The European Union has introduced new rules for physical goods coming into the EU. Starting 1st July 2021, Etsy has collected VAT from buyers on orders that meet the following criteria:
The goods are outside the EU and are delivered to the EU.
The total value of the package (excluding delivery and VAT) is less than or equal to €150.
Learn more about VAT collection on Etsy.
Etsy will automatically collect this VAT from the buyer at the time of purchase, then sends it to local tax authorities.
If you’re a European Union (EU) shop that sells physical items to buyers in other countries in the EU, you may be able to submit your VAT in one return, known as One-Stop Shop. If you would like to know more about OSS, you can check out our article here.
At the moment, regardless of you being subject to VAT or not (franchisee), your customers are charged with a specific VAT applied to region by ETSY. You can check it in your Etsy's payment account.
Important to note that the accumulated value of your invoices may not correspond to the total deposit. This happens because of service charge deduction by Etsy on a particular transaction. In order to address this imbalance, you need to make sure you can deduct the costs that Etsy deducts by entering these transaction fees in the 'expenses' screen of the Accountable app. You can do this once a month if you like, so as not to spend too much time on it. Choose 'office and administration costs' as the category.
Etsy provides downloadable VAT invoices to sellers in certain countries. These monthly VAT invoices arrive as downloadable PDFs in English.
To access your monthly VAT/GST invoice:
Visit your Payment account and select See all monthly statements.
Scroll down and click the month for which you’d like to download an invoice.
Select VAT Statement above the activity section.
Please note, They are unable to amend past VAT invoices. If you need assistance, please speak to a qualified tax professional.
As a self-employed natural person, if your income is <25000, you are categorized as a franchisee by tax authorities. Hence, you get the option to claim a special regime status where you get exemption from your VAT. To see when are the deadlines to apply for this status, click here. Also, if your income is >25000, you are clearly subject to VAT.
While transacting as a seller, there are three possibilities:
If a BELGIAN franchised taxable person invoices another taxable person established in BELGIUM, the service is located in Belgium, the customer's country, therefore the rule applicable to the sale is that applicable in Belgium: sale under the franchise regime, no VAT applicable but legal mention of sales under the franchise regime to be included on the invoice.
If a BELGIAN franchised taxable person invoices another taxable person established OUTSIDE BELGIUM AND IN THE EUROPEAN ECONOMIC AREA, the service is located in the customer's country, therefore the rule applicable to the sale is that applicable to the INTRA-COMMUNITY: INTRA-COMMUNITY sale, no VAT applicable, but legal mention of INTRA-COMMUNITY sales to be included on the invoice and intra-community statement to be established at the same time as a special VAT declaration.
If a BELGIAN franchised taxable person invoices another taxable person established OUTSIDE BELGIUM AND OUTSIDE OF THE EUROPEAN ECONOMIC AREA, no VAT applies as it's an export outside the EU.
You are required to file a Special VAT Return with calculations and details for every invoice's VAT charge and the accumulated VAT incurred through or on Etsy. Currently, accountable does not provide the service for filing a Special VAT Return but you can do this with the help of an Accountant or also independently on your own on INTERVAT.
A major chunk of ETSY's transaction takes place between Europe and US, rather than intra EU. For such transactions as you sell goods to customers outside the EU, you do not charge VAT. However, you may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales. When you buy goods and services for business use from a supplier based outside the EU, you must generally pay VAT at the point of import. If you make taxed sales, you can usually deduct this amount later on when you make your VAT declaration.
Important to note that for these extra EU transactions, If you want to send them a package you need to declare it with the HIS number (Tax number) mentioning the nature, value and quantity of these items.
Tax number in this situation is considered as following: The Belgian National Register Number is on Belgian ID cards, social security cards, and passports. It is a unique 11-digit number consisting of the holder’s date of birth (first six digits) then three digits to differentiate people born on the same day (odd numbers 001-997 for men, 002-998 for women) and a final two digits calculated on the previous nine digits. Belgian businesses also get a Belgian NN. This is a 10-digit number primarily for tax purposes as well as public records.
If you are an online seller on any platform (for example: Etsy), it is better in most cases that you should stay on 'subject to VAT' status as a self employed natural person. The reason is that if you get an exemption from taxes as a Franchisee, you cannot avoid taxes on your expenses which may generate an equal and closer value to your VAT in case if you chose not to attain the special status. At the same time, you save yourself from an excessive paper work or costs in staying on 'subject to VAT'. However, it depends case by case, it is therefore best to take an advice from your accountant.
Author - Valesca Wilms
As content marketing lead at Accountable Belgium, Valesca writes about freelancing, self-employment, and taxes based on her own experience as a freelancer.
Who is Valesca ?Thank you for your feedback!
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