VAT on Items Sold on Etsy

July 16, 2020

Not all Etsy sellers know that they might be responsible for the Etsy VAT compliance of their sales made on the platform. When collecting seller fees, Etsy automatically charges and remits Etsy fees VAT at checkout. However, sellers need to collect VAT on Etsy sales on their sold items. It is their responsibility to include the applicable VAT amount in their listings on Etsy so that their customers could evaluate the final Etsy VAT included prices.

Sales on Etsy and VAT in the European Union

Etsy shops selling to customers in the EU should consider both the nature of their goods and the country of destination. These criteria will determine the VAT rate applicable. Suppliers are responsible for VAT registration whenever they sell on the Etsy platform. Consequently, Etsy charges VAT and remits it to authorities in countries where the law obliges Etsy to do so; however, in other countries, sellers are liable for charging and paying taxes on their own.

According to German VAT regulation, Etsy is required to collect VAT certificates from some sellers who sell to German customers.

VAT on Etsy sales for businesses selling the UK

Following the end of the Brexit transition period, the rules regarding Etsy UK VAT fees were updated. As of January 1, 2021, VAT on Etsy UK customers need to pay is collected whenever a buyer located in the UK purchases goods for £135 or less from sellers based in other countries.

When looking for items worth less than £135, UK buyers will see approximate Etsy VAT UK inclusive pricing. The final Etsy VAT fees UK customers need to pay will be calculated at checkout. It is important to remember than businesses selling to customers in the UK are required to registered for VAT by the HMRC.

Etsy VAT fees in Australia

As of July 1 2018, while selling to Australian buyers from overseas, Etsy collects a 10% GST on orders if each of the following applies:

  • Seller is located outside Australia.
  • The package is being shipped to a buyer in Australia.
  • The total value of the package is less than or equal to AUD 1000.

GST is not applicable if both the buyer and the seller are located in Australia or the transaction amount is more than AUD 1000.

VAT on Etsy fees in New Zealand

As of December 1 2019, Etsy customers in New Zealand are subject to 15% GST on their orders if sellers are located outside New Zealand and if the package is shipped to a customer in New Zealand. However, GST is not applicable if both buyers and sellers are located in New Zealand. Furthermore, sellers must include Etsy’s Inland Revenue Department (IRD) number 122-669-181 and an indication that GST was applied on the outside of their packages and customs slip.

Norwegian Etsy VAT regulation

As of April 1 2020, Etsy customers in Norway are subject to 25% VAT on their orders if each of the following applies:

  • The seller is located outside Norway
  • The shipping address is in Norway
  • The package has items less than 3,000 NOK
  • The item is subject to VAT at the standard rate of 25%.

However, Import VAT is not applicable if both buyers and sellers are located in Norway or the transaction amount is more than or equal to NOK 3000 or the item is not subject to Norwegian VAT. Besides, sellers must include Etsy Ireland’s Norwegian tax (VOEC) number 2021137 and an indication that GST was applied on the outside of their packages and customs slip.

As a result, Etsy is responsible for collection and remittance of GST/VAT on behalf of the sellers in countries mentioned above. For the orders placed via PayPal, Etsy sends the collected GST/VAT to sellers and adds the tax to the Etsy statements of sellers in order to remit the tax to tax authorities.

VAT on digital sales

Sellers are required to charge VAT on Etsy platform on digital items purchased by buyers in certain countries such as Australia, Belarus, the EU, Iceland, India, Malaysia, New Zealand, Norway, Québec (Canada), Russia, Serbia, Singapore, South Africa, South Korea, Taiwan, Turkey, Switzerland, or the United Arab Emirates regardless of their location. Thus, if the buyer is located in one of these countries, Etsy charges the appropriate VAT rate on the sale of digital items delivered via automatic download.