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 a state where we're located. We also charge VAT on orders that are fulfilled at our Europe location with a destination address in the European Union.
We 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.
- VAT is calculated based on Printful's price, sales tax is calculated based on your retail price.
- VAT applies to delivery charges.