Patreon's Sales Tax Requirements

Please note that in this article (and generally on the Patreon platform), any reference to VAT includes reference to Value-Added Tax (VAT), Goods and Services Tax (“GST”), Harmonised Sales Tax (“HST”), and any other similar tax or indirect tax imposed in non-US jurisdictions, as relevant. This article is intended to provide guidance on both sales tax in the US and VAT in non-US jurisdictions.

Patreon is required by law to add sales tax (including VAT, GQT, or other similar taxes) to some pledges made by patrons. Tax laws in many countries and US states have evolved in recent years to require online marketplaces such as Patreon to apply sales tax/VAT to transactions that take place via their platform.

The article and FAQs below include details about how sales tax applies to Patreon and what you need to know to prepare.

Contents:

About Sales Tax

Where applicable, sales tax is charged on supplies to patrons based on the location of the patron, and not of the creator. Since you may have patrons anywhere in the world and the tax rules differ among locations, all of this information is relevant to you. 

The amount of sales tax a patron pays depends on where they are located and what benefits 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. Please note that the tax laws in some countries do not require or allow Patreon to collect sales tax on pledges made to you and therefore in certain jurisdictions you may have your own tax obligations. We therefore always recommend that you speak to your local accountant or tax advisor.

What is taxable differs for every country. In the US, rates and taxability vary depending on a patron's location, right down to their street-level address. So, to charge sales tax accurately, and only on those 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 ensuring that sales tax is being applied correctly to your membership. We rely on the information you provide to us about the benefits you are providing to your patrons within each tier offering to ensure we are charging your patrons the correct amount of tax.

If you want to set up your tiers quickly and do not want to use the advanced sales tax settings, we will apply the standard tax rate to your whole tier (if at least one of the benefits you are providing is taxable in the country where your patron is located – if none of the benefits are taxable, we will not apply tax to that pledge).

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

Frequently Asked Questions

Should sales tax apply to pledges? 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.

What if I support a creator without pledging to a specific tier?

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. However, in other jurisdictions, it is not possible to treat this “tip” as not taxable.

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 memberships can include both motivations, the advanced tax settings allow you to tell us how much supporting your work is a motivation for your patrons by using categories such as "general support."

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. 

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?

No. In many jurisdictions, we are not legally allowed to include sales tax in 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.

As mentioned above, if the advanced sales tax settings are not used, Patreon will apply sales tax to your whole tier if at least one of the benefits in that tier is taxable in the jurisdiction where the patron is located. 

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

Patreon continues to monitor laws governing the sale of online content and creation and will continue to update our platform to ensure sales and pledges made through Patreon comply with local tax laws.

* In certain jurisdictions, a reduced rate of tax may apply to certain supplies such as digital publications (e.g. ebooks). Those rates are not listed here.

** 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. Such regions where we do not apply VAT on pledges made intra-jurisdictionally include: Belarus, Quebec, and Australia. For more details about this, please refer to this section: Sales Tax FAQs for Australian creators and patrons

EU VAT –  country breakdown

United States – state breakdown

What is the rate being charged?

As referenced above, whether your patrons are taxed and at what rate depends on both their location and the types of benefits you are providing in the tier they have pledged to.

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 partners with local experts to ensure that 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?

Yes, it's very likely. We expect more states and countries will attempt to pass similar laws or regulatory changes in the future. We are constantly monitoring our 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 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.

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

Yes. Click on Payouts from the left navigation and then into the Documents tab. In the Sales tax section at the bottom of the page, you can export a CSV of yearly sales tax totals for each country and US state.

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 who 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 or required to be 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 for 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 that breaches the local registration threshold.