VAT on Etsy

VAT on Etsy can apply in several ways depending on your location, your buyer's location, and the types of goods or services sold. 

• VAT on seller fees: If you're located in a country where VAT is applicable, Etsy may collect VAT on the fees it charges you. Etsy will automatically deduct VAT from your balance for sellers in the EU, UK, and other eligible countries unless you provide a valid VAT ID. If you supply a VAT ID, Etsy will apply a reverse charge mechanism, meaning you won't be charged VAT on your seller fees but will need to account for it in your VAT return.

• VAT on digital sales: For sellers of digital goods (like e-books or patterns), Etsy automatically collects VAT from buyers in certain countries (e.g., EU, UK, Australia) and remits it directly to the relevant tax authorities. As a seller, you don't need to add VAT to your prices manually, as Etsy handles this part. The VAT is deducted from the sale before funds are transferred to your account, so your listed price includes VAT where applicable.

• VAT on physical goods: Etsy may also collect VAT on physical goods sold to buyers in specific regions, especially for cross-border transactions. If you're shipping goods to EU countries or the UK, Etsy will often collect and remit the VAT on your behalf to simplify compliance.

If your turnover exceeds the local VAT threshold, you may need to register for VAT and handle VAT returns independently, ensuring compliance with local tax laws.