Etsy_VAT_on_Seller_Fees

SS Digital India

1 week ago

Transcript

00:00Hey everyone and welcome. If you're an Etsy seller, you know that looking at your payment

00:04account can sometimes feel like trying to solve a tricky puzzle. Well, today we're going to break

00:09down one specific piece of that puzzle, value added tax or VAT on your seller fees. I promise

00:15by the end of this, it's all going to make a lot more sense. So you're looking at your statement,

00:19right? And you see this little extra charge pop up labeled VAT or maybe GST. And you're thinking,

00:25wait, what is this? Why are they charging me for this? Trust me, you are not alone and we are about

00:30to clear it all up. Okay. First things first, we need to get one thing straight. There are actually

00:35two different kinds of VAT you'll see on Etsy. There's the VAT that your buyers pay when they

00:40purchase your products. We are not talking about that today. What we are focusing on is the VAT

00:45that you, the seller pay on the services Etsy provides you, you know, for things like your

00:49listing fees and transaction fees. That's our target. So what even is VAT? Well, in a nutshell,

00:57it's a tax on stuff people buy goods and services. Now, depending on where you are in the world,

01:03you might know it by a different name like GST in Australia or HST in parts of Canada.

01:09The name changes, but the idea it's pretty much the same everywhere. This brings us to the single

01:15most important concept you need to grasp to understand this whole thing. It really all

01:19boils down to one simple question. Have you given Etsy your VAT ID? Okay, let's break this down

01:26because this is the core of it all. Look at the left side. If you're a seller in the UK and you

01:31don't have a VAT ID on file with Etsy, they're required by law to charge you VAT. So on a hundred

01:37pounds worth of fees, they'll add that 20% VAT and you end up paying 120 pounds. Now look at the

01:43right. If you do give them a valid VAT ID, boom, Etsy doesn't add that charge. Instead,

01:48you're responsible for handling it on your own tax return through something called a reverse charge.

01:53The bottom line, that little ID number makes a huge difference. And hey, this isn't just a UK

01:59thing, not by a long shot. This rule applies in a whole bunch of countries. As you can see,

02:04we're talking about most of the European Union, Australia, India, New Zealand, the list goes on.

02:10Take a quick look. See if your country's on here.

02:13Of course, just when you think you've got it all figured out, there's always a but, right? So

02:18while that main VAT ID rule covers most sellers, there are a few key countries where things work

02:24a little differently. Let's look at the exceptions. And here's the big exception. For sellers in a

02:30select group of countries, it doesn't matter if you have a VAT ID on file or not. Etsy is legally

02:36obligated to charge VAT on your seller fees, period. That charge is going to show up no matter what.

02:43So who's in this club? Well, if you're a seller in Ireland, Japan, Switzerland, Mexico, or any of

02:48these other places you see right here, you can expect to be charged VAT on your fees, regardless

02:52of your registration status. Let's make this crystal clear with an example. An Irish seller,

02:58even one who has their VAT ID on file with Etsy, is still going to get charged the standard 23%

03:03Irish VAT on their fees. This isn't an Etsy rule. It's a local tax law that Etsy is legally required

03:09to follow. There's just no way around it. Now, let's talk about a really special case, Canada.

03:16Canada's system is, well, it's a bit of a different animal. It's more complex because they have both

03:21federal and provincial sales taxes. So instead of a single VAT rate, Etsy charges GST, HST,

03:28PST, or QST. And it all depends on which province you, the seller, are operating from.

03:34For instance, if you're an Etsy seller based in Ontario, you're going to see a 13% harmonized

03:39sales tax, or HST, on your fees. That means for every 100 Canadian dollars in fees, there's going

03:44to be an extra $13 charge for HST. All right, that's a lot of rules, I know. But the big question

03:50now is, how do you keep track of all this for your own books? You're counting, right? Well, the good

03:55news is, Etsy actually makes this part pretty painless. Which brings us to probably the number

04:01one question sellers ask, that's all fine, but where's my invoice? And that's a totally fair

04:06question. As a business owner, you absolutely need that paper trail. And the answer is, yes,

04:13absolutely. Like clockwork, on the first of every single month, Etsy generates a nice, clean,

04:18downloadable PDF invoice for you. It covers all the seller fees from the month that just ended.

04:24And finding it is super easy. Seriously, just hop on your computer. You got to do it on a desktop,

04:28not the app. Go to your shop manager, then click on your payment account. From there,

04:33you just pick the month you need, and you'll see the option to download that invoice.

04:36A few clicks, and you're done. Okay, but what about refunds? That's a great question,

04:41because it happens, right? Let's say you make a sale in June, and Etsy charges VAT on that

04:46transaction fee. Then, in July, you have to cancel the order. Etsy doesn't go back in time and edit

04:51your June statement. Instead, they just issue a VAT credit on your July invoice. See? It all balances out

04:58in the end. Phew! Okay, we have covered a ton of ground, so let's do a quick fire recap,

05:04a final checklist, just to make sure all the most important points really stick.

05:09All right, here are the top five things to remember. First, yes, Etsy might charge VAT or

05:15GST on your seller fees. Second, and this is the big one, the rules are all about your country and

05:20whether you have a VAT ID on file. Third, remember that you get a monthly invoice to keep your

05:25record straight. Four, in some countries, you're always going to be charged VAT, no exceptions.

05:31And finally, number five, if you issue a refund, you'll get a credit for the VAT on your next invoice.

05:36And we're going to end on the most important takeaway of all. Seriously, look, what we've done

05:42here is help you understand how Etsy's system works. But, and this is a big but, this is not tax advice.

05:48Every seller's business is unique. For specific questions about what you owe and why,

05:52you should always, always, always consult a certified tax professional

05:56or your local tax authority. Thanks so much for joining me.

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