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eBay will NOT pass UK Digital Services Tax to SMEs
eBay have announced this afternoon that they will pay the UK Digital Services Tax which the government is levying on large internet based businesses. Unlike some other marketplaces, eBay will not pass the UK Digital Services Tax to sellers in the form of fee increases.
This is fantastic news and it’s also the honourable thing to do. The tax was never intended to apply to UK SMEs and indeed was intended for businesses, who while they’ve always paid the tax due under UK law, have been perceived not to be paying their fair share. It’s a response to businesses which are domiciled overseas and the UK Government described this as a misalignment between the place where profits are taxed and the place where value is created. In order to redress the balance a little the 2% UK Digital Services Tax is being levied on search engines, social media services and online marketplaces which derive value from UK users effective the 1st of April 2020.
“Under the current international tax framework, the value businesses derive from user participation is not taken into account when allocating the profits of business between different countries. This measure will ensure the large multinational businesses in-scope make a fair contribution to supporting vital public services.”
– HM Revenue & Customs
With many businesses facing costs from ever increasing competition, the UK exit from the EU and on top of that the Coronavirus pandemic, the last thing anyone wants is to see their marketplace invoice have 2% tacked on in tax that was never intended to be imposed on UK SMEs.
We (and you) often complain about eBay so we want to say right here that we’re dead impressed that they’ve taken the decision to do the right thing and cover the tax themselves in the manner it was intended to be applied and not copy competitors by passing it on to you.
“eBay is one of the marketplaces which will have to pay the new tax – and a lot of you have asked whether we at eBay will be passing on this tax to our sellers in the form of new fees.
We wanted to reassure you that we won’t do that, so you will not be charged additional new fees as a result of this tax.
A big thank you to all 300,000 of you who sell on our platform and continue to make eBay a diverse and vibrant marketplace for sellers of all sizes.”
– eBay UK
Because sellers are already paying 25% plus in fees, right now.
They introduced sponsored listings and making a ton anyway. They realised domestic sellers were making up to 15 per cent and now they get that as a promoted listing fee on most of the sales anyway.
No point selling on Ebay as a domestic seller. 2 per cent isn’t a favour. They will add it latter and already making an absolute killing.
Looking at how many sponsored listing sales are coming through and so little margin or volumes, i think my time on this platform is coming to an end.
A big thank you to all 300,000 of you who sell on our platform.
300,000 is just the Chinese right ?
Domestic sellers prob like 150.
Right nown id make more money returning warehouse space, than storing goods and selling them on ebay UK. So 2 per cent on fees is neither here or there tbh. The platform doesn’t work for UK VAT paying sellers.
@ ifellow, i think your ratio of 1 British seller to 2000 Chinese sellers is way off.
On a serious note how long before big sellers like yourself will really quit Ebay and Amazon.
Myself as small seller I’m running down stock and i will be out in Autumn 2021. Simply no profit in this any more as 25% fees are taking all my profit.
Its interesting to know small and Big Sellers a like are simply not making any money.
I cant comment on Amazon but been an Ebay Seller since 2005 and the last 2 years sales and profits have shrunk by 50% year on year.
@ Derek Duval
We are clearing stocks and will reduce our offering on eBay, generally, eBay isn’t really our focus anymore.
There will be a lot of sellers running dead stock at cost in their books and reporting it as cost price year after year, paying to warehouse that stock, they will never obtain cost price back on that stock especially the way fees are now, will make a good loss. Thinking great i got 100k 200k 300k stock, but how much of that is dead ? how much have you been warehousing for over 1 or 2 years? How much does it cost to warehouse vs potential profits ? How many units are selling per month, and at what margin ?
Plus carrying over the stock simply added to their corporation tax bill year after year, most wont even realise it, because they have thought of an exit strategy.
If you as a seller have 1000pcs or 500pcs of this type of stock over a few SKUs, then this is the loss you need take before you can quit eBay because its unlikely to also sell on Amazon.
Or carry on selling as it is now with 4-5pcs a week. Maybe in 20 years you’ll clear it and lose any potential nest egg you have created in the process.
@ Derek Duval
Ps just my opinion from my experience, i don’t want anyone to get their knickers in a twist because they have been storing Thomas the tank engines from 2007 or something.
You can simply exit eBay without clearing all that dead stock, is the bottom line and if you dont have dead stocks, when why quit eBay other than you simply can be bothered anymore or margins are too low.
I don’t mind low margins with volume working hard to make money, but holding dead stock for eBay when Chinese selling similar stocks are booming on the same platform. No thanks !
Surely it depends on what product you are selling?
I just got a nice offer from eBay this morning reducing my transaction fee to 5p for managed payments (instead of 30p that everyone has been complaining about).
I don’t think it’s fair to be making the sweeping statements you are making. Ebay do offer good deals, savings and promotions. The promotion this morning runs till next year. So eBay do a good thing but not passing this tax on and they still get shot down.
For your statements to be valid it depends on what you are storing
If a 25p discount gets you excited. Fair enough.
Overcharge then reduce the cost is not much of an offer
That offer is 5p across the board but based on selling small value items. The detail is 15% for final valuation. most but not all valuation fees are around 12%. So is it such a great deal? Need to get my abacus out to check that properly.
@Carolyn B. Wow, how did you achieve this? Any feedback/suggestions gratefully received. At 1000+ transactions a month, this would be amazing for me.
You just basically already said why you have not got the offer, and that’s you do 1000 transactions a month.
No way eBays going to offer you this.
Fair play, they are absorbing this, unlike Amazon.
So they do deserve credit at least for that much,
They will absorb it the same way eBay sellers are ‘Absorbing’ postage costs and some buyers actually believe it.
@ ifellow. reading Carolyns post above – you do not think that 25p saving is significant?
I think you are missing the point.
Many of my clients sell over 100 small items per day from a spare bedrooms. 25p saving on each is an extra income of exactly £1000 per month, £12k per year.
25p can make a SIGNIFICANT different to your net profitability. If you disagree i know many sellers who would laugh at anyone who would think otherwise. these sellers are often selling very cheap items in quantity while keeping legally below the VAT threshold and have minimal overheads other than postage, ebay fees and envelopes. I know a saving of 25p per transaction could be as much as a third of their income!
My guess is that you are used to such high overheads that 25p per transaction does not seem significant. Often the trick is to cut your overheads and adapt your business so that it is very significant. Just look at the sellers being forced off paypal micropayments – they certainly have something to say about the 25p per order.
@ Alan Paterson
If 25p is so important, you can’t afford to go over the VAT threshold because you need an accountant and actually file proper tax and find this all ‘Really great’.
Then I guess these are the type of sellers eBays good for now.
@ Alan Paterson
Personally id call these people hobbyist, rather than businesses.
But that’s just me.
@ Alan Paterson
I didn’t get the offer, as did many 100,000s of others. So don’t expect us to be jumping up for joy either.
@ Alan Paterson
Plus 100 items day leaves a sales price of about £2.32 per item to reach the vat threshold in a year.
Double it to 4.64 and your at 6 months.
9.28 your at 3 months, how many months are these ‘businesses’ selling?
Your number of 12k a year is nonsense, or people arent declaring tax correctly and ripping off the system which is ‘sucesfull ‘eBay businesses in a nut shell. Most of these ‘business’ owners are probably on tax credits and benefits.
i dont think that was my point. your previous post implied it wasnt worth anything so would it really have made any difference?
I was only trying to help.
Some of these “hobbyists” as you call them make more net profit than businesses with millions of pounds turnover (which off course can easily run at a loss).
Its debatable if it is wise to judge a business on turnover although most people do. there is wisdom in basing it on profitability and how many hours per day required to run the operation.
If you can make £30k doing your “hobby” then there is nothing wrong with that. These people are enjoying themselves while making money and have less stress. You seem to be the opposite of that. You have warehouse space, probably staff and other overheads that you are saying are not financially viable. Square peg (you), round hole (ebay) – it doesnt fit. Dont look down on the sellers with round pegs that do fit in the round hole.
The government class a business as anyone buying in or producing merchandise to resell at profit (1 definition anyway) so i think you not realising these smaller businesses as “businesses” is folly. Nothing wrong with £30k per year income for a few hours work a day.
Also, your reference to “cant go over the VAT threshold because you need an accountant” is also wrong. Sellers stay under the threshold so as they dont pay VAT on their turnover. they still (or should have) an accountant.
I am beginning to have an insight as to why you are having problems.
I have a friend selling BUTTONS (shirt and coat buttons). Just buttons. they cost pennies to bring in from China and he sells them in batches of less than 10. Turnover is £80k and net profit about £35k. All run from a cupboard – not a bedroom but a cupboard in his house. His only expenses are ebay fees, postage and envelopes (and an accountant). Under the VAT threshold which has a few minor disadvantages – and one MAJOR advantage – no vat return.
All his other purchases he would have purchased anyway like computer and internet, printer etc. Its the simplest of business with no overheads.
But you are implying thats not a proper business? I think you will find that small businesses like this are better for the economy than huge chains that are often not contributing their fair share of tax with many making a loss (especially now).
There are so many people becoming unemployed at the moment and ebay could be a very viable solution to that if the business is scaled properly.
No matter what the circumstance – providing the persons attitude is correct – `i have always been able to show someone how to create at least a living wage working from home. No matter the financial constrains and even folk with disability. the example i gave of the buttons business – that guy is in a wheelchair and started his business with £250. You can buy a large range and quantity of buttons for £250 and you dont need a warehouse.
Profit is reality, turnover is vanity. Bit of a cliche in business circles but true.
@ Alan Paterson
‘Just look at the sellers being forced off paypal micropayments – they certainly have something to say about the 25p per order.’
The bead seller revolt of 2020 will go down in history as one of eBays darkest moments. Thus let us not forget.
@ ifellow…… you can count! Look at my example further down the page. how much do you think a set of shirt buttons actually costs? which further emphasises the importance of the 25p that you dismisses. You have it all wrong buddy and you are getting nasty when all i was doing was trying to help.
dont post your plight on here if you dont like the response – i take it you were looking for a negative response. whats the use in that?
i wholeheartedly apologise for trying to help. i have seen your posts in the past and realise you have been contributing for some time to tamebay. I dont always agree with you but i have enjoyed some of your posts. i was only trying to help . so much for networking………
i give free help support and advice to ebay sellers with the right attitude. Obviously you are not one of those sellers.
@ifellow. ok you are not going to convince me that ebay sucks and i am not going to be able to give you any help.
lets leave it at that. your now insinuating i am a tax dodger. Needless to say my blood is boiling at the moment.
@ Alan Paterson
I’d rather ebay stick the 2 per cent and the 25p given to the bead seller where the dont shine
Fix the site, get some decent buyers on it, and stop promoting dodgey tax evaiding Chinese sellers.
But that’s just me. If I had a cupboard of buttons maybe it would be different.
I’d gladly pay amazon the 2 per cent because they seem to be not a complete and utter joke at the moment, and actually have buyers.
Years ago eBay made a massive deal about getting big high street sellers onto the platform about 95 per cent are no longer on it, despite still being in business. I wonder why ?
As soon as a brand opens a store on Ebay that isn’t an outlet selling refunded damaged goods its brand value immediately drops look at superdry.
The sites flooded with blatant fakes and dodgey sell quick and disappear sellers.
The promote your listing is a total joke forcing UK sellers to pay even more in fees or sell hardly anything, when prices and demand is already so low because of all the VAT evaiding Chinese sellers pumping money into promoted listings already. Meaning UK sellers make a tiny or no profit, paying listing, shop fees and getting weak sales volumes.
So no in not high fiving people about this 2 percent or the bead sellers 25p.
i am genuinely sorry that has been your experience of ebay. that is not my experience at all – or at least i am interpreting it completely different from you.
I dont really want to exchange further. you wrote a post further down the page implying i was avoiding being VAT registered by setting up all my friends as small independent businesses. that would not have made much sense as i was VAT registered myself lol. I wont have you make insinuations like that against my friends / clients.
Anyway if you wanted to upset me you have succeed and i would rather have no further exchange with you. I have helped 28 different businesses on ebay over the years many of whom are still trading. they would be upset too if they saw your post. You are welcome to have a go at me but not my clients. Its very unprofessional. I see one of them has already written below. My intention was not to upset anyone – only offer some assistance – admittedly in sometimes a passive aggressive sort of way. Thats just me.
@ Alan Paterson
Who the hell is providing these sellers with business courier and business postal rates for 4 months a year, every year. The cheapest courier is around £3.00 postable and royal mail 48 is around £3.10 based on this alone and the volumes you mention it would be difficult to sell for even 6 months before having to stop, and I doubt youd get the royal mail rate on and off as you please.
@ fellow, dear oh dear. you are so aggressive with your questioning.
unless an item can fit in a normal envelope and send either letter/large letter the item is not viable at the prices I quoted.
At the moment a large letter stamp 2nd class is 88p. Far cheaper if you get a franking machine and you are sending volumes.
the example I gave – buttons – are not sent by a courier! You are just not “getting it” but you are hostile in your posts and if you don’t understand something you lash out. Anything up to the size of an “F” (it might be an “E”) she Jiffy bag can be sent by large letter anywhere in world (if you use GSP) providing it is less that 2.5cm thick.
Believe me – there are many sellers making a full time income on ebay selling small items while LEGALLY being under the VAT threshold. You are just not prepared to listen.
These are the businesses that have been thriving during the pandemic. Little worry about staff, seldom worry about premises, cashflow relatively unaffected and if you are selling the right small items a £30K income can be achieved.
@ Alan Paterson
@ Alan Paterson
‘Many of my clients sell over 100 small items per day’
Each one of your many ebay accounts to dodge tax is a client . Wink wink.
I resent that implication Ifellow
i am trying to help you and you now insinuate i am a tax dodger. I have many ebay accounts – all were declared but I am not trading on any of my accounts at the moment due to severe ill health.
your attitude sucks. you are a bitter, bitter man lashing out at ebay because your business plan does not work.
I find it ironic that i use my real name and YOU sir accuse me of dodging tax. How dare you!
I was only trying to assist you with the plight you are obviously in. I was extending a hand and all you can do is bite it.
With my health as it has been i have only been (on top of contracting Covid-19) helping people with their ebay business. You are just a grade A wally.
I don’t normally post as I feel that the forums have became such a hostile place.
I am one of the sellers Alan helped about 4 years ago. I know some of the others and he encourages us to network with each other. I would not be selling on eBay today if it were not for him.
Are you trying to say that my business is somehow owned by Alan?
You would do well to listen to advice but it looks like you have burnt your bridges. You are out of order. Read through the posts. The man was genuinely trying to help you.
He has had extremely bad luck and bad health recently. He was on life support for a while it was that bad. To my knowledge he stopped reading on eBay last year. Probably quite difficult in a comma .
I got quite emotional reading your exchange.
Is this Alan Peterson .com?
@ admin. no, Alan Peterson is another seller who often posts on here. We are often mixed up.
Why are your crying ? Alan Peterson is going on about cutting costs and how 25p adds up.
However I’m explaining to him how dump Ebay is.
Try buying some nike or Adidas trainers what a laugh.
Amazon charge the 2 percent because they can do. EBay Rips off domestic sellers on a daily basis and then insults them with this 2 per cent.
All of us that have been on Ebay for over a decade aknow they will find another way to fleece us very soon above the tube of 2 per cent, and what a joke this.
Giving some bead seller 25p off is of no concern to me, I didn’t get any discount. Alan peterson seems to think it’s a big deal, i dont, for one I haven’t got the discount.
With respect Mr Fellow that wasn’t the issue. I note also you are spelling his name the same as “Admin.”
His name is Alan Paterson not Peterson. He is one of the few who uses his real name on here and this is to illustrate integrity and openness. I don’t even put my full name.
Difference of opinion is one thing.
Character assassination is quite another. Goodnight.
Fan club out in force.
eBay and Amazon are both companies that invited and bent over backwards to help 10,000s of Chinese merchants onto thier platforms, because they were so scared of aliexpress. Knowing to well it would rip UK sellers apart. When they should have bought all the tax free goods coming into the UK to the governments attention ( doing the right thing) But they didn’t want to do that as theyd rather make a quick buck and it might have shined some light into thier own tax affairs. 1000s of domestic sellers have left the platform or closed down since.
At least Amazon is honest about who and what they are and arnt a shadow of thier former selves.
I remember when FVF were not charged on postage for instance then everyone was forced more or less to offer free shipping whilst ebay added fvf too shipping and demoted those that did charge it, eBay pretending to care about domestic sellers is just Insulting. I’m sorry !
Any one who thinks ebay wont find a way to make well and above 2 per cent in less than 6 months clearly hasn’t been around for long.
And if your thinking wow my non vat registered business got 25p off a transaction for year when you were paying far less on PayPal. What a great deal.
Sorry if someone finds that insulting, but sometimes the truth feels that way.
My final comment because I’ve said loads.
ID RATHER EBAY CHARGE THE 2% ON FEES.
because that way I’d know they would not be looking for a way to charge even more within 6 months. Which every ones knows they blatantly are.
Hence I prefer amazons open and honest approach to eBays SNAKE OIL.
I sell on both Amazon and ebay and much prefer dealing with ebay over Amazon.
Least with ebay they will try and help you out when things go wrong or if a buyer is in the wrong. They won’t tell the buyer they have done wrong but at least try and put things right for you. Amazon way is tough, not our problem.
Not once have I had any money off or promotions from Amazon off fees. Get loads emails pushing Amazon Prime or Seller Fulfilled Prime but when I look into it not worth it. I would pay more for shipping, have to pay for free return and they keep most their fees. Only winner on Amazon is Amazon
ebay do listen when they get it wrong. There does seem to be a culture change at ebay at the minute where they are starting to value sellers. Since start of Covid ebay have done and given a lot of help and support to small business. Not had any of that help from Amazon
@ifellow ……. ok ……. so you prefer amazons approach to pass the fees onto us the sellers rather than ebays approach in deciding to absorb the fees for us.
Doent matter what ebay do – you just slag them off. Your opinions don’t make sense and your persistent reference to sellers under the VAT threshold as “hobbiest” (I see other folk jumping on your bandwagon with similar comments) is very, very naive.
By your own admission – with your ebay business failing – I thought you would want to listen rather than talk (and yes you have talked a lot – even more than me!)
@ Alan Paterson
I don’t get the hype about eBay waiving those 2% percent. It will be added indirectly later on.
eBay+PayPal fees were less than current Mangled Payments. But basic maths is hard work for some sellers.
And what’s that some sellers get 25p off their MP fees ? Why not each and every seller??!
We’re not on MP payments yet. Despite eBay telling us it will happen “late July”. It’s mid August. We registered back in Feb/Mar.
Any business going on 2 months holidays (stop trading) to stay under the Vat threshold is not a business. It’s a hobby.
Business is when you go for Vat with sales of 60k because your new supplier (not from China) does b2b and requires vat and you just then work hard to be above vat threshold on time, otherwise the tiny profit margins kill the business almost instantly.
Business is when your company takes a property lease for X years with utility bills to pay each month on top of other expenses. Does it need extra installation for an alarm and CCTV? Is this property too big or too small? Still gives me sleepless nights.
(Small) business is when your company employs 2-20 people (not multi chains as mentioned above).
thats not how the Revenue define what a business is and what is the point taking premises with all the extra commitments? what if a spare bedroom, garage will suffice?
Unit rental usually doubles when you add things like VAT, service charges, electricity, broadband, insurance, alarm system (usually needs Red Care), phone lines, building maintenance / insurance, water rates, traveling to work, vehicle costs etc etc. The list goes on.
Particularly in the current climate – many small businesses working from home are relatively unaffected by the pandemic.
Often premises are necessary, dont get me wrong. But if the business can be run from home then it should be run from home. a seller should keep it small, keep it tight and avoid unnecessary overheads.
I first looked at ebay 20 years ago. You would be shocked how many sellers are no longer active.
why should ebay be applauded ?
Who is doing who the favour?
Ebay are paying their taxes ?
Ebay will have took a calculated decision to use this as a PR opportunity
We have no doubt The2%and more will be recovered quietly in fees and add ons in the future
I look at it through the yes of a ebay business trader of over 12 years
Was it the right and decent thing to do….. YES
Am i grateful…. YES
Will ebay now go ahead and reduce discounts, increase other fees, put up shop prices etc to claw it back by stealth as always… YES
It really is a simple as that.
Ebay have been shafting sellers for years, let us not clap too loudly for what will be a publicity stunt on their behalf, paid for discretely by sellers in subtle fee rises that won’t be associated with the Digi tax! this has been ebay for over a decade, why would they do anything else?
Honestly, I feel it’s insulating to think sellers on eBay are so stupid as to fall for this nonsense. it’s quite frankly offensive.
Amazon are going to start charging this around September, at which point ebay will have raised fees anyway.
EBAY 1 : 0 AMAZON
eBay will not pass the UK Digital Services Tax to sellers in the form of fee increases.
And if you believe that you’ll believe anything.
Who is paying 25% fees? I pay 10%… what category costs 25% in fees?
Roughly same fees here. That’s including sponsored listings set at a low rate, yet still managing to be seen and getting results.
Glad I don’t sell in these 25% combined sponsored + FVF categories, if they exist.
Nice move. Good contrast to Amazon.
Good publicity stunt by ebay,,,,,,, but make no mistakes the 2% will be recovered elsewhere. It’s business. Simples.
Unless you promote your advert at 12 percent Ebay hide your adverts.
11 percent and 12 percent and vat is 25 percent
eBay promoted listings are a placebo for most. What happens if everybody pays for promoted listings? eBay gets rich and you get nothing but the exact same competition you would have if you hadn’t paid to get into the hamster wheel.
I’m surprised so many people have fallen for promoted listings. You might as well open your own website and pay Google for adwords.
Not promoted listings do not sell. Been there?
I suggest little experiment: search for one of your items on eBay (while being logged into your eBay account). Good position in the search results? Nice one.
Now, try the above while using other browser/incognito mode and your listing isn’t there. Surprised? That scenario is how the potential buyers sees (or rather not) your listings in general search results.
Over 20% of our sales from this past Monday were promoted listings. I’m not advocate of those but if they sell with minimum “promoted” overhead then I will go for it.
I have to say that in my professional experience of over 15 years on eBay, they absolutely 100% without a doubt will pass this onto sellers one way or the other, it just won’t be directly charged.
Credit should be given where credit is due. This is a good move by ebay.
Now make another couple of good moves and get some momentum going.
Thank Clapton I’ve never had that problem. My items show up fine so I’ve never had to pay any ransom money. You were probably targeted as someone in competition with many other sellers. They suppressed your listings and your competitors listings so you all had to pay. What do you expect from eBay? Some sort of level playing field?