Share this content

VAT on Digital Services supplied through Etsy

Etsy automatically charge and handle VAT - how do we handle sales on a voluntary UK VAT return?

Didn't find your answer?

I have a client who sells digital services (PDF patterns) via Etsy. Etsy automatically charge all their customers VAT, whether they live in the UK, EU or many other countries. Etsy account for it on their end and pay it directly to the tax authorities of the country.

In theory, this is great because my client doesn't need to bother registering for the MOSS scheme. However, if all their customers are being charged VAT anyway, it would make sense that my client voluntarily register for UK VAT so they can claim back VAT on their expenses. 

HMRC state that if you sell digital services entirely through digital platforms or marketplaces, like Etsy, you don't need to register for MOSS or UK VAT. 

So here's my query: If my client voluntarily registers for UK VAT, what do we put down as their sales figure on the VAT return? The VAT is already collected and paid to HMRC by Etsy and never reaches my client so I presume we just put £0 as the sales each quarter, but I've never come across this situation before and would like to hear from anyone who has? It seems odd to be submitting a nil sales return each quarter.

Replies (3)

Please login or register to join the discussion.

By ConfusedTaxAccountant
15th Feb 2020 18:58

I know this is old but did you ever find out the answer to this?

Thanks (0)
Replying to ConfusedTaxAccountant:
nsa newquay
By adam kay
15th Feb 2020 19:24

No. From what I can make out from HMRCs guidance, we just count all sales as being made to Etsy, not the end buyers, so all sales are EU reverse charge as Etsy is based in Ireland.

Thanks (1)
Replying to adam kay:
By ConfusedTaxAccountant
31st Mar 2020 19:24

Apologies, I have very limited VAT knowledge but how does that translate to the VAT return?

I'm guessing this means Etsy effectively treats it as an EU reverse charge on their end but for me as a seller:

Box 1 <- treated as nil as no VAT due on all Etsy sales, since all VAT paid to Etsy who send to tax authority.
Box 2 <- include reverse charge re Etsy fees (nets with Box 4) and any other reverse charge

Box 3 <- VAT on costs incurred
Box 4 <- reverse charge re Etsy fees (nets with Box 2) and any other reverse charge

Is that right?

I would be grateful for a link to the guidance you saw. No worries if you don't have it as I know time passed. A lot has happened within a month!

Many thanks.

Thanks (0)
Share this content

Related posts