What Is a Deemed Supplier?

What is a "deemed supplier"?

A deemed supplier is an electronic interface or online marketplace (such as Etsy, Amazon, or eBay) that is treated by EU tax law as if it were the supplier receiving and making the sale — for VAT purposes — even though the physical item is owned and sold by an independent merchant.

Established under Council Directive (EU) 2017/2455 and Article 14a of EU VAT Directive 2006/112/EC (effective since 1 July 2021), this rule shifts the legal burden of VAT collection and remittance from individual online sellers to the platform.

Legal Foundation: Article 14a of the EU VAT Directive specifies that where a platform facilitates distance sales, it is "deemed to have received and supplied those goods itself."

When does the deemed supplier rule apply?

The deemed supplier status is triggered strictly under specific statutory conditions:

Feature	Scenario	RecommendedDeemed Supplier Status
Imported goods in consignments ≤ €150 (IOSS)	Goods shipped from non-EU into EU	Marketplace is Deemed Supplier
EU B2C Distance Sales by Non-EU Sellers	Seller established outside EU (e.g. US/UK seller)	Marketplace is Deemed Supplier (Any value)
EU B2C Distance Sales by EU-Established Sellers	Seller established in an EU Member State	Merchant is Supplier (Marketplace collects VAT where configured)
B2B Transactions (Business to Business)	Sales to VAT-registered business customers	Merchant is Supplier (Deemed Supplier NEVER applies to B2B)

B2B Exclusion: The deemed supplier rule applies strictly to B2C (Business-to-Consumer) transactions. B2B sales made on platforms remain the responsibility of the merchant under standard reverse-charge or intra-EU supply rules.

Etsy Marketplaces vs. Direct Shopify Webshops

Etsy

Electronic Interface

Collects destination VAT on cross-border EU B2C checkout under platform rules

Shopify

Direct Store Tool

Shopify is a software provider, not a marketplace — merchant is sole supplier

Etsy Sales

As a registered marketplace under EU law, Etsy automatically calculates and collects destination VAT from EU buyers during checkout on cross-border sales. While Etsy remits this tax:

You receive the net payout (item price excluding VAT).
You do not remit VAT on those Etsy-handled transactions yourself.
Crucial Rule: The gross value of these Etsy sales MUST still be included in your EU turnover when calculating your €100,000 Union Annual Safeguard Threshold under the SME scheme!

Shopify Sales

A custom Shopify webshop is owned and operated directly by you. Because Shopify is not a marketplace interface:

You are the sole supplier for 100% of transactions.
You are directly responsible for applying VAT or invoking the EU SME Scheme exemption.

Interaction with the EU SME Scheme

Gross Sales Count Toward €100,000 Union Cap

Mandatory Calculation

Under Article 288 of the VAT Directive, turnover includes all supplies made by the enterprise. Sales facilitated by Etsy count toward your annual SME turnover even if Etsy remitted the VAT.

No Double Taxation

If Etsy collects VAT at checkout, you must not add VAT or issue invoices with VAT. For SME-exempt sellers, Euro SME tracks net figures to prevent double taxation.

Domestic vs. Cross-Border Etsy Sales

Domestic sales within your home Member State on Etsy are governed by your home country's domestic SME rules, whereas cross-border sales trigger platform collection.

Official Sources & Legal References

•Council Directive (EU) 2017/2455 — Provisions on provisions applicable to distance sales of goods and electronic interfaces.
•EU VAT Directive 2006/112/EC — Article 14a (Deemed Supplier Provisions).