Marketplace facilitator
A marketplace facilitator is a platform that facilitates sales between third-party sellers and buyers and is legally required to collect and remit tax on those sales on the seller's behalf. Common examples include Amazon, eBay, Etsy, and Shopify Markets.
How it affects sellers
When you sell through a marketplace facilitator, the platform handles tax collection and remittance for the transactions it processes. This means you do not collect or remit tax on those sales yourself - the marketplace does it for you.
This simplifies compliance for sellers, but it does not eliminate all tax obligations. You may still need to:
- Register in certain jurisdictions - Some countries and US states require sellers to register even if a marketplace is remitting on their behalf, particularly once you exceed local thresholds.
- Report marketplace sales in your returns - Even where the marketplace remits the tax, you may need to report those sales as exempt or excluded in your own tax filings, depending on local rules.
- Handle direct sales separately - Marketplace facilitator rules only cover sales made through the platform. If you also sell directly (your own website, for example), you remain responsible for collecting and remitting tax on those sales.
Jurisdiction coverage
Marketplace facilitator laws are not universal. In the United States, most states have enacted them, but rules vary. At EU level, platforms facilitating B2C sales of goods are required to collect and remit VAT under certain conditions. Other countries have introduced similar obligations at different thresholds and scopes.
Always verify whether the marketplaces you use have facilitator obligations in the specific jurisdictions where your customers are located.
Record-keeping
Even when a marketplace remits tax on your behalf, keep records of those sales. You will need them to reconcile your own filings, respond to tax authority inquiries, and demonstrate that the tax was correctly handled by the platform.