Four ways marketplaces can use tax calculation as a differentiator

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement


Four ways marketplaces can use tax calculation as a differentiator

Sponsored by

sponsored-firm-vertex-logo.png
accountant-1238598 resized.jpg

Vertex’s Niall Kiernan highlights four potential game-changers for marketplaces that want to get a grip of their tax calculation.

Online sellers have an increasing amount of choice over the marketplace they decide to use. Amazon, Walmart, eBay, Wayfair, Mercado, Etsy, Alibaba, Bonanza, Zalando - the list goes on. 

As a result, you may be investing a great deal of time and effort as a marketplace into attracting those sellers. You may be focusing on making your platform look attractive with a great design and UI. You may be spending a huge amount of budget on ad spend or experimenting with different marketing channels to see which are the most effective in attracting sellers to your site. 

Yet, there is another aspect that is likely to have even more influence over sellers. It’s an area marketplaces often overlook - tax calculation.

Let’s explore four ways how making your tax frictionless can make a huge difference to your sellers and set you apart from your competition.

1: Be clear about your own tax liability

There’s no question that the VAT landscape has become more complex for marketplaces after new EU rules came into force in July 2021, and US Sales Tax changes post-Wayfair. 

But it’s imperative that you calculate your indirect tax correctly so you don’t overpay or underpay. This means you need to be clear whether you, the buyer or the underlying seller is liable. Getting it wrong could significantly impact your invoicing and reporting. 

Remember, as a marketplace you’re the ‘deemed seller’ for distance sales of imported goods with a consignment value of less than €142 regardless of whether the underlying seller is in the EU, China or the US. You’re also liable when the supply of business to consumer goods takes place within the EU by non-EU sellers.

By getting the calculations right, you’ll be not only saving yourselves a headache but your sellers too.

2: Calculate the tax on cross-border sales correctly so you don’t cut into your sellers’ margins

You need to understand the tax liability for all the products you’re selling on your platform and calculate the VAT in the country of destination. This can be complex as the rates may differ for the same goods. For example, if you’re selling children’s clothing to a customer in Denmark, you may charge them 0% VAT under the old system. Under the new destination rules, however, they should be charged 25%. Quite a shock for the end-consumer and a big hit on your sellers’ margins.

3: Provide tax calculation in your seller reports to help them stay compliant

If you can give as much information as possible in your sellers’ reports, there are no surprises, and it helps educate your sellers for the future. It helps them stay compliant and minimises the chances of fines, penalties and audit costs. 

The seller will stay with the best marketplace for them. If they feel you keep changing the VAT without explanation or are getting it wrong, they’re likely to go elsewhere. 

4: Give informative VAT information at checkout

Similarly, you need to provide accurate and comprehensive information at checkout. For example, make sure you establish whether the buyer is a registered business. A business might be charged 21% destination VAT, when they’re actually entitled to an invoice without any VAT. This could make them abandon the purchase and leave your platform altogether. 

VAT determination may not sound like the most exciting part of building an attractive marketplace, but it’s a key aspect of the customer experience today. If you can make tax calculation slick and seamless through the power of technology, your sellers will thank you for it. So, don’t just focus on what’s happening on the surface, make sure your tax engine is performing as well as it can be. 

Take a look at our guide, ‘Global Research – Taxing times for the marketplace and seller relationship’.

more across site & shared bottom lb ros

More from across our site

The recently founded AI platform stands out in a crowded marketplace thanks to a compelling vision and friends in the right places
Advisers expect consumption tax reform to stay on course, but debt pressures could push the government towards tougher enforcement and incentive reviews
The firm demonstrated its sweet spot of litigation with an international twist with the recent win for the Danish tax authority…but it’s not a tax case
The recently formed firm has taken a break from hiring EY talent to expand its transactional tax and tax technology capabilities
The AI platform, founded last year by two school friends, is partnering with challenger firms like Unity Advisory and A&M Tax to launch its own assault on the AI tax market
Not only has Aurtus received recognition from ITR in the past, but its founder was both a partner at KPMG and co-founder of Dhruva Advisors
Clients care more about considered counsel than rapid media-friendly soundbites, says Matthew Gilleard, associate director at Infinite
It was also a memorable night for Galicia, KPMG, Skadden and Pinheiro Neto, all of which scooped major awards at a gala ceremony in New York
The former Deloitte UK CEO earned a 45% raise in a year when 1,000 staff reportedly lost their jobs – and the pay gap is only getting bigger
In a seminal development for big law, the 95-year-old firm is set to cease operations after a series of high-profile partner departures
Gift this article