Many of you are aware of the January 1, 2015 change to the EU VAT law on digital services and goods. Although there are still many questions about the law and a need for clarification, Etsy, as a third-party marketplace, has finally taken responsibility for collecting and remitting VAT taxes to the EU. Previously, Etsy had stated that sellers would be responsible for this burden. I was so thankful to read the following update from Etsy in answer to questions many sellers have asked:
1) Could my shop be penalized for non-compliance?
Because the government views Etsy as the party responsible for collecting and remitting the VAT, to the best of our knowledge, individual sellers will not be penalized for non-compliance for digital items sold on Etsy.
2) Do the VAT regulations apply to businesses based outside of the EU?
As many of you have pointed out, the digital VAT rule does apply to businesses based outside the EU who sell to consumers in the EU. VAT must be charged in those digital sales. However, as we note above, individual sellers will not be penalized for non-compliance because Etsy is considered to be the responsible party. Etsy will take responsibility for collecting and remitting VAT.
This is wonderful news for those of us who have been offering digital tutorials. To comply with the law, I have been manually emailing tutorials to non-EU countries and sending hard copies to EU countries. It has been a huge inconvenience for both seller and customer alike! You can bet, I will be spending today uploading all of my tutorials for instant download on Etsy!