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Etsy Expands VAT Tax Collection

Etsy expanded its practice of collecting VAT tax for sales in Europe, much to the relief of many sellers who sell digital goods and services on the online marketplace.

As EcommerceBytes previously reported, the European Union changed its rules last month. It now requires merchants selling items like e-books and downloadable PDFs in the European market to register with EU authorities and calculate taxes in accordance with the rates of each country where they sell.

Etsy had announced it would collect and remit VAT on behalf of Etsy sellers who were based in EU countries and who provided digital goods to buyers in the EU by automatic download.

On Monday, it said it would begin collecting and remitting VAT on behalf of all Etsy sellers providing digital goods to buyers in the EU by automatic download, whether or not the seller is based in the EU.

“That means you won’t have to process VAT returns on automatically downloaded digital items sold on Etsy to buyers in the EU, no matter where your shop is based,” it explained.

It reminded sellers that it is the EU buyer who pays VAT as part of their toal purchase price. “We’re working on the site update needed to begin collecting VAT during checkout and will provide more details on how the collection process will work soon. If you’re wondering if you should list your digital items, please know that Etsy will take responsibility for collecting VAT and remitting it to the appropriate tax authority.”

More information is available on the Etsy blog, where it’s clear from the comments that sellers have plenty of questions remaining.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.