Paying taxes / VAT
In this article:
How to apply taxes to product prices
Do I need to have a registered company to pay tax?
Do I need to collect EU VAT or UK VAT?
How to export the VAT MOSS report
Role of Sellfy in taxes
Important! The United Kingdom's Brexit transition period is now over and the United Kingdom is no longer a part of the European Union as of January 1, 2021. This affects both the taxes for those located in and selling to the United Kingdom. Please read here for more details.
Our role is to help you set and collect tax amounts for your products and to reflect those taxes in your sales reports. However, Sellfy does not file taxes for you, so you'll need to report and pay taxes to your own local tax authority or authorities.
We do recommend that you contact your local tax authority to get the most accurate information about what taxes, if any, that you need to pay for selling digital products. Much of this will depend on where you’re located.
Watch our tutorial below for more information.
Note: We offer tools for both European VAT MOSS and UK VAT reporting to HRMC. You can find out more about EU VAT and Brexit here: How does Sellfy handle the EU VAT laws and Brexit?
How to apply taxes to product prices
With Sellfy, you're able to apply taxes to your products in your Tax settings. To set up taxes for your store, watch our tutorial here or follow the steps below:
- Log in to your Sellfy Account
- Navigate to Store Settings → Taxes
- Select the tax amount according to your country or state
You may also choose whether the tax is included in the product price or if it's added on top of it.
When you apply taxes, we automatically calculate the tax amounts for each country/state and display them to the customer at checkout.
How to get a tax report
We collect all the order data for you in the Orders section of your Sellfy Account, including the product price, tax amount, and customer's country of location.
You can use the data from your Order history for tax purposes and submit the information to your accountants or directly to your local tax authority, depending on their requirements.
To request your Order export navigate to Orders → Export → Request report.
Note: The exported file is in.csv format and must be opened using the appropriate application to view it as a spreadsheet. Once you have downloaded and saved your Order export on your computer, open the exported file in Google Sheets, Microsoft Excel, or OpenOffice Calculator to display the data coherently. If you're using a Mac computer, you can use the Numbers app as well.
Do I need to have a registered company to pay tax?
Important! Law and regulation pertaining to tax and company registration can vary significantly from country to country. It is essential to make sure that your business complies with local legislation and that of the countries your customers are located in.
How are tax rates calculated?
If you've enabled taxes in your account, Sellfy will automatically calculate the proper tax rate and apply it to the order, with one location exception. You'll choose whether to include the tax in the total of your sale, or whether it is applied "on top" or in addition to the customer's order total. The only exception to this is UK tax rates, which you will manually set after allowing purchases from the UK.
Tax rates are calculated based on your customer's location. For example, if you're selling to a customer within the US, US federal and/or state taxes will be applied to the product accordingly. If you're selling to customers in the EU or elsewhere, Sellfy will apply these taxes as well. For the UK, however, you will need to manually set your tax rate after enabling customers in the UK to purchase.
If you're selling to customers in the United Kingdom or the European Union, it is required that you collect and file VAT. But, no worries! Sellfy makes this easy. Or, if you choose, you may block customers from the EU and/or UK.
Manual settings for tax rates
Note: If you are located in a European country and have checked the Don't allow purchases from European Union box in your Tax settings, customers located in your own country will still be able to purchase items from you.
Our tax settings include manual settings that offer you some control over taxes. Be sure to save any changes made.
- Include tax in product price - This will not add any additional cost to the order for taxes. It means that any amount due for taxes will be considered as already paid for in the product or order cost. This also includes the tax that is paid for the shipping charge.
- Charge taxes on shipping rates -This will collect taxes on the amount that the customer is paying for shipping, as well as the product price.
- Don't allow purchases from the European Union -This will block customers in the EU from making purchases so that the seller is not required to register and pay VAT on these orders.
- Don't allow for purchases from the United Kingdom - This will block customers in the UK from making purchases so that the seller is not required to register and pay UK VAT on these orders.
Do I need to collect EU VAT or UK VAT?
Note: If you are located in a European country and have checked the Don't allow purchases from European Union box in your Tax settings, customers located in your own country will still be able to purchase items from you.
Are you selling to customers located in the United Kingdom or the European Union? If yes, then you will be required to collect VAT (Value-added-tax) on the purchases. You will also be required to register and report these taxes. As of January 1, 2021, you will need to report UK VAT and EU VAT separately.
Regardless of your own personal or business location, VAT applies to every seller who provides products and/or services to the EU and the UK. This is because the tax is assessed not by the seller's location, but rather by the buyer's location.
You will have one of two options:
- Block these customers from making any purchases
- Collect the appropriate taxes, register, and report these taxes.
Sellfy's role is to help provide you with the tools to block UK and EU customers, or you can enable sales and collect the proper amount of tax based on the buyer's location.
For more information on VAT collection and reporting, please read here.
How to export the VAT MOSS and UK VAT reports
If you're collecting VAT for the UK or the EU, you may be required to provide a quarterly tax report.
To export tax information specifically for VAT:
- Log in to your Sellfy Account
- Navigate to Store Settings > Taxes
- Scroll down to VAT MOSS report
- Select the region, month(s), and year from the dropdown menu
- Click Export data
