Value Added Tax

Value added tax (VAT) is also known in some countries as a goods and services tax (GST). It’s an indirect tax that is imposed on any product sold or service provided. Value Added Tax is similar to a sales tax. Generally speaking, it’s a tax on the purchase of goods or services, and payable based on a percentage of the sales price paid by the buyer. In the EU, VAT is included as part of the prices charged to the buyer, and the seller then takes responsibility to remit the VAT to the tax authorities. VAT should only be charged by a taxpayer who is VAT registered.

For example, any eBay seller making sales to DE buyers and fulfilling those orders from DE-based inventory may be required to register for DE VAT, and then charge and remit Value Added Tax on any deliveries made to DE addresses. Speak with a tax advisor to better understand how Value Added Tax applies to your eBay business in the UK or EU and other countries outside the US.

Here are some things you should know if you sell products on eBay.

What are the VAT rates in different countries?

eBay wants sellers to be successful and legally protected, wherever you do business. Registering for Value Added Tax may help you do both those things. Whether you need to register for Value Added Tax depends on the way you conduct your business.

The key factors that determine if you have an obligation to register for Value Added Tax are:

• Your business’s country of establishment
• The location of your inventory
• Your level of sales

It’s each seller’s responsibility to ensure they are Value Added Tax-compliant.

Complete the following steps to ensure you are Value Added Tax-compliant and to avoid potential selling restrictions:

• Register with the local tax authority in each country where you’ve determined you have a Value Added Tax obligation. For example in the UK, register with HM Revenue & Customs (HMRC), the UK’s tax authority.
• Provide eBay with your Value Added Tax ID number, and we’ll automatically add it to all your eligible new listings.

VAT rates vary from country to country. As of April 1, 2023, Hungary has the highest VAT rate at 27%, followed by Denmark, Norway, Croatia and Sweden at 25%. In the EU, standard tax rates range from 17% to 27%. 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 standard rates are set in Andorra (4.5%), United Arab Emirates (5%), Switzerland and Liechtenstein (7.7%).

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.

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.