VAT stands for Value-Added-Tax. It's placed on each stage of the supply chain (eg. production, sale) for goods and services. VAT applies to orders that ship to a customer in one of the EU member states (based on “ship to” address).
You can think of it like sales tax. For orders fulfilled in the US, we charge a sales tax if the order is going to CA or NC. Starting Oct 2nd, we'll add a VAT charge on orders that are fulfilled at our Europe location with a destination address in the European Union.
We'll calculate VAT with the following formula: (Printful product price - discounts +shipping price) * VAT rate %.
Key differences between VAT and sales tax:
- VAT is added to every step of the process for the manufacturer, distributor, and seller. Sales tax is only applied to the value of the product sold.
- We'll calculate VAT based on Printful's price, sales tax is calculated from the end-customer's retail price.
- VAT applies to delivery charges