Hello, everyone! And happy summer! To be frank the spring was more summery over here in Finland than the June itself, but I still hope for some nicely warm days. I hope your summer (or winter!) is going well!
Today I wanted to address one important thing, which includes both the buyers and the sellers on Etsy: the prices. If you are shopping on Etsy very often, you might have noticed already (or maybe not), that in quite many small shops (like mine) prices rose a bit. Everyone has had their own change, but prices in PurringPyjamas rose €1-2 (US $ 1.12-2.25). I really hope there will be no need to raise the prices even more. Here comes in the most important question: WHY? The answer is simple: additional VAT. Or, at least, I wish it was that simple.
As we all know, people pay VAT from goods and/or services. But in order to be eligible to pay VAT, you need to earn a certain amount of money (it differs from country to country). In my case – or PurringPyjamas case – I’d need to earn from the shop €10 000 or more in order to pay VAT. Guess, do I earn that much? Not even close. So I don’t need to register as a VAT payer for PurringPyjamas and I do not need to pay additional VAT to Finnish government, ‘cause my income from this little Etsy shop is not even close to the limit. But guess what – Etsy requires EVERYONE to pay VAT. It doesn’t matter, how much you earn from your shop – you can earn €50/year or €50 000/year, you still will have to pay THE SAME percentage of VAT, unless you already registered yourself as VAT payer beforehand. So, basically… Even if I earn that €50/year, I still have to pay VAT. And no, that money definitely does not go to Finnish government (as I am not required to pay tax), it goes to Etsy’s pocket. So, this kind of decision to take VAT automatically might be the right decision for big shops, that have huge sales on Etsy, but for small shops it hurts, because now we need to not only pay taxes to Etsy (yes, Etsy as sales platform has it’s own taxes too), but also pay VAT, for which we aren’t even eligible.
I just thought to clarify this a bit as eventually it might raise some questions. I simply didn’t want the buyers to think that I rose the prices for absolutely no reason. Shipping prices will not change (at least in my shop), even though Etsy charges tax from shipping too (crazy, I know!).
I hope you all are having a beautiful morning/afternoon/evening/night! 🙂