Selling on Etsy in Germany 2026: registration, taxes & Kleinunternehmer

As soon as you sell on Etsy in Germany regularly with the intent to earn money, the tax office treats it as self-employed commercial activity — whether you offer crocheted hats, vintage jewellery or print-on-demand t-shirts. Three indicators make it clear: intent to repeat, intent to make a profit, and a public market presence. Ignore those and the platform tax-transparency law (PSTTG) will sooner or later put you on the tax office's radar.

In short: selling on Etsy in Germany

• Gewerbe? Yes, once you sell repeatedly with profit intent — registration costs a one-off €15–60 at the Gewerbeamt.
• VAT? As a Kleinunternehmer (§ 19 UStG) 0%, as long as you stayed under €25,000 last year and under €100,000 this year. Otherwise 19% or 7%.
• Income tax? Always — on your profit, i.e. revenue minus Etsy fees, materials, shipping and tools. Profit is tax-free only up to the basic allowance of €12,348 (2026).
• Trade tax? Only above €24,500 annual profit, and for sole traders largely credited against income tax.
• Etsy reports: Once you cross 30 sales or €2,000 in turnover per year, your data goes to the tax office automatically (PSTTG).

Hobby or business? The legal line

Selling your grandma's vases once is private. Listing handmade candles every month with profit intent is a business. The tax office checks three signs: repetition, profit intent and a public market presence — and an Etsy shop normally meets all three from the first serious listing.

There is no fixed hobby threshold in euros. Even a side income of €200 a month is subject to trade registration if you sell systematically. Pure private sales — a one-off clear-out of used belongings — stay tax-free as long as there is no profit intent and no repetition. But as soon as you buy specifically to resell, or make things yourself, it is a business — even part-time alongside a job.

Etsy also reports every seller to the Bundeszentralamt für Steuern once you cross 30 transactions or €2,000 in sales per year (PSTTG). The tax office sees your numbers either way — whether you registered or not.

Registration step by step

The full setup takes one focused morning. These five steps take you from "nothing registered" to "legally ready to sell":

Request the USt-IdNr. directly inside the questionnaire (step 2) — you need it the moment you enter it on Etsy (more on that under fees below). A business account is not legally required for sole traders, but it saves you a lot of searching at bookkeeping time because private and business movements never mix.

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Should you opt for the Kleinunternehmer rule?

If you stayed under €25,000 in revenue last year and expect under €100,000 this year, you can use the Kleinunternehmer (small-business) rule (§ 19 UStG). This is not a detail — it decides whether you charge VAT, can reclaim input VAT, and how much bookkeeping you face:

Rule of thumb: pure handmade shops with little material input usually come out ahead as Kleinunternehmer — the missing input-VAT deduction barely matters, and the price stays attractive for consumers. If you buy a lot of stock (print-on-demand, bulk orders) or sell to businesses, standard VAT lets you reclaim input VAT on purchases and on Etsy fees. Note: opting into standard VAT voluntarily binds you for five years.

Expert opinion

Setting up the shop on Etsy is something we often see done wrong among sellers who are just starting out. Most self-employed people start as Kleinunternehmer, and they need to check that Etsy actually recognises that status.

Which taxes apply to Etsy income

Three taxes are relevant for an Etsy shop — plus filing the EÜR as your profit calculation:

Profit is calculated in the income-surplus calculation (EÜR) (revenue minus business expenses) and filed with annex G alongside your income tax return — the deadline is 31 July of the following year. For sole traders, trade tax is largely credited against income tax under § 35 EStG, so it adds little on balance.

Etsy fees — what is deductible

Etsy charges fees in several places. All of them are fully deductible business expenses:

In total, depending on price and shipping, roughly 11–17% of revenue goes to Etsy. The most common bookkeeping mistake: booking only the net payout Etsy transfers to you. The correct way is to book the gross sale price as revenue and each fee separately as an expense. Otherwise neither your profit nor your VAT will be right.

A second trap concerns the fees themselves: Etsy Ireland UC issues them with 0% VAT. If you have entered your USt-IdNr. on Etsy, you owe the 19% on those fees yourself under the reverse-charge procedure — you report it in the UStVA and, under standard VAT, deduct it again as input VAT in the same step (net zero). As a Kleinunternehmer this entry does not apply; you simply book the fees gross as an expense. The exact mechanics are in the Etsy sellers FAQ.

Worked example: what is left of your Etsy revenue?

Take a part-time candle maker, a Kleinunternehmer, with €12,000 in annual Etsy revenue:

On this €5,640 profit she pays no VAT and no trade tax (well under €24,500) as a Kleinunternehmer. If her total taxable income — including her main job — is above the €12,348 basic allowance, the Etsy profit stacks on top of her job income and is taxed at her personal marginal rate. This is exactly where many people miscalculate: the Etsy profit is not "extra tax-free" — it is added to the rest of your income. Plan for that and you avoid a nasty surprise at year-end.

VAT on EU and third-country sales

Inside Germany, 19% or 7% VAT applies (0% as a Kleinunternehmer). Sales abroad are more nuanced:

• EU consumers: Above €10,000 in annual sales to consumers in other EU countries, you charge the buyer-country VAT — normally settled via the OSS scheme at the BZSt. Etsy often handles it directly when the sale qualifies as a marketplace supply (§ 3 (3a) UStG).
• B2B inside the EU: Reverse charge with the buyer's valid USt-IdNr. — check it in the VIES database first.
• Third countries (US, UK): Usually VAT-free as an export supply, but keep customs and shipping documents (e.g. the DHL slip) in good order.

PSTTG: what Etsy reports to the tax office

Since 2023 Etsy must report you to the Bundeszentralamt für Steuern once you cross 30 sales or €2,000 in turnover per year: name, address, tax ID, bank details and quarterly turnover. You will find a copy of the report in your Etsy account. The tax office already has your numbers, even if you declared nothing.

If you have been selling above the threshold for years without registering, contact a tax adviser proactively before the tax office asks — a voluntary disclosure is far cheaper than being caught for tax evasion. What exactly gets reported and how the procedure works is covered in the PSTTG article.

Bookkeeping — the Etsy pain point

Etsy sellers often have hundreds of micro-transactions per month in two currencies with fees that are not cleanly assigned — and that is exactly where the gross-booking errors above creep in. Norman ingests your Etsy payouts and bank transactions, auto-categorises them, books every sale gross including fees, and produces EÜR and VAT returns — and the bookkeeping module is free.

Frequently asked questions

Do I have to pay tax on Etsy sales?

Yes, as soon as you sell with profit intent. Income tax applies to your profit once your total taxable income is above the basic allowance (€12,348 in 2026). VAT applies only if you are not (or no longer) a Kleinunternehmer.

When do I need a Gewerbe?

As soon as you sell regularly and with profit intent — there is no fixed euro threshold. Even ten handmade items a month meet the criterion. Only one-off private sales of used belongings stay registration-free.

Is Etsy tax-free as a hobby?

Only if there is no profit intent — pure hobby with no lasting surplus. As soon as you produce or buy systematically in order to sell, it is commercial and taxable, no matter how small the turnover.

What happens if I don't register a Gewerbe?

Thanks to PSTTG reporting, the tax office sees your turnover automatically. Consequences range from a demand to file a return with an estimate (usually higher than your real income) to fines and proceedings for tax evasion. An early voluntary disclosure limits the damage.

Do I have to issue invoices to my Etsy buyers?

There is no general invoice obligation to consumers, but it kicks in above €250 gross. To business customers you always need an invoice with all the mandatory fields under § 14 UStG. Details on invoices, the LUCID packaging register and side-business rules are in the Etsy sellers FAQ.

Conclusion

Selling on Etsy from Germany is fully legal and not that complicated — if you register the Gewerbe, keep clean books and book platform fees on a gross basis. The biggest pitfalls: skipping registration, booking net payouts instead of gross sales, and ignoring PSTTG reports. For more self-employment basics see our guide on Freiberufler vs Gewerbe.