How VAT Works on Digital Items

VAT stands for value-added tax. It's a tax based on the consumption of goods and services that are commonly found in the EU and select other regions of the world.

VAT is also known as JCT, GST, HST, SST, PST, RST or QST in some countries and regions.

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”).

The information below is for VAT rules on the sale of digital items delivered via automatic download to buyers in:

  • Australia
  • Belarus
  • Chile
  • the EU
  • Georgia (country)
  • Iceland
  • India
  • Indonesia
  • Kenya
  • Malaysia
  • Mexico
  • Moldova
  • New Zealand
  • Norway
  • Québec (Canada)
  • Russia
  • Saudi Arabia
  • Serbia
  • Singapore
  • South Africa
  • South Korea
  • Switzerland
  • Taiwan
  • Thailand
  • Turkey
  • Ukraine
  • the United Arab Emirates
  • the United Kingdom
  • Vietnam

This does not apply to physical goods. Learn how VAT works on physical items.

Etsy and digital VAT

Etsy collects and remits VAT on digital items purchased by buyers located in certain countries.

If you sell digital items, no matter where your shop is located, buyers in Australia, Belarus, Chile, the EU, Georgia (country), Iceland, India, Indonesia, Kenya, Malaysia, Mexico, Moldova, New Zealand, Norway, Russia, Saudi Arabia, Serbia, Singapore, South Africa, South Korea, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Arab Emirates, or Vietnam will be charged VAT.

If you sell digital items to buyers in Canada learn when your buyers will be charged Canadian taxes.

To be clear, buyers—not Etsy or Etsy sellers—pay VAT as part of their total purchase price when buying digital items.

Some examples of digital items:

  • E-books 
  • Digital patterns 
  • Downloadable PDFs

In all cases, Etsy will take the VAT paid by the buyer and remit to the relevant tax authorities. Sellers are not responsible for adding VAT to their digital listing prices. If you have any questions regarding your tax liability on digital items that you sell, please contact your tax advisor.

How digital VAT works for buyers

Etsy automatically detects if the buyer is in one of these countries and adds the appropriate VAT to the listing price if the item is a digital file download.

Buyers see the total price with VAT included on each listing that applies, as well as in their cart, invoice, and purchase page.

The price with VAT included will appear on the product listing for the digital item.

Buyers will pay the listing price and VAT for digital items purchased from any seller.

Digital VAT and your Payment account

Etsy Payments

For transactions where Etsy Payments is the payment method, Etsy will automatically collect VAT from the buyer. The VAT will be deducted from the order before the funds are placed in the seller’s Payment account.

Standalone PayPal 

For transactions made with  the seller's stand-alone PayPal account, the VAT costs are added to the seller’s Payment account.

Remember, Etsy can't directly collect the VAT charged to buyers when they make a payment to the seller's own PayPal account. If a seller accepts payment in their own PayPal account, applicable VAT will be added to the seller’s Payment account once the buyer completes checkout. This way, Etsy can then remit it.

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