Patreon's Sales Tax Requirements

Patreon is required by law to add sales tax, or VAT, or other similar taxes, to some patron payments. Tax laws in many countries and US states have evolved in recent years to require “online marketplaces” as well as video and audio streaming companies to apply sales tax to transactions.

The article and FAQs below will cover all the details about how sales tax applies to Patreon and what you need to know to prepare.

Please note: this article covers our sales tax requirements on memberships of patrons located outside of the EU. If you are located in the EU and would like more information on Value Added Tax or VAT, please visit this help centre article: VAT (Value Added Tax) on Patreon

Contents:

About Sales Tax

Sales tax is charged based on the location of the patron, and not the creator. Since you may have patrons anywhere in the world, all of this information is relevant to you. 

The amount of sales tax a patron pays depends on where they are located, and what you offer in your tiers. The laws and tax rates for that patron’s location will be applied whenever a patron pays the money through Patreon, whether that’s monthly, annual or a one-off item.

The rates and laws about what is taxable are different for every country, and in the US rates can vary depending on a patron's location, right down to their postcode. So to charge sales tax accurately and only on the things that are taxable, we need to know where the patron is located and what benefits creators are offering.

How do I make sure that my benefits are taxed correctly? 

We encourage creators to explore our advanced sales tax settings function. This will give you more control over how sales tax applies to your membership, and allow us to apply sales tax more accurately. Doing so may save your patrons a small amount of sales tax in some cases.

If you want to set up your tiers quickly and do not want to use the advanced sales tax settings, we will still apply the standard tax rate to your whole tier.

Take a look at our article, About Advanced Sales Tax Settings, for details and instructions.

Frequently Asked Questions

Should sales tax apply to Patreon? Is supporting a creator on Patreon the same as making a purchase?

If a patron is receiving benefits in exchange for their pledge, the pledge may be subject to sales tax, depending on what is considered taxable in the patron’s location. For example, many places have passed laws that make streaming content taxable with platforms like Netflix and Spotify in mind. So in those places, streaming video and audio are considered taxable.

Some patrons may decide to pledge outside of your set tiers. For example, they may have pledged an amount above your set tier price or you have given them the option to pledge without receiving pledge benefits. In many jurisdictions, this amount would be akin to a “tip” and treated as non-taxable.

One notable exception is the EU, where we are currently required to apply tax (VAT) to all pledges regardless of whether the patron is receiving any benefits. We are working with EU tax authorities to secure reductions and exemptions for support-based pledges in the future. 

Supporting a creator on Patreon can be similar to making a purchase if the patron simply wants a way to pay money for content or tangible items you’re offering. But many patrons are also motivated by the idea of supporting content/art they care about. Since most memberships include both motivations, the advanced tax settings allow you to tell us how much supporting your work is a motivation for most of your patrons by using categories such as “general support.” This tells us that a portion of their pledge is being made without any benefit in return, and allows us to reduce sales tax for patrons in places where tax laws allow us to do so. 

I thought sales tax was only applicable on tangible goods?

The laws about what is taxable vary by location, but in many places digital goods and content are now taxable, both downloadable and streaming. 

I am a creator located outside of the United States. Does this apply to me?

Yes! Sales tax is determined based upon the location of the “buyer” or “user” so, in our case, it is the patron. Patreon creators can have patrons all over the world. We encourage creators to review their tax settings once they launch to ensure current and future patrons are taxed accurately.

Can I include sales tax in my tier price, so I absorb the cost and it’s not an additional charge for the patron?

In most jurisdictions, we are not legally allowed to include sales tax in the pricing.

How are you determining what is in my tiers?

We encourage Creators to take some time to set up their tiers in the most optimised way possible. By using the advanced sales tax settings you can provide more details on the benefits you’re offering and the relative value of those benefits. This will allow us to apply tax rates more accurately and may even save patrons a small amount of sales tax in some cases.

If the advanced sales tax settings are not used, Patreon will automatically detect what’s in your tiers, and apply the right tax rate for each patron’s location. This may mean we apply sales tax to your whole tier rather than just the amount you have told us relates to taxable benefits.

Where is Patreon collecting tax and what are the tax rates?

Patreon collects, files and remits sales tax (also known as VAT in many countries). We continue to monitor rules that govern the sale of online content and creation to ensure sales and pledges made through Patreon comply with local tax laws.

An overview of the standard sales tax rates per jurisdiction can be found below:

* To comply with local laws, there are some countries or regions where we do not charge VAT/GST to patrons who are supporting a creator located in the same country as them. However, if those patrons support creators in other countries, they may still be charged VAT/GST on those pledges if the benefits they receive are taxable in their country. Affected regions: Belarus, Quebec, Australia. For more details about this, please refer to this section: Sales Tax FAQs for Australian creators and patrons

** Please note that Canadian provinces may add local tax in addition to the federal rate

Europe VAT –  country breakdown

United States – state breakdown

Canada - province/territory breakdown

Whether your patrons are taxed, and at what rate, depends on both their location and the types of benefits you are providing in their tier.

Within the United States, rates currently range from 4% to 11%. To make things more complex, some locations tax certain things while others don’t (e.g. – “physical goods” vs. “digital downloads” vs. “digital streaming”). Outside of the United States, rates range from 5% to 25% in the countries where Patreon will charge and pay sales tax.

It is important to understand that tax rates and rules change frequently. Patreon ensures your patrons are taxed at the current rate for the patron location and the benefits being provided. 

Will more states/countries start requiring Patreon to charge sales tax in the future?

Very likely.  We expect more states and countries will attempt to pass similar laws or regulatory changes in the future. We are constantly monitoring ours and your obligations and will keep this page up to date and with as much warning as possible.

How will US Sales tax work for a creator that charges ‘per thing’?

Sales tax applies to each transaction. For patrons that pay per thing, if they are in a location that requires sales tax and the thing you offer is taxable in their location, they will find sales tax applied to each monthly transaction where you posted a ‘thing’ during that month and the patron paid for it.

What about Patreon’s Merch for Membership? Are tiers that include that merch taxable?

If you are using Patreon’s Merch for Membership service, Patreon is taking care of paying sales tax on those merch items. Patrons will not pay sales tax on those, but still may be charged sales tax if other items in their tier are taxable in their location.

What are the new advanced tax settings and how will they save patrons money?

Our advanced tax settings will allow you to provide more detail on exactly what you are offering in your tiers, and give us guidance on how much those benefits are worth for sales tax purposes. If we have that level of detail from creators, we’ll be able to apply sales tax to just the portion of the pledge that should be taxed per patron, in locations where tax laws allow us to do so.

For example, imagine you have a $5 patron in California. In the $5 tier, there are three benefits and only one of those is taxable in California. California tax laws will allow us to charge sales tax on a portion of that $5 rather than the entire amount if we know what percentage of the $5 each benefit is worth. So for that patron in CA, it could save them 30 cents or so in sales tax.

Is there a way I can find how much sales tax is being collected from my patrons?

Yes, in your dashboard, under Income in the left-hand navigation menu, click on taxes and you’ll find a tab called Sales Tax. There you can review yearly totals for each country and US state, and you’ll be able to export a report with monthly totals. 

Sales Tax FAQs for Australian creators and patrons

Should patrons in Australia that support a creator in Australia be charged GST?

We’ve been in touch with tax authorities in Australia to help clarify this point and we’ve updated our help articles to make it clear that we will not apply GST on pledges from patrons in Australia that support creators in Australia. However, if those patrons support creators in other countries, they may still be charged GST on those pledges if the benefits they receive are taxable in Australia.

Do I as a creator need to be registered for GST?

If GST already applies to your business under existing rules (i.e. you are an Australian-based merchant registered for GST selling digital services or digital products), then you will continue to be responsible for GST on these sales, instead of the EDP operator (Patreon). The Australian Taxation Office website has more information available on merchants who charge GST.

If I don’t earn enough from my business to meet the threshold for GST, should my patrons be charged GST?

For creators located in Australia, GST from Australian patrons will remain your responsibility. Patreon will not collect GST from patrons in Australia on pledges to Australian creators. That said, regardless of Australian GST thresholds, Patreon is still, as a business, responsible for collecting and paying sales tax/VAT/etc. from patrons that pledge to you from certain countries outside of Australia. 

You must register for (and begin collecting) GST when your business or enterprise has a GST turnover (gross income minus GST) of AUD$75,000 or more ($150,000 per year or more if you are a non-profit). Go to the ATO website for additional information.

What is subject to GST within Australia?

GST tax applies to a very broad range of things. Technically the law states “any form of supply whatsoever,” which extends well beyond the scope of “goods” and “services”. That means tangible and intangible goods as well as any provision of admission or access or information are subject to GST. However, under Australian law, GST would not apply to any payment made that is NOT in connection with a supply of anything. In other words, General Support, which you can add as a benefit using our advanced sales tax settings, is NOT subject to GST.  Also, any transaction of multiple items in one payment that contains separately identifiable parts is a “mixed supply” under Australian law. This means you can use our advanced sales tax settings to adjust the value of your benefits to distribute the pledge amount between the different benefits in each tier, so we can apply the GST on the taxable portion only.