VAT stands for Value Added Tax, and it is a consumption tax levied on the value added to goods and services at each stage of production or distribution. VAT is commonly used in Europe and other countries around the world as a way to generate revenue for the government.
Domain selling platforms such as Sedo.com do collect VAT on behalf of the government, when this is due. Determining when VAT tax applies isn’t always easy and there is a process to decide if VAT is involved in a domain sale.
Sedo provides a VAT guide in its FAQ section that assists with the determination on VAT collection. The key highlights are as follows:
- If you are a buyer or seller based in the USA, VAT does not apply to your transaction.
- VAT only applies if the seller is trading as a company which is VAT liable. The seller’s VAT status is available on the domain offer page in the Meet the Seller section. If the VAT status shows as “Applicable” the seller has indicated they are trading as a VAT liable company. If you are a seller trading as an individual, sales tax does not apply.
However, this alone does not help determine VAT collection when either the buyer or seller, or both, are in the EU.
For example, when the domain seller is an individual there is no VAT to be collected, regardless of their location. The same applies to sellers that are companies without a VAT ID or that are not located in the EU: no VAT is collected.
When is VAT collected?
- If the domain seller is a company with a VAT ID, located in the EU and the domain buyer is a company with a VAT ID located in the same EU country as the seller.
- If the domain seller is a company with a VAT ID, located in the EU and the domain buyer is an individual located in the EU.
Hopefully this helps clarify the question whether, as a domain buyer or seller, VAT is involved for sales & acquisitions at Sedo.com.
