Brief Summary
From January 1, 2022, Ukraine applies a 20% VAT on digital services provided by non-residents, including marketplaces and advertising platforms. For sellers, this means not a tax on the product itself, but additional costs for commissions, advertising, subscriptions, and other digital services.
This article provides a basic explanation: what is the digital services tax, who it affects, why sellers on Etsy and eBay see +20% additional costs, and what to do to correctly account for this in your pricing.
Who is this article for
- For Etsy, eBay, and other platform sellers who have noticed an additional 20% increase in service costs.
- For individuals and sole proprietors who are not VAT payers in Ukraine.
- For those who do not understand why subscriptions, advertising, and marketplace fees are increasing.
- For those who want to understand, how the digital services tax affects seller expenses and how to factor this into pricing.
Essence
The digital services tax in Ukraine is not an additional tax on your goods, but VAT on the services you purchase from foreign online companies. That is why Etsy, eBay, Google, Facebook, and other services may show an additional +20% to certain expenses for Ukrainian sellers.
The main practical takeaway for sellers is simple: if you are not VAT registered, these expenses should be included in the cost and prices should be adjusted so that commissions, advertising, and services do not “eat up” the margin.
How the Digital Services Tax Works for Sellers
| Question | What it means | What it affects | Practical conclusion |
|---|---|---|---|
| What is this tax | 20% VAT on digital services of non-residents | Paid services of marketplaces and advertising platforms | It’s not a tax on goods, but on services |
| Who pays it | Platforms pay it to the state centrally | Cost of platform services for the seller | The expense is effectively included in the seller’s invoice |
| Where is it visible | In subscriptions, advertising, commissions, product listings | Etsy, eBay, Google, Facebook, and other services | All paid digital services should be checked |
| Who it concerns | Individuals and FOPs not registered for VAT | Ukrainian sellers without VAT payer status | This category sees an additional 20% in expenses |
| What the seller should do | Recalculate expenses and adjust prices | Profit margin and profitability | Ignore the tax at your own risk in cost calculation |
Checklist for Seller After Tax Implementation
- Check if you are a VAT payer in Ukraine.
- See which platform or advertising services have become 20% more expensive.
- Calculate separately subscriptions, advertising, commissions, and listing publications.
- Do not confuse this tax with the tax on the product itself or revenue.
- If you are a VAT payer, verify if the tax identification number is entered correctly.
- If you are not a VAT payer, include these expenses in your pricing.
- Update your store’s financial model considering the new expenses.
Expert Opinion
The digital services tax does not take a part of your product, but it takes a part of your margin due to more expensive marketplace and advertising services. That is why it cannot be ignored in the financial model calculations of a store.
Editorial summary based on Western Bid article materials
Frequently Asked Questions
What is the digital services tax in Ukraine?
What is the digital services tax in Ukraine?
The article explicitly states that this is 20% VAT on digital services provided to residents of Ukraine by online non-resident companies. This rule applies to marketplaces as well as advertising services like Google and Facebook.
Since when is this tax in effect?
Since when is this tax in effect?
The page explicitly states that the tax was introduced from January 1, 2022.
What does this mean for sellers on Etsy and eBay?
What does this mean for sellers on Etsy and eBay?
The article explicitly states that sellers on Etsy and eBay see +20% on subscription costs, advertising services, commissions, product listings, and other paid platform services.
Who Actually Pays This Tax?
Who Actually Pays This Tax?
The article explains that the tax itself is paid once per quarter by trading platforms and other non-resident services in a single payment. However, its actual cost is passed on to the seller through the increased cost of the platform’s services.
When is the digital services tax not charged?
When is the digital services tax not charged?
The article explicitly states that if you have a registered VAT-registered company, you can enter the corresponding tax number, and VAT will not be applied to the services.
What to do next
Start by reviewing your expenses: separately check how much you spend on subscriptions, advertising, commissions, and product listings, then adjust your prices so that new 20% costs do not quietly reduce your profit margin.
