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.

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. Etsy automatically reports every seller to the Bundeszentralamt für Steuern once they 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

1. Register a Gewerbe at your city's Gewerbeamt — €15–60, often online. 2. Fill in the Fragebogen zur steuerlichen Erfassung via ELSTER — the tax office no longer sends it automatically. 3. Wait for your Steuernummer (and a USt-IdNr if you sell to other EU countries). 4. Finish setting up the Etsy shop, enter VAT details in the seller back-office. 5. Open a business bank account — keep private and business separate from day one.

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). Upside: no VAT on invoices, no VAT pre-returns. Downside: you cannot reclaim input VAT on materials, Etsy fees and shipping. For pure handmade shops with low material cost it is often a good deal — for print-on-demand or bulk material buyers, usually not.

Which taxes apply to Etsy income

Income tax on your profit (revenue minus Etsy fees, materials, shipping, tools) — progressive 0–45%. Trade tax only above €24,500 annual profit (allowance under § 11 GewStG); for sole traders it is largely credited against income tax. VAT 19% on normal goods, 7% on books and certain art. Profit is calculated in the income-surplus calculation (EÜR) plus annex G with your annual return, due 31 July.

Etsy fees — what is deductible

Etsy charges multiple fees: $0.20 listing fee per item, 6.5% transaction fee on price + shipping, 4% + €0.30 payment processing, plus currency conversion and Etsy Ads. All of them are fully deductible business expenses. Critical point: book the gross sale price as revenue and the fees separately as expenses — not just the net payout you receive. Otherwise your VAT figures will be wrong.

VAT on EU and third-country sales

Inside Germany: 19% or 7% German VAT. EU consumers: above €10,000 yearly threshold, you charge the buyer-country VAT — normally settled via the OSS scheme at the BZSt, and Etsy often handles it directly when the sale qualifies as a marketplace supply (§ 3 (3a) UStG). Third countries (US, UK): usually VAT-free as an export supply, but keep customs and shipping documents in order.

PSTTG: what Etsy reports to the tax office

Since 2023 Etsy must report you to the Bundeszentralamt für Steuern once you cross 30 transactions or €2,000 in sales per year: name, address, tax ID, bank details, quarterly turnover. The tax office already has your numbers. If you have been selling above the threshold for years without registering, contact a tax adviser proactively — a self-disclosure is far cheaper than being caught for tax evasion.

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. Typing them into Excel by hand does not scale. Norman ingests your Etsy payouts and bank transactions, auto-categorises them and produces EÜR and VAT returns — and the bookkeeping module is free.

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.