Sales Tax and VAT for Resellers

01

Read this first

What follows deliberately contains no rates, no thresholds and no deadlines, because any figure printed here would be wrong for most readers and out of date for the rest.

02

Who collects the tax: the split responsibility

The most confusing part for sellers is that tax on a sale may be collected by the marketplace, by you, or by neither, depending on the transaction. Understanding which is which resolves most of the confusion.

• Marketplace-collected tax. Many jurisdictions now require platforms to calculate, collect and remit consumption tax on sales made through them. Where this applies, the tax is added to what the buyer pays and passed to the authority by the platform — it never becomes yours to hold or remit.
• Tax you are responsible for. Where facilitator rules do not apply, where you sell outside a marketplace, or where your own registration status creates an obligation, collection and remittance fall to you.
• Tax on what you buy. A separate question. Whether tax you paid on stock and business costs is recoverable depends on your registration status and local rules.
• Import tax and duty. Different again, arising at borders and covered in international selling and customs.

A crucial consequence: marketplace collection does not necessarily remove your own registration obligation. Those are separate tests. Sellers who assume the platform handles everything are frequently unregistered while believing they are compliant, and the rules on this differ meaningfully between jurisdictions.

03

What tends to trigger registration

The triggers vary, but the categories of trigger are reasonably consistent. Any of these should prompt a conversation rather than a search.

Rolling thresholds deserve particular attention because they are the most common way a compliant seller becomes non-compliant without noticing. A strong quarter can cross a rolling twelve-month threshold months before any annual accounting period ends, and the obligation begins then rather than at year end.

04

Why used goods are often treated differently

This matters enormously to resellers and is widely unknown. Many jurisdictions operate special arrangements for second-hand goods, because ordinary consumption tax rules would tax the same item repeatedly each time it changes hands.

The general shape of such arrangements is that tax is calculated on the seller's margin — the difference between what you paid and what you sold for — rather than on the full sale price. Where such a scheme exists and you qualify, the difference to your economics is substantial, particularly on low-margin, high-value items where taxing the full price would be ruinous.

• Availability, eligibility and mechanics vary by jurisdiction. Some have such schemes, some do not, and the qualifying conditions differ.
• Eligibility usually depends on how you acquired the goods, which is why purchase evidence matters even for cash purchases from private individuals.
• Record-keeping requirements are typically stricter, often demanding a specific form of purchase record per item.
• Certain categories are frequently excluded. Do not assume a scheme covers everything you sell.
• You generally cannot apply it retrospectively to goods whose acquisition you cannot evidence.

05

Reconciling what the marketplace reports

A recurring source of confusion and error: the numbers a platform reports will not match your bank, and neither will match your profit. All three are measuring different things.

1. Gross sales include tax the platform collected and remitted, which was never your income.
2. Payouts are net of fees, so they understate sales while overstating profit relative to what you actually earned.
3. Refunds appear in different periods from the original sales, distorting any single month.
4. Postage charged to buyers is income; postage you paid is a cost. Netting them off obscures both.
5. Timing differs. A sale, its payout, and its bank appearance can fall in three different periods, and at year end this materially changes your figures.

The practical answer is to reconcile monthly from platform reports rather than from bank deposits, keeping tax collected by the marketplace visibly separate from your own income. Attempting this annually, across several channels, from bank statements alone is where sellers lose weeks — and it is a large part of why per-item records with fees and postage attached are worth maintaining as you go.

06

Operating sensibly under uncertainty

You will not resolve every question, and rules change. A few habits keep the uncertainty manageable and inexpensive.

1. Set money aside as it arrives, in a separate account, at a rate your adviser confirms. Tax spent on stock is still owed.
2. Keep purchase evidence for everything, including informal purchases. It is the input to both cost accounting and any margin treatment.
3. Know which of your channels collect tax on your behalf, and where that leaves your own obligations. Write it down per channel.
4. Watch rolling turnover, not annual, so a threshold is seen approaching rather than discovered afterwards.
5. Review before you expand. A new country, a new fulfilment arrangement, or a new stock location can create obligations before the first sale — check first, not after.
6. Have an adviser you can ask a short question, because the cost of a quick answer is trivial against the cost of a wrong assumption compounded over a year.

None of this is the interesting part of reselling. It is, however, the part where a profitable business can be undone by an obligation that accrued quietly — and the sellers who handle it calmly are the ones who built the records early, kept the money separate, and asked the question before they needed the answer.