Does Etsy Automatically Charge Sales Tax?

 

Etsy charges sellers several fees, and you may notice that Etsy has charged sales tax on your behalf for some sales. This article outlines when Etsy automatically collects taxes from your buyers and answers some common questions about taxes and Etsy.

 

Why does Etsy charge sales tax?

Etsy will automatically calculate, charge, and remit sales tax when you’re shipping products to certain states. They do so because of marketplace facilitator laws.

 

 

What states does Etsy collect sales tax for?

Etsy automatically collects and remits sales tax for the following states:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• District of Columbia
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Nebraska
• Nevada
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Pennsylvania
• Puerto Rico
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

Find the most up-to-date list here.

 

 

Do I need to add sales tax on Etsy?

Etsy sellers don’t need to add sales tax for states that Etsy charges and remits sales tax automatically.

 

If you sell to customers outside of those states, you may be required to calculate, charge, and remit taxes on your own. Most Etsy sellers are required to collect and remit sales tax.

 

It’s important, as a business owner, to understand your local tax laws (where you’re operating your business), as well as the tax laws of any country you ship products to.

 

If you’re required to collect sales tax on your own, you’ll need to register your business to receive a sales tax permit/ID/number (the name will depend on the country you live in). You’ll need this permit/ID/number before you start charging taxes.

 

Whether or not you need to charge sales tax and how much you need to charge can depend on where you operate your business, where you ship your products, what you’re selling, how much revenue you earn per year, etc.

 

Visit your government’s website for more information on sales tax laws for small businesses.

 

 

How to add sales tax on Etsy

If you’re located in the US or Canada, you can use Etsy’s sales tax tool to specify a tax rate for each state and/or province. You’ll find this tool under Shop Manager -> Finances -> Payment Settings -> Sales Tax.

 

If you’re located outside of the US or Canada, you’ll have to calculate VAT on your own (based on the price of your product, how much VAT you must charge, and if you must charge VAT on shipping fees).

 

You must then include that VAT total in the price of your listing on Etsy.

 

You’ll then receive the money you charged when Etsy sends you a payment, and you’ll be responsible for remitting those taxes to the proper tax authorities.

 

 

Custom Fees & VAT

Etsy is responsible for collecting VAT in some countries and regions for physical products and digital products. VAT is also known as JCT, GST, SST, or QST in some countries.

 

 

What countries does Etsy charge VAT for?

When selling physical products through Etsy, Etsy will collect and remit taxes on some orders for certain locations. It can depend on where you’re located and where you’re shipping to, the value of the sale, etc.

Learn more here.

 

Etsy does not collect custom duties or VAT costs for the following countries:

• Canada
• Japan
• India
• Russia
• Singapore
• South Africa
• South Korea
• Switzerland
• United Arab Emirates
• Belarus
• Taiwan
• Turkey
• Iceland
• Serbia

 

 

Digital Products

Etsy will automatically charge and remit VAT when selling digital products in the following countries and regions:

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

 

 

Learn how to lower your Etsy fees: How Can I Lower My Etsy Fees?

 

You may also be interested in learning about the new tax law that impacts how Etsy reports your transactions to the IRS.