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UNDERSTANDING TAXES ON KOOPOONLINE

This section will discuss how taxes work on Koopo Online.  Here we will cover the following:

  • Taxes on physical products
  • Tax on digital products
  • Tax or VAT on products shipped outside the US

Koopo Online Tax Disclosure

By default all products on Koopo Online are taxable where there is nexus.  Taxes are automatically calculated and added to customers order.  Sellers have the option to set their products to a tax status of none.  Koopo does not recommend this option.  Taxes charged are paid to sellers and it is the sellers responsibility to remit taxes to appropriate tax authority.  If you collect taxes you may be required to register for a license to collect taxes in states where there is nexus.   For more info on registering for a tax permit in your state, click here!

Koopo Online is not giving tax advice, this section is informative and general.  Please consult with a tax professional.

Note: Koopo Online automatically calculates, collects, and remits sales tax for items shipped to certain states that require marketplace sales tax collection and remittance.  See below for more info.

Digital VAT (Value-Added Tax) Fees

Under local laws in certain countries, when you sell a digital item that is downloaded automatically to a buyer living in the EU, Norway, Russia, South Korea, Switzerland, New Zealand, or India, you are required to collect and remit VAT (The term “VAT”, for the purposes of this guide, shall be synonymous with terms used by other countries,  including GST, and any local sales taxes) to the relevant tax authorities based upon the rate that is charged in the country where the buyer is located.  KoopoOnline will automatically increase the amount charged to the buyer of the digital item to collect the correct amount of VAT, and you will receive the additional amount paid by the buyer for VAT, and you will be responsible to pay that amount to the relevant tax authorities.

You can learn more about VAT for digital items below.

Digital VAT on Koopo Online

Note: VAT is also known as GST in New Zealand.

The information below is for VAT rules on the sale of digital items delivered via automatic download to buyers in the EU, India, New Zealand, Norway, Russia, South Africa, South Korea, and Switzerland.

This does not apply to physical goods.

Koopo and digital VAT

Koopo Online calculates VAT on digital items purchased by buyers in the EU, India, New Zealand, Norway, Russia, South Africa, South Korea, or Switzerland

If you sell digital items, no matter where your shop is located, buyers in the EU, India, New Zealand, Norway, Russia, South Africa, South Korea, or Switzerland will be charged VAT.

To be clear, buyers—not Koopo Online or sellers—pay VAT as part of their total purchase price when buying digital items.  Sellers collect this amount and are responsible for remitting those amounts to the proper tax authorities.

Some examples of digital items:

  • E-books
  • Digital patterns
  • Downloadable PDFs

Sellers can set products to a tax status of “none.”  This will tell Koopo that not to calculate tax for that product.  This setting is not recommended as you may fail to collect tax on purchases where tax should have been collected and remitted to tax authority.  When failing to collect necessary tax, the tax authority may still require you to pay the tax.

How digital VAT works for buyers

Koopo Online automatically detects if the buyer is in the EU, India, New Zealand, Norway, Russia, South Africa, South Korea, and Switzerland and adds the appropriate VAT to the listing price if the item is a digital file download.

Buyers see the total price with VAT included on each listing that applies, as well as in their cart, invoice, and purchase page.

The price with VAT included will appear on the product listing for the digital item.  Buyers will pay the listing price and VAT for digital items purchased from any seller.

Filing digital VAT on your tax returns

Sellers are responsible for keeping track of their taxes and filing their own tax returns.

Sales tax is based on shipping location.

For instance, if you’re in the state of Michigan and you set a tax rate for Michigan, a New York state buyer wouldn’t be charged tax.

The rate will be applied to the most localized area you specify

The tax rates are calculated automatically on Koopo Online.

While Koopo Online provides a means to apply taxes to your transactions, we do not warrant that these tax amounts will fully satisfy your sales and use tax reporting obligations. For a final determination on these matters, please seek assistance from your tax advisor.

State taxes are governed by a legal concept known as nexus. Basically, nexus means that a business, like yours, must have some physical connection to a state to be required to collect sales taxes there. “Physical connection” might be employees, a warehouse, or some other assets located inside the state. Simply shipping products via common carriers or directing marketing to customers in a particular state is not enough of a connection to establish nexus.

So if you are seller on Koopo Online, your nexus will be based on the address that you provide when setting up your store.   Koopo Online does not support multiple nexus’.  Please consult a tax professional for further information on this matter.

Once you’ve determined where you have nexus, you need to determine the sales tax requirements for those states. Some states have no sales tax, whereas others have strict sales tax laws. Please check your state and/or city websites for more information on tax laws in your area.

VAT on product sold on Koopo Online

VAT only applies to products sold outside the US and Canada, in certain countries.  For sellers that only sell products in the US and Canada, VAT does not apply.

Am I required to charge VAT on my physical items?

For information on VAT requirements in your location, please consult your local tax authority or a licensed professional.

For EU countries, the applicable VAT rate depends on two things:

  • the nature of what is for sale and
  • the country in which the supply of goods and services is taxable with VAT

When supplying goods and services in the EU, the applicable VAT rates can be checked on the European Commission’s website.

Am I required to charge VAT on my digital items?

Koopo Online automatically charges VAT on digital products purchased by buyers in the EU, India, New Zealand, Norway, Russia, South Africa, South Korea, and Switzerland. If you sell digital products, no matter where your shop is located, buyers in the EU, India, New Zealand, Norway, Russia, South Africa, South Korea, or Switzerland will be charged VAT.

VAT on seller fees

Depending on your business status and location, Koopo Online may be required to charge VAT on seller fees accrued each month and remit it to the relevant tax authority. See below for details.

Sellers based in the EU (excluding Ireland), India, New Zealand, Norway, Russia, and South Korea

  • Sellers in these countries, who submit a VAT ID  will not be charged VAT on seller fees.

Am I required to have a VAT ID?

A VAT Identification Number (VAT ID) is used to identify individual businesses for the collection of taxes. Koopo Online does not require sellers to have a VAT number to sell in our site.

Businesses in certain countries may be required by their local tax authorities to register for a VAT ID if they reach their local country threshold. However, in some countries, you may also register for VAT even if you have not reached the threshold.

Because VAT laws vary from place to place, we’re unable to advise sellers on whether they need to acquire a VAT ID. If you have any questions about whether you need a VAT ID, please consult your local tax authority or tax advisor.

How will my VAT ID be used?

By providing a VAT ID, you are establishing a business-to-business relationship between your shop and Koopo Online. This status and your business location determine whether or not Koopo will charge VAT on seller fees.

In some countries, Koopo Online has a reporting obligation to share your VAT ID, together with the total value of your seller fees applied for that period, with local authorities. Contact your local tax authorities for more information.

Sales Tax Collected by Koopo

Sellers don’t have to update their sales tax settings in their shop for orders shipped to the states listed below. The sales tax settings  only apply for states/regions where Koopo doesn’t automatically collect sales tax. No action is required on your part to collect sales tax from buyers in the states listed in this article.

Sellers can’t opt out of Koopo automatically collecting sales tax for items shipped to customers located in the states mentioned in this article.

What amount of sales tax was remitted by Koopo for my orders?

To determine how much sales tax was remitted by Koopo for a particular order, view your orders in your seller dashboard where it itemizes all line items.  You can also check this in your reports section in your seller dashboard.

Take the gross total of the order and subtract fees. The difference between this amount and the net amount of the order equals what Etsy remitted to the state.

Do I need to charge sales tax on sales in the states in this article?

Sellers do not need to remit sales tax on their Koopo sales to a state where Koopo remits sales tax on your orders.

For orders shipped to customers in all other states

If you sell goods and reside in the US or Canada, you have the option of either including applicable taxes in your listing prices, or excluding applicable taxes from your listing prices.