VAT stands for value-added tax. It's a tax based on the consumption of goods and services that is commonly found in the EU and select other regions of the world.
VAT is also known as JCT in Japan; GST in New Zealand and Australia; and QST in Quebec (Canada).
VAT may be charged to buyers on their purchases (“VAT on Items Sold on Etsy”) as well as to eligible sellers on their paid seller fees ("VAT on seller fees”).
This article contains general information. You should always contact your local tax authority or tax advisor for more information.
- Am I required to charge VAT on my physical items?
- Selling to Australian buyers from overseas
- Selling to German buyers from outside of the EU
- Selling to UK buyers from overseas
- UK Sellers: Making Tax Digital rules
- Am I required to charge VAT on my digital items?
- What should a seller invoice to a buyer look like?
- Is VAT collected on seller fees?
- Am I required to have a VAT ID?
- How will Etsy use my VAT ID?
- Will I receive an invoice from Etsy for VAT on seller fees?
- VAT for shops based in Australia, Belarus, the EU (excluding Ireland), Iceland, India, New Zealand, Norway, Québec (Canada), Serbia, South Korea, Turkey, Taiwan, and United Arab Emirates
- VAT for shops based in Ireland, Japan, South Africa, Russia, and Switzerland
Am I required to charge VAT on my physical items?
For information on VAT requirements in your location, please consult your local tax authority or a licensed professional.
If you are a VAT registered seller, you may be required to charge VAT on the items that you sell on the Etsy platform.
For sellers in the EU
For EU countries, the applicable VAT rate depends on two things:
- the nature of what is for sale and
- the country in which the supply of goods and services is taxable with VAT
When supplying goods and services in the EU, the applicable VAT rates can be checked on the European Commission's website.
Etsy displays copy next to an item’s price to buyers located outside the US and Canada that indicates that the price includes VAT (if applicable). If you are required to charge VAT on the items you sell, it is your responsibility to include applicable VAT in your listing prices on Etsy.
Selling to Australian buyers from overseas
As of 1st July 2018, some orders delivered to Etsy customers in Australia are subject to Goods & Sales Tax (GST). Etsy will collect a 10% GST on orders if each of the following applies:
- Seller is located outside Australia.
- The package is being delivered to a buyer in Australia.
- The total value of the package is less than or equal to $1,000 AUD.
Etsy will automatically include the tax in the buyer’s total. The buyer will pay the tax at checkout, and Etsy will be responsible for remitting it to the Australian Taxation Office (ATO).
For orders placed through PayPal, Etsy will send the GST collected to the seller as a part of the payment. Etsy will add the tax to the seller’s Etsy statement so that we can remit the tax to Australian authorities.
GST does not apply if the total value of the package is more than $1,000 AUD or if the transaction is between buyers and sellers both located in Australia. Sellers might need to add additional information to the customs forms on these packages. Learn more.
Selling to German buyers from outside of the EU
As of 15th April 2019, some non-EU Etsy sellers may need to provide their German USt 1 TI VAT certificate to Etsy. If you store your goods in Germany and are based outside the EU, then you are required to be VAT registered in Germany. If you are an Etsy seller who meets this criteria, you must send your VAT certificate to firstname.lastname@example.org.
If you sell goods to a German buyer and you don’t store your goods in Germany, your goods may be subject to VAT on import to Germany, and you shouldn’t need to be VAT registered in Germany.
Etsy can’t provide tax advice. We recommend that you speak to a tax advisor with experience in German VAT for more information.
Selling to UK buyers from overseas
If you’re a seller located outside of the United Kingdom (UK) but you sell to UK buyers, you might be considered an “overseas seller”. Her Majesty’s Revenue & Customs (HMRC) defines an “overseas seller” as a seller who:
- sells goods already in the UK at the point of sale to UK consumers
- is based outside the EU and sells goods to a UK consumer, and then imports them into the UK
- sells goods located in another EU member state to UK consumers
To learn more on this please click here.
UK Sellers: Making Tax Digital rules
The HMRC requires most UK VAT registered businesses with a taxable turnover above £85,000 must follow the rules for Making Tax Digital for VAT. These rules include:
- Keeping digital VAT records
- Signing up for Making Tax Digital for VAT
- Using software compatible for Making Tax Digital to submit VAT returns
Etsy can’t provide tax advice. We recommend that you speak to a tax advisor with experience in UK VAT or reach out to HMRC directly for more information.
Am I required to charge VAT on my digital items?
If you sell digital items to buyers in certain countries Etsy is required to charge VAT no matter where your shop is located. If you sell an item to a buyer in a country where Etsy isn’t required to charge VAT on digital items, you may be responsible to collect it. We recommend that you speak with a professional about the tax laws in your location.
What should a seller invoice to a buyer look like?
Some businesses in the EU may need to provide an invoice when supplying goods or services. For further details on the invoice and these requirements, please find more information on the European Commission's website.
Additionally, we recommend that you check whether your invoices comply with the local invoice requirements.
Is VAT collected on seller fees?
Depending on your business status and location, Etsy may be required to collect VAT on seller fees accrued each month and remit it to the relevant tax authority.
Etsy may also need to collect VAT on Etsy Payments processing fees for sellers located in eligible Etsy Payments countries where required.
Am I required to have a VAT ID?
A VAT Identification Number (VAT ID) is used to identify individual businesses for the collection of taxes. Etsy does not require sellers to have a VAT number to sell in our marketplace.
Businesses in certain countries may be required by their local tax authorities to register for a VAT ID if they reach their local country threshold. However, in some countries, you may also register for VAT even if you have not reached the threshold.
Because VAT laws vary from place to place, we’re unable to advise sellers on whether they need to acquire a VAT ID. If you have any questions about whether you need a VAT ID, please consult your local tax authority or tax advisor.
How can I add or update my VAT ID?
You can add or update your VAT ID in Shop Manager:
VAT IDs have specific formats and European VAT IDs can be checked on the European Commission website for validity.
If you notice that your VAT ID is coming up as invalid, you will need to contact your local tax department to have it updated. You may also have an obligation to register your VAT ID with your local government.
How will Etsy use my VAT ID?
By providing a VAT ID to Etsy, you are establishing a business-to-business relationship between your shop and Etsy. This status and your business location determine whether or not Etsy will charge VAT on seller fees.
In some countries, Etsy has a reporting obligation to share your VAT ID, together with the total value of your seller fees applied for that period, with local authorities. Contact your local tax authorities for more information.
Will I receive an invoice from Etsy for VAT on seller fees?
Etsy provides downloadable VAT invoices to sellers in Australia, the EU, India, Japan, New Zealand, Norway, Russia, South Africa, South Korea, and Switzerland.
VAT invoices will appear on the first of each month for the previous month’s statement.
Each monthly VAT invoice contains a summary of VAT-eligible fees (in USD) deducted in the previous month.
Prior to November 2018, fees on the invoices were based in United States Dollar (USD).
As of November 2018, fees on the invoices are based in the currency of your Payment account, in some cases may still be USD.
Monthly VAT invoices arrive as downloadable PDF in English.
You can access the invoice on your desktop computer by visiting Shop Manager > Finances > Payment account. Once there, click on the month to get an invoice for that period. The download link will appear above the breakdown of your activity for the month.
VAT for shops based in Australia, Belarus, the EU (excluding Ireland), Iceland, India, New Zealand, Norway, Québec (Canada), Serbia, South Korea, Turkey, Taiwan, and United Arab Emirates
For sellers in these countries who have not submitted a VAT ID to Etsy, applicable VAT charges will appear in the current balance in your Payment account. You’ll receive a monthly invoice on the first of the following month that includes a list of VAT-eligible seller fees and how much you were charged on those fees during the prior month.
If you added your VAT ID to your Etsy account, you won’t be charged. Instead, you will receive an invoice from Etsy on the first of each month stating that you were not charged VAT on your seller fees. You’ll have access to invoices starting with the month you added a VAT ID to your account.
If you received a VAT credit during a month for a charge that was in a previous month, you will also receive a credit note along with your invoice on the first of the month. For example, if you sell a listing in June, and then cancel the order in July, the VAT you were charged in June and refunded in July will be reflected in the credit note issued for July’s transactions.
Some areas are exempt from VAT. We are aware of these exceptions and are working on a solution for sellers in these locations.
VAT for shops based in Ireland, Japan, South Africa, Russia, and Switzerland
Etsy is required to charge VAT on applicable fees regardless of whether you’ve submitted a VAT ID to us. Your Payment account will reflect any charges from the previous month. You will also receive a monthly invoice on the first of the month that includes a list of VAT-eligible seller fees and how much you were charged on those fees during the prior month.
If you received a VAT credit during a month for a charge that took place in a previous month, you will also receive a VAT credit note along with your invoice on the first of the month. For example, if you sell a listing in June, and then cancel the order in July, the VAT you were charged in June and refunded in July will be reflected in the credit note issued for July’s transactions.
You can find the current VAT rate for Irish sellers here.