Etsy recently changed its billing system, and some international sellers describe a nightmare trying to make sense of it, especially when it comes to VAT (Value Added Tax) and GST (Goods and Services Tax). Even if they wanted to, sellers can't ignore any discrepancies since they must reconcile records and be able to justify them to tax authorities.
Etsy is aware of the issues - we sent an inquiry 2 weeks ago pointing to this thread
on their discussion boards where sellers describe problems, which we summarize as follows:
1) Sellers say their selling fees are inaccurate and believe Etsy is overcharging them, a problem that appears to be related to currency conversions.
2) Sellers are unable to decipher VAT calculations, which appear to them to be incorrect.
3) Sellers say Etsy changed VAT on invoices retroactively, which they say would be illegal.
Some sellers are voicing their concerns on social networks using the hashtag #5percentis5percent. We found a thread on Twitter where Etsy advised a seller: "reach out to our team at email@example.com and a specialist will be happy to take a look at this for you."
To get a sense of how complicated the issues are, a seller posted on the Etsy boards an example of their October VAT statement (before the new billing system took effect) and the same statement after the new billing system took effect:
October statement, before being transferred on 6th Nov
subtotal ... £98.36
VAT 19.76%, should be 20%, but there are rounding differences on small amounts, so explainable.
NEW October Vat Statement, after switched to new finances
subtotal ... £86.45....so fees are way down
VAT............ £22.05...and VAT is way up
VAT now 25.5%, but look at all the figures!!!!
THEN, if I go to my payment account, and look at the monthly statement for October, with the circles thingy
Fees and taxes £84.51 (this should be the same amount as "subtotal")
VAT ...... £19.18
VAT now 22.7%
One can see why sellers came up with the "5 percent is 5 percent" hashtag - how can the totals on the same October VAT statement be different for the seller just because of a new way of presenting the billing?
We found a thread where Etsy answered questions
related to the new billing system. A moderator wrote: "Retroactively changing your VAT invoices was not intentional. We've identified a bug with some of the invoices and are actively working to resolve the issue. We'll update those affected as soon as we have more information."
However, in response to a seller who wrote, "The 5% transaction fee is being incorrectly calculated for non-USD shops resulting in affected sellers being consistently overcharged for each transaction. I've been informed by customer support via live chat that this is a BUG," Etsy responded:
"We can confirm that this is working as intended, and we've clarified this with our customer support team. The 5% transaction fee charged by Etsy will be assessed on your listing's price and shipping cost after it has been converted to United States dollars (USD). All fees from Etsy are then converted to your Payment account currency. We're looking into improving this and will update you as we have more information."
It would be helpful to see some examples. International sellers continue to report consternation about the new system. Who needs more fee- and tax-anxiety, especially during the busiest shopping period of the year?