Yes, you can write off Etsy fees as a business expense, including listing, transaction, advertising, and payment processing fees, which reduces your taxable income. These are considered ordinary and necessary costs of running your shop, and can be deducted from your gross sales on your tax return.
If you can provide Etsy with a valid VAT ID, then no VAT is charged, but the fees are subject to the reverse-charge mechanism. This means that you need to account for VAT on your VAT return on fees that Etsy would have charged you had they charged VAT, but you can claim it back on the same return.
Schedule C is where you report income from your Etsy business and deduct business expenses to determine your net profit or net income as a sole proprietorship. Your net profit is what you'll pay self-employment tax and income tax on.
starting your own site: 👍 More Marketing = More Buyers: Etsy says one of the key reasons they're increasing transaction fees is so they have more money for marketing. Etsy says they spent close to $600M in 2021, and intend to increase that spend in 2025.
HOW I DO MY ETSY TAXES: Beginners Guide! What is Tax Deductible? Home Business
Can you write off Etsy expenses?
Are Etsy fees tax deductible? This is a common question for sellers, and the good news is that they are deductible. If you sell through other platforms and pay fees there, those may also be deductible.
Deducting these from your business's profit will reduce the taxable income and, by extension, your business's tax bill. Among others, as an Etsy seller, you should keep track of: Etsy Fees such as: Listing fees which are charged when you list a product.
Depending on where you're selling, you may need to collect and remit sales taxes like VAT or GST. Etsy collects and remits taxes on some transactions, but you'll still be responsible for tracking and reporting these amounts.
Does Etsy take 30%? No, Etsy does not take 30% of your sale. Etsy takes a 6.5% fee as a commission on the sale price, which includes shipping and gift wrapping. Etsy also takes a payment processing fee which is in addition to this fee which is around 3% + 0.25USD (this fee varies by country and card type).
The One-Stop Shop (OSS) scheme introduced in the EU applies to sales, not fees. That means the VAT on seller fees still falls under your normal domestic VAT rules. You claim this VAT just like any other business expense.
Sellers are responsible for complying with the laws and regulations of the country of destination. Generally, the buyer is responsible for paying customs duties on receipt of the package. In some countries Etsy is responsible for collecting the VAT or similar tax on the sale of goods on the Etsy platform.
Etsy typically reports your gross income to the IRS on Form 1099-K, but even if you don't receive a 1099-K, you still have to report your Etsy sales income on your tax return. If your state has income tax, you'll need to pay state income taxes on the net income from your Etsy sales as well.
Do I need to register my business if I sell on Etsy?
Etsy doesn't require sellers to have a business licence to sell on Etsy. However, when selling on Etsy you're required to follow any laws that apply to you as a small business selling online. If you have any questions regarding which laws apply to you, please contact a qualified professional.
If you're making a purchase that qualifies as tax-exempt, such as a purchase for a certified non-profit organisation, select Contact support at the bottom of this page. When you contact Etsy Support: Include the order number(s) for the order(s) that should be tax exempt.
I heard that I don't need to do anything until I'm earning over £3,000? That's not true. If you're earning over £1,000 from side hustles, you'll still need to tell HMRC. At the moment, you tell HMRC by doing a Self Assessment tax return.
Moving forward, Etsy will report transactions for all UK sellers who meet the threshold, regardless of when they joined. If you're a seller who resides in the UK, Etsy is required to send your information to HMRC authorities when: You complete 30 or more transactions in a calendar year with physical goods.
Calls to boycott Etsy are growing since “Alligator Alcatraz” merch popped up on its marketplace. The term refers to the Trump administration's new migrant detention facility in the Florida Everglades.
Etsy's biggest competitors include Amazon Handmade, for its massive audience and fulfillment options, and Shopify, for sellers wanting a customizable, independent store. Other key rivals depend on the product, with eBay offering broad reach, Redbubble for artists, and platforms like Goimagine focusing specifically on handmade goods.
Generally, you need to file if: Your income is over the filing requirement. You have over $400 in net earnings from self-employment (side jobs or other independent work)
