Yes, there is VAT on Etsy Seller Fees as well as listing fees. The rate of VAT you are charged is based on the country that you are in, but in the UK the current rate of VAT is 20%.
Etsy began charging VAT back in 2015 as a result of changes to EU VAT regulations that were bought in to tackle VAT avoidance on goods and digital products sold on the internet. The regulations are known as VAT MOSS (Mini One Stop Shop) and affects all digital businesses not just Etsy.
How Do I See How Much VAT I have Paid on My Etsy Seller Fees?
You can see how much VAT Etsy have charged you by downloading your monthly invoice within the finance section of your Etsy Shop Manager.
I Didn’t Know I Was Paying VAT on My Etsy Seller Fees
You may not have realised you were paying VAT on your Etsy Seller Fees because all figures quoted on Etsy are including VAT, to avoid confusion.
Can I Avoid Paying VAT on Etsy Seller Fees?
VAT is a tax on consumers rather than businesses. Currently businesses in the UK with a turnover of more than £85,000 must register for VAT or you can choose to voluntarily register for VAT. Once registered you can then reclaim any VAT you pay on all your purchases. But you must remember that you must also pay over 20% VAT on your sales (or increase your prices), so this will affect your profit margins or make your pricing less competitive.
Once you are VAT registered you will be given a VAT Registration Number, which you can then enter into your Etsy Account (within the Finance section). Once this is entered Etsy will stop charging you VAT on your seller fees.