All successful businesses expand. But with that desirable growth comes the reality of international legal compliance. As your orders cross various borders, they will be subject to the value-added taxation of that country. 

The purpose of this article is to help merchants understand the recent legislative changes to value-added tax (VAT) in the EU and the tools we’ve presented for the situation. 

In short, starting October 1, 2021, Printify is charging VAT on orders in the European Union, Norway, and the United Kingdom. At the same time, we’re streamlining legal responsibilities, speeding up order transit, and providing necessary information for merchants to reclaim VAT expenses.

Please note that this article is not meant to serve as tax, legal, or accounting advice, instead it has been prepared for informational purposes. We recommend consulting your own tax, legal, and accounting advisors before acting. 

Meanwhile, we have partnered with VAT experts to help clarify questions on print-on-demand eCommerce in Europe, and help set up VAT registration and reporting.

1. What is VAT?

These are regulatory measures applied on transactions, tilted toward balancing the global economy. These tariffs also generate income streams for publicly beneficial purposes. 

A value-added tax is a transactional tax charged on the sale of goods and services – often between 5-27% of an order’s total cost. This system has been adopted by over 115 countries, providing a common framework for invoicing, registration, and other aspects of international business. 

As this tax is applicable at each stage of an order’s production, it is applied relative to the net value of the value of goods sold within producing countries – taking into account local tax rates. Generally speaking, all goods and services moving across borders or sold locally are subject to VAT.

All products within the Printify catalog are subject to VAT. This includes sample orders and items purchased without the intention of resale.

2. How is VAT different from USA sales tax?

VAT and sales tax are really just different sides of the same regulative coin in different parts of the world. 

In America, sales tax is primarily applied to the sale of goods. However, these measures are distributed unequally by state and local governing bodies with significant degrees of immunity for various parties. Read more about Printify and US sales tax on our blog here.

In contrast, originally invented in Europe, VAT is almost universally applied to all goods and services.

3. Are VAT rates equal in all European Union jurisdictions?

No. VAT rates are different between each country. However, the VAT rules are harmonized under the European Directive. For more information, please see EU VAT regulations. 

4. How is VAT calculated and charged?

The answer to this question depends on what country the order is created in, where it is shipped to, and the VAT ID used in that transaction. Concrete examples are provided at the end of this article, but let’s break down the factors first:

5. What are the one-stop-shop (OSS) And import-one-stop-shop (IOSS) Systems?

Print-on-demand merchants constantly move orders across borders. Before OSS and IOSS, it was necessary to manage several legal processes within each country an order traveled between. But with the introduction of OSS and IOSS systems in July 2021, everything is streamlined by a single (one-stop) registration, avoiding a lot of paperwork. 

6. Do I have to charge VAT to my customers?

Generally speaking, goods and services moving are subject to some form of taxation – particularly when crossing borders. So, when one of your orders travels, it will likely incur some form of VAT (in the EU), sales tax (in America), or other tariffs. Things can become much easier to manage under the OSS or IOSS systems. 

Keep in mind that all goods on Printify catalog are taxable in Europe. If you have questions about your registration obligations, we suggest you consult a tax advisor.

7. How to prepare for VAT collection on Printify?

The whole process can be broken into four stages:

1. Submit your VAT ID(s) on your Printify account – here’s our Help Center article on how to do it,
2. The VAT on your orders will be charged based on your provided VAT ID,
3. On a regular basis, receive and review your VAT invoices from Printify orders,
4. Submit the necessary documentation to tax authorities and include your VAT invoices to reclaim your tax returns.

8. How to set up VAT collection on my sales platform?

• Shopify
  Learn more (EU)
  Learn more (UK)
• Etsy
  Learn more
• WooCommerce
  Learn more
• eBay
  Learn more
• BigCommerce
  Learn more 
• Wix
  Learn more
• PrestaShop
  Learn more
• Printify API

9. Examples of VAT calculation

We know that taxation in general is a complex subject. To help you better understand it, we have prepared a table containing the main principles of tax calculation in Europe along with some illustrative examples. 

Keep in mind that there are three main variables dictating which VAT rate will be applied to a specific order: ship-from country (print provider’s location), ship-to country (your customer’s location), and your VAT ID (country where you have registered for VAT collection purposes).

Ship-from → Ship-to	Are you registered for VAT in Europe?	VAT rate	Example
EU → EU	Yes You have the ship-from country VAT ID	Ship-from country rate	T-shirt, USD 10, DE → IE. DE 19% VAT is charged. Merchant pays USD 11.90 and can claim back VAT USD 1.90 in DE. Final cost is USD 10.
EU → EU	Yes You have any other EU country VAT ID	0% VAT rate	T-shirt, USD 10, DE → IE. 0% VAT is charged. Merchant pays USD 10. Final cost is USD 10.
EU → EU	No	Ship-to country rate	T-shirt, USD 10, DE → IE. IE 23% VAT is charged. Merchant pays USD 12.30. Final cost is USD 12.30.
EU → EU (within the same country)	Irrelevant	Ship-to country rate	T-shirt, USD 10, DE → DE. DE 19% VAT is charged. Merchant pays USD 11.90. If registered in DE, can claim back VAT USD 1.90 in DE and final cost is USD 10. If not registered in DE, final cost is USD 11.90.
Rest of the world → EU	Irrelevant	Ship-to country rate	T-shirt, USD 10, US → IE. IE VAT 23% is charged. Merchant pays USD 12.30.
Any country → the UK	Irrelevant	Ship-to country rate	T-shirt, USD 10, PL → UK. UK VAT 20% is charged. Merchant pays USD 12.00.
Any country → Norway	Irrelevant	Ship-to country rate	T-shirt, USD 10, PL → NO. Norwegian VAT 25% is charged. Merchant pays USD 12.50.

10. Where can I get tax advice?

Keep in mind that Printify does not provide legal, tax, or compliance advice. Instead, we strongly encourage you to reach out to licensed tax consultants. Printify merchants will also receive a reduced registration fee, read more here.

While we are not tax consultants or CPAs, in this article, we try to help you understand sales tax for your business and your peace of mind.

They say the two things guaranteed in life are death and taxes. That is why every year, like clockwork, tax filing finds us and sends us all into a minor panic. But we have good news for you: since October 2020, Printify has been applying sales tax to the states where we are registered to collect. It doesn’t mean you are no longer required to collect taxes in the states you have sales tax nexus, but you don’t have to worry about sales tax compliance in other US-based destinations.

We have also outlined essential information about sales tax in this article. We partnered with the experts at TaxJar for more resources. You will no longer need to waste hours scouring the internet, trying to figure out sales tax. While we recommend a tax expert for specialized sales tax advice, we hope this article gets you one step closer to understand sales tax and closer to some well-deserved peace of mind.

What is sales tax?

A tax is a percentage of the sales price of an item put in place by the government to be remitted whenever the item is sold. The tax collected is then used for public facilities and services such as schools, hospitals, public infrastructure, etc. Sales tax is a percentage collected on retail purchases by the seller and remitted to the state government. Unlike federal taxes, the sales tax is governed by each state, making their laws to collect it, which may differ from one state to another.

Sales tax is also known as the “pass-through tax” because even though a business charges sales tax, they don’t keep it. The business is required to collect it and remit it, “pass it through” to the relevant state government. Sales tax is a consumption tax, which means it is only charged when the end consumer buys goods or services.

It is important to remember that sales tax is not profitable, it is the law, and getting your business sales tax right is necessary. Sales tax is based on economic and physical nexus in certain states. Nexus rules apply both to Printify selling to merchants, as well as merchants making sales to the final consumers*.

The POD platform business model operates through two distinct transactions. The first transaction occurs between Printify and the merchant, where we sell the ordered products to the merchant. The second transaction takes place when the merchant sells products to their customers, and it becomes their responsibility to handle taxes based on their nexus and other applicable requirements. In the United States, the place of taxation is determined by the location of the purchase, specifically the states where the merchant’s customers are located and where the products are delivered.

How do you qualify for sales tax?

Nexus 

What is a sales tax nexus? This is when you have a physical presence or a substantial connection to a state that requires you to comply with their tax laws. You need to collect sales tax from sales in a state where you have sales tax nexus.

How do you get nexus with a state?

You may acquire sales tax nexus if you qualify for any of these four factors:

• Physical presence: Your location may create a sales tax nexus. This includes formal and informal retail premises such as a brick-and-mortar store, an office, a home office, a garage, or even your kitchen table if you conduct business from there.

• Your business employees: You may create nexus if you have hired professionals, such as salespeople, or social media consultants for your business. This includes employees working remotely, who may be in different states, and create nexus there. In some states, affiliates (indirect services) may also give you sales tax nexus.

• Your business warehouse/storage: Where you store your inventory may also give you nexus. This means if most of your inventory is stored by your Print Provider in a particular state, such as California, you may have nexus in the state. Note that Print on Demand from a Print Provider’s fulfillment center does not give you nexus.

• Economic nexus: If you make enough sales in dollars or transactions that meet the requirements of a particular state, you may have economic nexus in that state. The tricky part about economic nexus is that it is determined by individual states and may differ from one state to another. Economic nexus is the primary reason Printify is required to collect sales tax.

Where is Printify registered to collect and remit sales tax?

Printify is required by law to collect sales tax in states where we have nexus, on sales (including costs associated with shipping) to our merchants. Below is a map showing all the states where Printify is registered for sales tax purposes and therefore collects and remits sales tax. Find additional information on state and local sales taxes.

How will Printify charge sales tax, and how will it be calculated?

1. Based on your customer’s destination (ZIP code) – Printify uses your customer’s shipping address to calculate sales taxes.
Please note that Printify collects sales taxes for the specific states that we are registered for in the USA, including orders for international sellers where the destination is within the USA.

2. Based on orders coming in from specific sales channels or API – Printify calculates and collects sales taxes based on resale certificates provided by the merchant.

3. For all sample orders – the sales tax is displayed at checkout and collected by Printify. The tax is also based on the resale certificates you, as the seller, have provided.

How to register and collect sales tax?

Register for collecting sales tax (sales permits): You cannot collect sales tax without a sales tax permit. Once you’ve determined that you have nexus with a state, the next step should be to register for a sales tax permit with the state to start collecting sales tax. 

How to get a resale certificate after you have registered for collecting sales tax?

Apply for a resale certificate

As a Printify seller, we recommend requesting a resale certificate from state authorities. Alternatively, if you’re already registered for the tax/sales permit in your state/multiple states, preparing MTC or SSTGB certificates on your own following the comprehensive guide we have put together here.

A resale certificate (also known as a sales tax exemption certificate) is different from a sales tax permit as it allows you to buy products without paying sales tax on our end if you plan to resell them and collect the sales tax through your business. This means that Printify will not collect sales tax from you.

How do I set up sales tax through my sales channel?

Some states in the US have made laws that require online marketplaces to collect and remit sales taxes on behalf of their third-party seller transactions. This means any sales you make via these marketplaces will be taxed for you automatically. Unless you have nexus in these states, you will not be required to do any additional remitting.

However, if you have nexus in these states, you will be required to file a “Zero tax return” or register for a non-reporting sales tax status. Additionally, it is advisable to keep a sales tax permit in states where you have nexus as the marketplaces only remit the taxes for sales made through the marketplace. We advise that you reach out to sales channel representatives or tax consultants for the appropriate information and setup.

Sales channels and their sales tax setup

How to file a return for sales tax

If you are registered for sales tax purposes and collect sales tax, you are required to file a return that indicates how much sales tax you have collected and remitted. Follow the guidelines on the TaxJar map to file a return for each state. TaxJar connects all marketplaces you sell and then creates return-ready tax reports in the manner in which a state wants to receive it. If you are tax registered, you are required to file a sales tax return whenever you have a filing due, even if you did not collect any sales tax to avoid penalties.

So, what should you do about the sales taxes?

Now, when you hopefully understand the theoretical part about sales tax a bit better, what does it all mean in practice, and what should be your next steps?

1. Check if/where you have a sales tax nexus.
2. If you have nexus, we recommend consulting a sales tax advisor but the steps will most likely include:
   • Choosing and setting up a tool for tax calculation and collection;
   • Applying for a sales tax permit for each state you have nexus in;
   • Submitting a resale certificate for each state you charge sales tax in – to purchase products without paying sales tax if you plan to resell them. This means that Printify won’t charge sales tax in those states;
   • If you collect taxes, you will also need to report and remit them, thus, use your chosen tool for tax reporting and follow their guidelines.
3. If you don’t have nexus and haven’t uploaded a valid resale certificate, Printify will charge sales tax on your item and shipping cost for orders shipped to states where Printify is registered. No other actions needed.

Examples for tax calculation

To make sales tax easier to digest, we have prepared a few examples of tax calculations depending on the product category, sales channel, merchant documentation, and order destination. 

Examples are calculated in accordance with sales tax rates and regulations on August 18, 2020.

For easy comparison, we picked examples of orders with a single item going for the same cost at $20 and shipping cost at $10.

All sales tax calculations are performed by licensed tax automation software that considers all relevant information and state-specific rates and exemptions. Please, note that for orders going to California, the sales tax is calculated based on the final retail price, not item cost.

Where can I get sales tax advice?

We at Printify are not tax experts or specialists and cannot give you any tax or legal advice. We strongly recommend you consult a tax specialist or CPA to get information on sales tax and regulations. That is why we have partnered with the specialists at TaxJar:

TaxJar is a leading technology for eCommerce businesses to manage sales tax. TaxJar features tools that make eCommerce easier for everyone by helping merchants spend time on their business and not sales tax.

• All of your sales tax data in one place: TaxJar instantly prepares your state return-ready reports from all of the places you sell, with one-click integrations with the top platforms, services, and marketplaces. See it all in one place.
• Seamless and automatic filing: With AutoFile, your tax forms will be automatically submitted when they are due. Never miss a deadline again.
• Real-time sales tax rates and calculations: Upgrade to TaxJar Professional, and the TaxJar API will instantly provide accurate sales tax rates at checkout.

If you would like to learn more in-depth information on sales tax, here’s an Online Seller’s Guide to eCommerce Sales Tax.

Types of sales taxes in Canada

There are two types of sales taxes in Canada. One is levied by the provinces, and the other is charged by the federal government.

These can be broken down into four separate sales taxes, and that’s how they appear in our Canadian invoices. There’s the Goods and Services Tax (GST), the Harmonized Sales Tax (HST), the Provincial Sales Tax (PST), and the Quebec Sales Tax (QST).

Some provinces charge only the federal tax (GST/HST), while others have specific tax rates established on the provincial level.

How do Canadian sales taxes compare to the US sales tax and VAT in Europe?

Canada uses a mix of European-style value-added taxes and US-style sales taxes.

The GST and HST levied at the federal level and the QST charged by Quebec are all VAT-type taxes. They apply to most sales of goods and services regardless of whether the recipient is registered as a taxable business or not. Tax-registered businesses can reclaim these three types of taxes if the purchased goods are used for resale or other business purposes.

In contrast, the PST levied by British Columbia, Manitoba, and Saskatchewan is similar to the US sales tax and is paid by end consumers. Local businesses purchasing goods are exempt from PST provided they submit proof of their PST registration to Printify.

How are Canadian sales taxes calculated and charged?

Starting April 2022, Printify will automatically include tax on all Canadian orders, based on Canada’s tax policies. In Canada, sales taxes are charged on both federal and provincial levels. The sales tax will differ depending on the province your product is shipped to.

Canada invoice summary

You can view your invoices by going to the Payments section of your profile and selecting Invoices. You’ll see the Canadian flag on your Canadian invoices. There are separate invoices for sales made within Canada and for imports into Canada. We currently offer monthly invoice summaries.

Like all other summaries, the Canada invoice summary consists of a summary page and a details page. You can find more information about the invoice summary in our help center article.

How can merchants get an exemption?

Printify can allow an exemption from the Provincial Sales Tax for merchants in British Columbia, Manitoba, and Saskatchewan. If you’re a registered taxpayer in one of these provinces, you can give us your tax registration details and receive an exemption. Learn more in the article on how to become exempt from Provincial Sales Tax.

When it comes to HST, GST, and QST, these are VAT-type taxes, and merchants cannot be exempt. You can reclaim these taxes via tax returns if you’re a registered taxpayer.

Where can I get tax advice?

Keep in mind that Printify does not provide legal, tax, or compliance advice. If you’re not sure whether you need to register for any taxes in Canada, please consult a professional tax advisor for the best solution for you and your business.

Disclaimer: We strongly recommend you consult a tax specialist or CPA to get advice on sales tax and regulations.