VAT charged on UK to UK orders

[magdalenaruiz]

VAT is added on all of my UK orders, it has never happened before. I am not VAT registered. It is also adding VAT on orders In EU unless they are over £135

Customer support has been useless, cannot call them and the chat that supposed to have 1min response time gets stuck on bot reply...

I have contacted them by email still waiting. 

In the meantime I am writing to all my UK customers to request a refund from Etsy for incorrectly charged tax. 

Anybody with the same problem? 

Cheers

[CraftyCornishMaids]

Orders under 150 euros, (approx £135) sent from UK to EU should have VAT added and collected by etsy, and they will not be collected again on import, as long as you ensure the IOSS number is submitted electronically via the label, and your invoice on the outside is in their currency, with amount of VAT paid, and etsy's IOSS number.

Not sure why your UK-UK orders have VAT added - who knows what causes etsy glitches
I would try creating a new shipping profile and use that 

[magdalenaruiz]

I will try that , thank you. 

regarding VAT collection on import, I had several incidents in Germany and France where despite several notes and IOSS sticker on the package stating that tax has been collected, the buyer was forced to pay in again

[CraftyCornishMaids]

@magdalenaruiz 

Did you have an actual invoice in a see through document wallet on the outside, in Euros

... It is an international requirement for an invoice in local currency, - some countries didn't and don't enforce it very often,

But since IOSS, France and Germany are definitely enforcing it more, and without the invoice, showing vat paid and the number, they often charge again ., you can get the info in euros from the packing slip

[CappuccinoLace]

https://community.etsy.com/t5/Technical-Issues/VAT-BUG/m-p/145309314/highlight/true#M844941

Was your shop originally set up in the UK, or have you moved from another country to the UK?

It appears to be etsy actually enforcing the actual law

https://community.etsy.com/t5/Technical-Issues/Different-prices-showing/m-p/145341413/highlight/true...

[FancyTogs]

Etsy have been required to collect VAT on UK to UK sales by non-UK sellers since 2021. It looks like they have finally started to do it.

I have seen a couple of forum reports of VAT on UK-UK sales by "UK" sellers who have a non-UK country setting remaining within their shop or user profile, usually after they have moved between countries.

Check that your country settings in your addresses, tax details, bank account, etc are all UK.

Lawrence (Clare's other half)

[magdalenaruiz]

thank you so much for that! This is very helpful. My shop was registered in the UK initially but I moved to Spain for a few years and changed my bank account. When I returned to the UK, due to Brexit I was unable to change my bank account to a UK one, I would have to open another shop and start all over again, which did not make any sense. 

I will go through all my settings and check again. 

thank you!

[CraftyCornishMaids]

@magdalenaruiz 

If you are a Spanish bank account, didn't you have to give your Spanish VAT ID to etsy?

[magdalenaruiz]

No, I do not have Spanish Vat, I live and work in the UK, the account change is not possible after Brexit so had to keep it. 

[magdalenaruiz]

Thought I will update it, might help somebody, I do not believe I am the only one with this problem. 

At this moment etsy charges VAT on UK orders AND!!! on EU orders purchased from my shop.  Still waiting for them to respond...

[clocksandprints]

I have the same problem, e-mailed them, all you get is a standardised e-mail back and no solution

Richard

clockdandprints

[magdalenaruiz]

I have not had a response to my email but got on the chat and was told to contact my customers and advise them to request a refund. Apparently they are looking into this

[Lampposted]

This stuff I find confusing.

I think this applies to the VAT you pay "VAT on UK seller fees" as part of your "fees" breakdown structure from your payment account.

Depending on your business status and location, Etsy may be required to charge and collect Tax on seller fees each month and remit it to tax authorities.

Learn about Tax on seller fees

I think individual sellers (tax as an individual) have to pay this VAT. If you're using another vehicle like a limited liability company, then (as I understand it) you don't if you're underneath the VAT threshold. Etsy may have defaulted you to an individual seller rather than a business seller when it added the setting. If you add the information there then VAT payments should stop until your vehicle reaches it's tax threshold. 

Menu to look into this is:  Finances > Legal and Tax information

If this is incorrect, I'd like to know as well.

[FancyTogs]

@Lampposted 

Etsy charging VAT on seller fees is a separate topic from Etsy collecting VAT on certain sales of goods to buyers.

You are right and wrong.

Sellers who are sole traders or ltd companies all have to register for VAT in the UK if they have a turnover of more than £90k.

Below £90k VAT registration is optional, sometimes there can be good reasons for a seller to register voluntarily but it is rare.

Etsy is required to charge UK VAT on their sales of services to UK consumers (B2C). This does not apply to sales of services to businesses (B2B), which Etsy are allowed to zero rate as a Reverse Charge of Services invoice.

Etsy must have a good reason to show that their customer is a business. Etsy are allowed to use a verified VAT registration as definitive proof that their customer (a seller) is a business. The laws allow Etsy to use other evidence that their customer is a business, such as a seller having an online shop with stock offered for sale, but Etsy are choosing to only accept VAT registrations. I have not seen anything to suggest that Etsy are allowing a companies house registration as proof of a seller being a business, even though it would be logical.

UK VAT registered sellers must declare VAT on their Etsy fee invoices themselves, using the Reverse Charge of Services procedure. This allows the sellers to also reclaim the VAT that is charged on their own UK VAT registration. It is not possible for UK VAT registered sellers to reclaim VAT charged on fees by Etsy.

Note that Reverse Charges of Services such as Etsy fees, and fees from other non-UK businesses (Shopify etc) count towards the VATable turnover for the registration threshold.

Lawrence