Etsy charges a 5% commission on sales. This fee includes the listing value, shipping costs, and gift wrap. Sales tax and value-added tax are not included in this 5% fee.
Your balance from sales, fees, and taxes is displayed in your Payment account. If enrolled in Etsy Payments, your fees are deducted from sales funds.
Etsy converts fees to your payment account currency using the market rate. This conversion may change with currency fluctuations.
The IRS thresholds for 1099-K reporting apply to your gross Etsy Payments sales volume. This includes shipping fees and collected sales tax. Etsy Payments fees and refunds are not included. You can deduct expenses like shipping costs, sales tax, fees, and refunds as business expenditures when filing taxes.
To simplify sales tax, Etsy calculates, collects, and remits it on behalf of sellers when shipping to the US or for digital orders from US buyers. This means sellers don’t need to calculate rates or file returns for each state.
Etsy’s Tax Calculator helps sellers understand their tax obligations for sales tax, income tax, and VAT. Eligibility differs between sellers. Seek an accountant’s advice for your situation.
In some states, Etsy collects sales tax from the buyer and remits it to tax authorities. In some countries, VAT is collected on digital services. Detailed tax information is available here.
You must collect sales tax on Etsy items sold. Failure to do so can have consequences like paying years of back taxes, penalties, and assets seized. First, determine where you must collect tax based on nexus rules.
Etsy and Amazon meet sales thresholds in all states so their sales are taxed automatically. You may still need to file returns yourself in “marketplace facilitator” states.
Etsy charges a 2.5% currency conversion fee if you list in a different currency than your payment account.
Etsy collects and remits the sales tax when shipping to participating US states. If applicable, Etsy adds and collects tax from the buyer and forwards it to authorities. You receive the tax payment which Etsy then deducts.