Value added tax (VAT), known in some countries as a goods and services tax (GST), is an indirect tax that is imposed on any product sold or service provided. VAT is calculated based on the difference between the cost of the product and its price for a buyer.
Here are some things you should know if you sell products on eBay.
What are the VAT rates in different countries?
VAT rates vary from country to country. As of October 1, 2020, Hungary has the highest VAT rate at 27%, followed by Denmark, Norway, and Sweden at 25%. Standard tax rates range from 20% to 22%. For example, 20% in Austria, Bulgaria, Estonia, France, Great Britain, Russia and Slovakia, and 21% in Belgium, Latvia, Lithuania, the Netherlands, Spain and the Czech Republic. The lowest rates are set in Lebanon (11%), Switzerland (7.7%), Thailand (7%), and Singapore (7%).
Many countries impose this tax on overseas purchases, including items purchased on eBay. Whether the buyer will be required to pay VAT sometimes depends on the price of the order, the location of the item, and the final shipping address.
If you sell to:
Purchases shipped to any of the EU countries are subject to VAT at different rates for each specific country. See the table below for some examples.
|EU Country||Standard VAT Rate, %||Reduced VAT Rate, %|
|Sweden||25||6 / 12|
|Portugal||23||6 / 13|
|Hungary||27||5 / 18|
|Finland||24||10 / 14|
|Greece||24||6 / 13|
|Czech Republic||21||10 / 15|
|Croatia||25||5 / 13|
|Romania||19||5 / 9|
|Slovenia||22||5 / 9.5|
|Latvia||21||5 / 12|
|Lithuania||21||5 / 9|
|Malta||18||5 / 7|
|Cyprus||19||5 / 9|
Reduced VAT Rates apply to goods in certain categories, such as books, magazines, food. A complete list of VAT rates applied in the member states of the EU can be found on the European Commission website.
As of October 1, 2020, VAT is not due when the total value of all goods in a consignment (value not inclusive of customs duties or transport costs) is less than a threshold. The threshold may vary from 10 euros to 22 euros, depending on the EU country:
- Bulgaria - 30 BGN (about €15.34)
- Croatia - 160 HRK (about €20.85)
- Cyprus - €17
- Denmark - 80 DKK (approx €10.75)
- Hungary - 6,000 HUF (about €18.82)
- Romania - €10.
Starting from 1 July 2021m current VAT exemption for imports of goods will be abolished and VAT will be imposed on all items, regardless of their value.
Other significant changes to how VAT is collected on imports into the EU, supplies within the EU by non-EU sellers, and cross border supplies by EU sellers include;
eBay will collect and remit VAT for imports of consignments up to a value of €150 shipped into the EU and sold to consumers.
For goods where the seller is a non-EU business but the goods are already within the EU, eBay will collect and remit VAT on sales to consumers within EU countries, and from one EU country to another.
The current distance selling thresholds for intra-EU cross-border supplies will be abolished.
All sellers with b2c accounts on regional sites (ebay.de, ebay.fr, ebay.it, etc.) will have to provide a gross price and separate VAT rate on their listings, so that eBay can determine the correct amount of VAT to collect from consumers.
EU sellers with an annual turnover of more than €10,000 for their complete intra-EU cross-border supplies will have to charge the VAT of the EU country of delivery.
UK VAT rate: 20%.
As of October 1, 2020, there is a VAT exemption for imports of goods in small consignment of a value of up to £15 into the UK.
From 1 January 2021, the UK will introduce a new model for imports to ensure goods from outside of the UK are treated in the same way as goods already in the UK.
The current VAT exemption will be abolished.
eBay will start to collect and remit VAT for UK imports on all consignments with a value of up to £135. In cases where the seller is a non-UK business and the goods are already in the UK, eBay will collect and remit VAT for goods sold to consumers within the UK, regardless of their value.
Business sellers trading with UK buyers and listing on the UK or any EU site will need to provide both gross prices as well as the applicable VAT rate used to calculate the gross price on all listings. If sellers do not specify gross prices and VAT rates, eBay will have to assume that the price provided is the net price, and will add VAT on top of the price displayed to buyers. Sellers should begin listing the applicable VAT rates on all their existing and new listings as soon as possible.
Starting March 1, 2021, eBay will make it mandatory to add the VAT rate on all UK and EU sites when listing items.
VAT rate in Norway: 25%.
VAT rules similar to those being prepared for the EU and the UK are already in force in Norway. They apply to all eBay sellers who sell products and ship them to buyers in Norway.
VAT on cross-border sales to buyers in Norway applies to low value goods up to a value of NOK 3,000 (shipping, insurance and tax not included). VAT exemptions on imports of low value goods (below NOK 350) have been canceled from 1 April 2020.
Marketplaces, such as eBay, are liable to collect and pay VAT to the Norwegian authorities. When a buyer in Norway purchases an item below a value of 3000 NOK from outside Norway, eBay will add VAT to the order total at checkout. The seller will receive their usual payment for the order value (item price plus shipping costs), and eBay will remit the VAT value to the Norwegian Tax Administration.
VAT on items with a value above 3000 NOK (excluding shipping and insurance costs) is generally paid by the buyer when the goods are released into Norway.
If your annual turnover as a seller is over NOK 50,000 (~ €4500), you must register with the Norwegian Tax Administration.
Australia and New Zealand
VAT rate in Australia: 10%, in New Zealand: 15%.
Goods and Services Tax (GST), similar to VAT, generally applies to all purchases delivered to Australian and New Zealand buyers. For most goods this tax is 10% in Australia and 15% in New Zealand.
For the items purchased outside Australia or New Zealand with a total value up to AU $1,000 (~$700) or NZD $1,000 (~$650) eBay will add GST to the total price at checkout. The seller receives payment for the order value (item price + postage costs), and eBay remits the GST to the Australian or New Zealand Taxation Office.
For imported items valued at over AU $1,000 or NZD $1,000 the GST is generally collected at the Australian border. Buyer may need to pay it as part of clearing their parcel through customs.
There is no VAT in the United States, only sales tax. Tax laws vary between states, and sales tax may be required to be collected by the seller, collected by eBay, or paid directly by the buyer. If the item's being sent from outside the US, the recipient may have to pay duty and customs processing fees. However, consignments under $800 are not subject to VAT or customs duties.
VAT rate in Russia: 20%.
Items purchased on a marketplace outside Russia with a total value up to €200 and weight under 31 kg are not subject to VAT or customs duties. Purchases that exceed this threshold are subject to customs duty paid by the buyer.
Is VAT imposed on my eBay fees?
Depending on your country, the corresponding VAT rate can be applied to your eBay fees.
If you have questions about how to calculate VAT when selling on eBay, or whether paid VAT is deductible, please contact your tax advisor.