | Yes |
4) | NI or GB | non-UK | over GBP 135 | No |
5) | non-UK | NI or GB | irrelevant | Yes |
6) | non-UK | non-UK | up to GBP 135 | Yes |
7) | non-UK | non-UK | over GBP 135 | No |
1 The term United Kingdom includes the territory of Great Britain and Northern Ireland.
2 For a detailed definition of the term ‘consignment’, please visit the HMRC website.
FAQs
What is my country of legal establishment?
This is based upon the country of incorporation of your legal entity which has a contract with Zalando for the sale of products.
For example, if you are incorporated in Scotland, then you are established in Great Britain (GB). If you are incorporated in Northern Ireland, then you are established outside of GB, but inside of the United Kingdom (UK). If you are incorporated in France, then you are established outside of GB and the UK, but inside the European Union (EU).
Based on your contract with Zalando, as well as our Platform rules, you are obligated to inform us of the changes in your sales entity / legal establishment (if relevant). Failure to do so, as well as unreasonable delays, might result in the UK VAT being withheld from your payouts.
I supply to UK customers only via self-fulfillment. Do these rules also apply to me?
Yes, they do. The deemed supply conditions have to be considered separately for each consignment, irrespective of the mode of transportation or fulfillment method.
What obligation do I have as a partner if Zalando is not the deemed supplier?
You alone remain responsible for all UK VAT reporting and VAT payment obligations, as well as the related B2C invoicing.
Nevertheless, further (indirect) tax obligations may also apply. In case of any uncertainties, we recommend that you consult with your tax advisor.
What will change for me as a partner with Zalando as the deemed supplier?
VAT reporting: Zalando will report the UK VAT to HMRC on your B2C sales
VAT payment: Zalando will also pay the UK VAT on these transactions
Partner payouts: The UK VAT paid by Zalando to HMRC on these transactions will be deducted from your periodic settlements
Invoicing: Solely for tax purposes, your online sale to the customer will be broken down to two invoicing flows:
B2B (zero VAT charged) sale from you to Zalando: Zalando will issue these invoices to you; and
B2C sales from Zalando to the UK customer (with UK VAT): these will be issued by Zalando to the UK customer
Note that companies can only be considered as locally established in NI for VAT purposes if they have a valid VAT ID number in the correct format i.e. with the prefix ‘XI’.
If you have any further questions about the implementation of the new VAT regulation within Zalando Partner Program, please reach out to Partner care here.
Please note that we cannot offer any tax advice for your business. The above FAQs are for guidance only. We recommend that you discuss your specific situation with your tax advisor.