EBay’s FVF commission on the VAT they collect from the buyer

[writesoon]

It may be technically correct to include EU VAT in the seller’s overall sales total from an accounting point of view, but why do eBay  actually need to charge us a Final Value Fee on that VAT?

EU VAT is added to the item price and the postage if a buyer from, say, France buys something from us.

So a £50 sale with £10 postage incurs an extra £12 in EU VAT (20%), making the final total the buyer pays £72.

Ebay then charge the their ‘final value fee’ commission on that whole  £72 total.

Yes, technically we have received an extra £12 for the item in the form of EU VAT, but that £12 disappears as quickly as it arrived, because eBay keep it to give to France’s VAT collectors. So, in effect, the extra commission they're taking from that £12 actually comes out of the item price excluding VAT. This just means we are paying a higher commission on what we actually receive.

it may be that the overall cost to eBay of collecting and dealing with all this VAT is so high that eBay need to do something to cover it.

If that is the case, do private sellers who sell items to countries that charge VAT also pay this extra fee, or are businesses the only ones being asked to contribute to the cost collecting the VAT in the form of extra fees?

Perhaps someone from ebay can shed some light on this?

[4_bathrooms]

---

@writesoon wrote:

Yes, technically we have received an extra £12 for the item in the form of EU VAT, but that £12 disappears as quickly as it arrived, because eBay keep it to give to France’s VAT collectors. So, in effect, the extra commission they're taking from that £12 actually comes out of the item price excluding VAT. This just means we are paying a higher commission on what we actually receive.

---

A business seller never technically receives the EU VAT paid by an EU buyer; it is entirely charged and remitted by eBay. A UK business seller would not include the EU VAT that eBay charged and remitted in their turnover for tax purposes but otherwise you are correct - business sellers pay a fee on a tax eBay alone is obliged to charge and remit. As per eBay:

"The final value fee is calculated as a variable percentage of the total amount of the sale (which includes the item price, postage, and any applicable taxes), plus a fixed charge of 30p per order."

---

@writesoon wrote:

it may be that the overall cost to eBay of collecting and dealing with all this VAT is so high that eBay need to do something to cover it.

---

That is what the regulatory operating fee is for (which is also based on what the buyer pays including any applicable taxes).

---

@writesoon wrote:

If that is the case, do private sellers who sell items to countries that charge VAT also pay this extra fee, or are businesses the only ones being asked to contribute to the cost collecting the VAT in the form of extra fees?

---

Private sellers do not pay final value fees nor the regulatory operating fee. They do pay the international fee (as do business sellers albeit business sellers have a lower rate) of 3% which is based on the total price paid by the buyer including - you've guessed it - any applicable taxes.

[sml192]

As you say there are costs associated with collecting and remitting the required taxes and this is eBay's way of recouping those costs.

Private Sellers do contribute albeit not to the same extent.  They are charged 3% of the total amount paid by the buyer for international sales which includes the Buyer Protection Fee where applicable as well as postage and any taxes and customs fees.

[writesoon]

Thank you for claifying that private sellers do make some contribution - albeit a smaller one than businesses - to recouping the 'costs associated'  of collecting and remitting taxes.

Given the 'costs associated' with trying to sell as a business on eBay , including the ever rising price of postage (of which eBay take about 13.5% when the buyer pays for it), and given that businesses are the ones now providing the income that allows 'private' sellers to 'sell for free', may I respectfully request that eBay help businesses - particularly those who need to turn over a lot of lower cost items to make enough money - by significantly increasing the number of inclusive listings in the Basic shop subscription. 

I think I'm right in saying that business sellers in the USA  get about 10,000 listings included in their Basic shop, while we pay about the same for just 250 fixed price listings and 100 auctions. USA business sellers get those 250 for free even if they don't have shop!

An increase (from 250 fixed price and 100 auctions) to, say even just 1500 inclusive listings for a Basic shop, which could be used in any format that best suits the business, would make a huge difference to a lot of us! It would give businesses a much better chance of making enough money on eBay to stop worying about all the fees. Ebay would then get more commission from the extra sales, so it seems a no brainer.

As an 'adviser' on this forum, pehaps you can relay this request directly to those who make the decisons?