Q: What is VAT?
A: The European Union value added tax (or EU VAT) is a consumption tax levied on goods and services within the European Union (EU). Different rates of VAT apply in different EU member states, which may range from 15 to 27%.
Q: Why are you charging VAT?
A: Changes to the EU’s VAT law that took effect in 2015 require us to begin charging VAT on all electronically supplied services (“ESS”), which include products offered on Creative Market.
Q: If the EU made the change in 2015 why is Creative Market only now charging VAT in 2016?
A: Over the past year, Creative Market has implemented the systems necessary to collect, remit and properly invoice for transactions requiring that VAT be levied. As the EU requires Creative Market to collect and remit VAT, Creative Market has taken the measures necessary to assess and pay all VAT arising from 2015 sales.
The European Commission states that “located” means:
- For a business (taxable person) = either the country where it is registered or the country where it has fixed premises receiving the service.
- For a consumer (non-taxable person) = the country where they are registered, have their permanent address or usually live.*
*For example, a UK citizen is an ‘expat’ who works or lives most of their time in Spain, then you, as the person supplying digital services to that consumer, should be charging Spanish VAT on those services and not UK VAT.
Q: What is a valid VAT ID Number?
A: A VAT ID Number (or a VRN in the UK) shows that a buyer is a registered business in an EU country and therefore won’t be charged VAT by Creative Market. If you are a business, but do not have a valid VAT ID Number number you will be charged VAT.
Q: Will I be charged at purchase if I provide a valid VAT ID Number?
A: Upon your first purchase of a Creative Market product you will be asked to confirm where you are located. If you affirm you are in an EU country your purchase (as well as all subsequent purchases) will be charged VAT based on the EU country where you are located. Upon receipt of a valid VAT ID Number, Creative Market will not collect VAT on transactions that occur after the VAT ID Number is provided.
You may enter a VAT ID Number here. Please note that this must be entered before your purchase to avoid being taxed.
Q: If I obtain a valid VAT ID Number later how do I get a refund for VAT that Creative Market charged me on purchases prior to that?
A: As the laws of each country vary, Creative Market recommends you consult with your tax advisor in order to obtain a refund in such case.
Q: How can I enter my VAT ID Number and/or change my country and address?
A: You may do this on your VAT settings page.
Please note that changing your VAT ID Number and/or your country and address will only affect purchases that occur after the change(s) is made. Previous purchases will remain unchanged.
Q: I purchased from a Creative Market shop owner who has a VAT ID Number so why was I charged VAT?
A: EU VAT is assessed based upon the location of the customer, and is not affected by the shop owner’s tax status.
Q: What is the Reverse Charge Mechanism?
A: The Reverse Charge moves the responsibility for the recording of a VAT transaction from the seller to the buyer of a good or service.
This mechanism eliminates or reduces the obligation for sellers to VAT register in the country where the supply is made. If the supplier incurs any local VAT on costs related to the service or goods supplied under the Reverse Charge, they may recover them through an EU VAT reclaim.
Q: How is VAT calculated?
A: The VAT rate in the EU country where you are located* determines the percentage of the product’s price that will be assessed as VAT. Product prices you see on Creative Market prior to purchase do not include VAT. At checkout the amount of the VAT will be shown.
*Please see “Who must pay VAT?” above for clarification.
Q: What is the VAT rate in my country?
A: For your country’s VAT rate please see these resources:
Q: How will I know what country and rate you’ll charge me for VAT?
A: Before you confirm your purchase, we will indicate the country, VAT rate, and total VAT amount.
Q: Is Creative Market or the shop owner considered the seller for VAT purposes?
A: For the purposes of EU VAT, Creative Market is deemed to be the seller. Creative Market determines, collects and remits VAT for all purchases by EU buyers.
Q: How do I get a VAT invoice for each purchase?
A: VAT invoices are automatically created at the time of purchase and can be found on your VAT settings page.
All invoices are designed to comply with the legal requirements set forth by each EU member state. Additionally, all invoices will be archived in Creative Market’s tax compliance system.
Q: Will VAT collected from a shop owner’s sales be shown on 1099s and 1042s?
A: No, because VAT is not an income tax, amounts collected will not appear on US forms.
Q: Is anyone exempt from paying VAT besides buyers with a valid VAT ID Number?
A: According to the UK the answer is no:
From 1 January 2015, the rules around the European Union (EU) VAT place of supply of services will change. This will affect the sales of digital services (broadcasting, telecommunications and e-services) from a business to a consumer (private individuals and non-business entities eg, public authorities or charitable bodies).
Q: As a shop owner are my earnings affected by VAT?
A: No, VAT is not part of the earnings calculation.
Q: Creative Market is based in the US so why are you charging me VAT?
A: VAT is based on the location of the buyer only and is not determined by the location of the seller.
Q: What is Creative Market’s registered VAT number?
Q: Who will remit the VAT collected to the EU?
A: Creative Market determines, collects and remits VAT for all purchases by EU buyers.
Q: What is Intra-Community Acquisition? Does that affect if VAT is collected and/or the amount collected?
A: We are a non-resident company therefore there is no Intra-Community Acquisition of goods.
Q: Are Creative Market site credits, PayPal purchases, gift cards, or un-withdrawn earnings used to buy products affected by VAT?
A: The method of payment does not determine if VAT will be charged, but rather where the buyer is located*. At the the time of purchase i.e. download using credits or earnings VAT will be assessed.
*Please see “Who must pay VAT?” above for clarification.
Q: What is a Harmonized Sales Tax and does it relate to VAT?
A: Harmonized Sales Tax is another form of consumption tax separate and apart from VAT.
Q: How does Creative Market account for currency exchange rates when collecting VAT?
A: All purchases on Creative Market are in USD, and Creative Market will remit payments to the EU member states in Euros.
Q: If I ask for a refund will the VAT I paid be refunded as well?
A: Yes, refunds will be issued for the full amount of the purchase price, that is, base price plus VAT.
Q: As a buyer how will I know what the total price of a product including VAT will be before I purchase?
A: The prices shown on Creative Market products do not include VAT. The total price including VAT, the VAT country, and the VAT percentage/rate will be shown after you click “Buy Now” but before you confirm your order.
If you’ve made a purchase previously and were charged VAT the same rate will be added each time you purchase. For example, if you are a French buyer you will always be charged 20% VAT. So if you buy a product for $10 you will be charged $2 in VAT. If you then buy a $20 product you’ll be charged $4 in VAT.
Q: I was traveling when I made my first Creative Market purchase and you charged me the VAT rate for the country I was then in. However, I live in a different country so why am I not being charged at that rate?
A: Upon your first purchase of a Creative Market product you were asked to confirm where you are located. If you affirmed you are in an EU country your purchase (as well as all subsequent purchases) will be charged VAT based on the EU country in which you are located*. You may change the country from this page to correct a mistake made in the country presented or selected. However, previous VAT collected cannot be refunded.
*See “Who must pay VAT?” above for clarification.
Q: How do I as a shop owner find out what VAT rate my buyers will be charged?
A: The rate your EU buyers will be charged depends on the country they are in. For country-specific VAT rates please see these resources:
Additional information on the topics above can be found here:
European Commission VAT information:
- General Overview
- Telecommunications, broadcasting & electronic services
- Questions & Answers: VAT changes from 2015
- 2015 EU VAT changes - contact points provided by Member States
- VAT: businesses supplying digital services to private consumers
- VAT: Supplying Digital Services and the VAT Mini One Stop Shop (VAT MOSS)
The above FAQ is not intended to represent tax, accounting, or legal advice. Should you have any questions, please consult your tax advisor.