Disclosure: We sell our own digital products on Gumroad and Payhip and make free tools for sellers; a few paid ones are linked at the end of this page, and we earn the sale price if you buy one. We have no partnership with Lemon Squeezy, Payhip, Sellfy, Etsy, PayPal or Stripe and aren’t paid for any other link.

Not tax advice. This guide sums up what each platform says on its own help pages and what a few tax authorities publish. Your situation depends on where you live and where your buyers are, so check with a tax professional before you rely on it.

Sell one PDF to a buyer in Germany and, in principle, German VAT is due on it, even if you live in Ohio. The question is who has to charge it and send it to the tax office: you, or the platform you sell through. Some platforms take the whole job off your hands as merchant of record (they are the seller in the eyes of the tax office). Others pay the money straight into your own PayPal or Stripe account and leave the tax with you.

We read each company’s own help pages and terms on October 20, 2026. Tax rules change often, so check the linked pages before you rely on them.

The short version

  • Gumroad and Lemon Squeezy are merchants of record for your sales. They charge the tax at checkout, keep it and pay it to the tax offices. You don’t charge, file or pay sales tax or VAT on those sales yourself.
  • Payhip pays you through your own PayPal or Stripe account, but it takes on digital EU and UK VAT (as your reseller) and US and Canadian sales tax (as a marketplace facilitator in the US, since July 1, 2026, and a digital platform operator in Canada). Taxes in other countries stay with you.
  • Sellfy is not a merchant of record. It can add EU VAT and the rates you set at checkout, but the tax lands in your account and filing and paying it is your job.
  • Etsy keeps you as the seller but collects and pays US sales tax as a marketplace facilitator in 46 states plus DC and Puerto Rico, and VAT or GST on digital downloads to buyers in the EU, the UK and 39 other countries on its list.
  • On every platform, income tax on what you earn is still yours.

Who collects what

  Who is the seller for tax Tax the platform collects and pays Where What you still have to do
Gumroad Gumroad (merchant of record for all sales since January 1, 2025) sales tax, VAT, GST and similar taxes worldwide, “in regions where we have tax obligations”; digital VAT everywhere it applies Income tax. No tax settings to manage (Gumroad switched them off). If you already file sales tax returns, Gumroad offers a reseller certificate so you can report these sales as resales.
Lemon Squeezy Lemon Squeezy (merchant of record for all sales, marketplace sales included) sales tax and VAT all sales on the platform Income tax on your payouts. Pick the right tax category for each product (there are categories such as eBooks and Digital Template).
Payhip Mostly you (the money goes to your own PayPal or Stripe), but Payhip acts as your reseller for digital EU/UK VAT and as the marketplace facilitator for US sales tax digital EU and UK VAT; US and Canadian sales tax EU, UK, US, Canada Taxes anywhere else: you can set rates, Payhip passes the tax to you, and you report and pay it. A possible “zero dollar” state return if you have a physical presence in a state. Income tax.
Sellfy You (“Sellfy is not considered the Merchant of Record”) none: it calculates EU VAT and applies the rates you set, but doesn’t file or pay — Register, file and pay EU and UK VAT if you sell there (or block EU/UK buyers). US sales tax in states where you have to collect. Income tax.
Etsy You; Etsy collects as a marketplace facilitator US sales tax; VAT or GST on digital downloads 46 US states (all but Delaware, Montana, New Hampshire and Oregon), DC and Puerto Rico; for digital items, the EU, the UK and 39 other countries Income tax. Shop Manager tax settings for places Etsy doesn’t cover. You can’t opt out of Etsy’s collection.

A few details from the same pages:

  • Gumroad always adds VAT on top of your price. Its EU and UK VAT page answers “Can I choose not to charge VAT on my digital products? Or make it inclusive?” with “No.” Buyers with a VAT ID can get the VAT refunded, and a refund to the buyer includes the VAT. You can mark a product as an e-publication to get reduced VAT rates (0% in the UK).
  • Lemon Squeezy deducts the tax from your next payout and pays it. You can turn on tax-inclusive pricing for the whole store, in which case the tax comes out of your price instead of being added to it.
  • Payhip handles EU and UK VAT by default, and you can switch that off if you’d rather do it yourself. It charges nothing extra for US sales tax. You choose whether tax is added on top of your price or included in it.
  • Sellfy applies current EU VAT rates automatically once you enable tax. You add the UK and any US states yourself. You can block buyers from the EU and the UK so you don’t have to register there (buyers in your own country can still buy).
  • Etsy adds digital VAT to the listing price automatically and, with Etsy Payments, deducts it before the money reaches your Payment account. It doesn’t charge anything extra for collecting US sales tax.

What happens if the platform doesn’t collect

If you sell on Sellfy, or into a country Payhip doesn’t cover, these are the rules you run into:

  • EU: VAT on electronic services sold to consumers (downloads count) is always charged at the rate of the buyer’s EU country. A business outside the EU can register for the EU’s non-Union One Stop Shop in one EU country and file one VAT return each quarter for all its EU sales. The EUR 10,000 threshold you may have read about is for businesses based in the EU.
  • UK: digital services sold to UK consumers are liable to UK VAT, and HMRC says a business based outside the UK “will need to register for UK VAT”. HMRC adds that when you sell through a digital platform or marketplace that sets the general terms, authorises payment or handles delivery or download, the platform is responsible for the VAT instead of you; Sellfy’s own help still tells its sellers to collect, register and report UK VAT themselves.
  • US states: each state sets its own rules. Pennsylvania, for example, charges its 6% sales tax on digital products such as e-books, apps and photos, but a seller from another state only has to register and collect once its Pennsylvania sales top $100,000 in a calendar year. Below that, the buyer is supposed to pay use tax themselves.

One $20 sale, three buyers

Say you live in the US and sell a $20 downloadable template (not an e-book, so standard rates apply) to one buyer in Germany (19% VAT), one in the UK (20% VAT) and one in Pennsylvania (6% state sales tax). Each platform adds the tax on top of the $20 price, the buyer pays by card, and you’re on Payhip’s free plan. Your Pennsylvania sales are far below $100,000.

What the buyer pays:

Buyer Tax Buyer pays
Germany 19% of $20 = $3.80 $23.80
UK 20% of $20 = $4.00 $24.00
Pennsylvania 6% of $20 = $1.20 $21.20

What you keep from each sale, after the tax and the platform’s own fees:

Platform Germany UK Pennsylvania Who pays the tax
Gumroad (direct sale) $16.62 $16.62 $16.62 Gumroad
Lemon Squeezy $17.95 $17.94 $18.44 Lemon Squeezy
Payhip Free (before PayPal/Stripe fees) $19.00 $19.00 $19.00 Payhip
Sellfy (before PayPal/Stripe fees and the monthly plan) $20.00, plus $3.80 VAT you must pay $20.00, plus $4.00 VAT you must pay $20.00, no tax charged You (Germany, UK); in Pennsylvania nobody collects and the buyer owes use tax
Etsy $17.54 $17.53 $17.61 Etsy

How each line works:

  • Gumroad: 10% + $0.50 = $2.50, plus card processing of 2.9% + $0.30 = $0.88, leaves $16.62. The tax goes to Gumroad on top of that. We worked both fees out on the $20 price; Gumroad’s help doesn’t say whether card processing is figured on the tax-inclusive total, which would cost you up to 12 cents more.
  • Lemon Squeezy: the fee is $0.50 + 5% of the total including tax, plus 1.5% for buyers outside the US. Germany: $0.50 + $1.19 + $0.36 = $2.05, so $23.80 − $3.80 − $2.05 = $17.95. UK: $0.50 + $1.20 + $0.36 = $2.06, leaving $17.94 (the same method as Lemon Squeezy’s own $15 UK example: $0.50 + 5% of the $18 total + 1.5% = $1.67). Pennsylvania: $0.50 + $1.06 = $1.56, leaving $18.44.
  • Payhip Free: Payhip’s VAT example takes its 5% on the price before tax, so 5% of $20 = $1.00, and Payhip keeps the tax. You get $19.00 in your PayPal or Stripe account, and PayPal or Stripe then takes its own fee. On Plus (2%) you’d get $19.60, on Pro (0%) $20.00. We assumed the same 5% base for US sales tax.
  • Sellfy: Sellfy takes no transaction fee (you pay a monthly plan instead), and the whole amount the buyer pays goes to your PayPal or Stripe account: $23.80 from Germany and $24.00 from the UK, if you’ve enabled EU VAT and added the UK. The $3.80 and $4.00 aren’t yours: you need EU and UK VAT registrations to pay them. In Pennsylvania you’re under the $100,000 threshold, so you don’t charge tax and keep $20.00. Sellfy’s pricing page puts PayPal or Stripe fees at “typically 2.9% + 30¢”.
  • Etsy (US shop, US bank account): 6.5% transaction fee on the $20 item ($1.30), $0.20 to renew the listing after the sale, and payment processing of 3% + $0.25 on the total including tax. Germany: 3% of $23.80 + $0.25 = $0.96, so $23.80 − $3.80 − $1.30 − $0.96 − $0.20 = $17.54. UK: $0.97, leaving $17.53. Pennsylvania: $0.89, leaving $17.61. Etsy’s page says processing includes “any applicable sales tax”; we applied that to VAT too.
  • Pennsylvania on Gumroad and Lemon Squeezy: neither publishes a state-by-state list. We assumed both charge the 6%, since Pennsylvania taxes digital products and both say they handle sales tax as merchant of record. If they don’t, the buyer pays $20.00 and you keep the same $16.62 on Gumroad and $18.50 on Lemon Squeezy (its fee is a little lower without tax in the total).

Payout fees (for example Gumroad’s 2% on PayPal payouts) aren’t included. See When do you get paid? for those.

What the table shows: the platforms that keep the most per sale (Sellfy, then Payhip) are the ones that hand you more of the tax work, or a monthly bill. On Sellfy, every EU or UK sale means VAT registrations and quarterly returns, which is a lot of paperwork for a $20 product. Gumroad, Lemon Squeezy and Etsy cost more per sale, but you have nothing to file for the places they cover.

Best for

  • Gumroad: sellers who want no tax work at all, anywhere, and no monthly fee. The same fee applies wherever the buyer lives.
  • Lemon Squeezy: software and digital product sellers who want a merchant of record with a lower percentage than Gumroad’s 10%, especially for US buyers.
  • Payhip: sellers who want a free plan and low fees and mostly sell to the EU, UK, US and Canada, where Payhip handles the tax.
  • Sellfy: sellers who already have a tax setup (or an accountant) and want to be the seller of record with no transaction fees, or who sell only in their own country.
  • Etsy: sellers who want marketplace buyers; US sales tax and digital VAT in most big markets are handled.

Downsides

  • Gumroad: the highest fee here on direct sales (10% + $0.50 plus card processing), and you can’t make prices tax-inclusive.
  • Lemon Squeezy: extra 1.5% on international and PayPal payments, and the fee is figured on the total including tax.
  • Payhip: buyers outside the EU, UK, US and Canada (Australia, Norway or Switzerland, for example) are your responsibility if tax applies there. US sales tax handling only started on July 1, 2026.
  • Sellfy: all the tax work is yours. Selling to the EU or UK means registering there, or blocking those buyers.
  • Etsy: several fees per sale, processing is charged on tax you never keep, and you can’t opt out of Etsy’s tax collection.

Tools and kits for sellers

Sources

All checked 2026-10-20 on each company’s or tax authority’s official site.

  • Gumroad, Sales tax on Gumroad (merchant of record for all sales; handles sales tax collection and remittance worldwide; EU physical-shipment exception; reseller certificate): https://gumroad.com/help/article/121-sales-tax-on-gumroad
  • Gumroad, EU & UK VAT on Gumroad (collects and remits VAT on digital sales to EU and UK buyers; VAT can’t be switched off or made inclusive; VAT ID refunds; refunds include VAT; e-publication reduced rates, 0% in the UK): https://gumroad.com/help/article/10-dealing-with-vat
  • Gumroad pricing (merchant of record since January 1, 2025; tax settings disabled; collects “in regions where we have tax obligations”): https://gumroad.com/pricing ; Gumroad’s fees (10% + $0.50 per direct sale, card processing 2.9% + $0.30 not included): https://gumroad.com/help/article/66-gumroads-fees ; Terms of service, section 10 (Gumroad is the supplier for indirect tax; sellers handle their own direct tax): https://gumroad.com/terms
  • Lemon Squeezy, Sales Tax and VAT (merchant of record for all sales; tax deducted from your next payout; tax-inclusive pricing option; $15 UK example; you shouldn’t need to report sales tax, income tax may apply): https://docs.lemonsqueezy.com/help/payments/sales-tax-vat ; Fees (platform fee on the total order value; +1.5% international, +1.5% PayPal; $20 France example): https://docs.lemonsqueezy.com/help/getting-started/fees ; Marketplace (merchant of record for marketplace sales): https://docs.lemonsqueezy.com/help/marketplace ; Tax Categories (choose one per product so the right tax is added): https://docs.lemonsqueezy.com/help/products/tax-categories
  • Payhip, Sales Tax & VAT (reseller for digital EU/UK VAT, reports and pays quarterly; marketplace facilitator in the US and digital platform operator in Canada; other taxes passed to you to report and pay): https://payhip.com/features/vat-taxes ; Digital EU VAT & UK VAT (on by default, can be switched off; 5% fee taken on the pre-VAT price in the example): https://help.payhip.com/article/127-digital-eu-vat ; US Sales Tax (from July 1, 2026; free; product tax categories; possible zero-dollar returns): https://help.payhip.com/article/392-us-sales-tax ; Pricing (Free 5%, Plus $29/month + 2%, Pro $99/month + 0%; PayPal/Stripe fees extra): https://payhip.com/pricing
  • Sellfy, Merchant of Record (Sellfy is not the merchant of record; you handle tax collection and compliance): https://docs.sellfy.com/article/366-merchant-of-record ; Collecting taxes (Sellfy won’t file taxes; EU VAT applied automatically, other rates set manually; block EU/UK buyers; VAT MOSS and UK VAT reports): https://docs.sellfy.com/article/130-paying-taxes ; EU VAT laws and Brexit (sellers outside the EU register with HMRC for UK VAT and for the non-Union scheme for EU VAT, or stop selling there; UK added manually): https://docs.sellfy.com/article/43-how-does-sellfy-handle-the-new-eu-vat-laws ; Pricing (0% transaction fees; PayPal or Stripe fees “typically 2.9% + 30¢”): https://sellfy.com/pricing/ ; Terms, section 6 (you are solely responsible for taxes): https://sellfy.com/terms/
  • Etsy, How US State Sales Tax and Fees Applies to Etsy Orders (marketplace facilitator; list of states; no extra charge; no opt-out): https://help.etsy.com/hc/en-us/articles/360000343968-How-US-State-Sales-Tax-and-Fees-Applies-to-Etsy-Orders ; How VAT Works on Digital Items (country list; VAT added to the listing price and deducted before funds reach your Payment account): https://help.etsy.com/hc/en-us/articles/115015587567-How-VAT-Works-on-Digital-Items ; Fee Basics (6.5% transaction fee, $0.20 listing and auto-renew fee): https://help.etsy.com/hc/en-us/articles/360035902374-What-are-the-Fees-and-Taxes-for-Selling-on-Etsy ; Payment Processing Fees (US 3% + $0.25 on the total including sales tax): https://help.etsy.com/hc/en-us/articles/115015628847-What-are-Payment-Processing-Fees-for-Selling-on-Etsy
  • European Commission, Your Europe: VAT One Stop Shop (non-Union scheme for businesses outside the EU supplying services such as digital services to EU consumers): https://europa.eu/youreurope/business/taxation/vat/one-stop-shop/index_en.htm ; Cross-border VAT (electronic services taxed in the customer’s country; EUR 10,000 threshold for businesses established in the EU): https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm ; VAT rates (Germany 19% standard): https://europa.eu/youreurope/business/finance-and-tax/vat/vat-rules-rates/index_en.htm
  • HMRC, VAT rules for supplies of digital services to consumers (UK VAT on digital services to UK consumers; non-UK businesses must register; platforms account for VAT on sales through them): https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers ; VAT rates (standard rate 20%): https://www.gov.uk/vat-rates
  • Pennsylvania Department of Revenue, Digital Products (6% on digital products; buyer pays use tax if the seller doesn’t collect): https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/sales-use-and-hotel-occupancy-tax/digital-products ; Online Retailers ($100,000 in annual Pennsylvania gross sales before an out-of-state seller must collect): https://www.pa.gov/agencies/revenue/resources/tax-types-and-information/sales-use-and-hotel-occupancy-tax/online-retailers