In this article, we want to help you make the best settings for VAT, JCT, GST, QST and Sales Tax. These settings do not affect your fees or payouts, but they may help some of your patrons based on their locations. We'll go over: General information about Advanced Sales Tax Settings, Accessing and Using the Settings, Advanced Sales Tax Settings frequently asked questions, Other Sales Tax questions.
If you haven’t read up on the new sales tax requirements on Patreon, you might want to do that first (read: Patreon's Sales Tax Requirements) before you dive into the advanced sales tax settings. If you’re ready to learn about the advanced settings, read on!
In this article, we’ll go over:
- General information about Advanced Sales Tax Settings
- Accessing and Using the Settings
- Advanced Sales Tax Settings frequently asked questions
- Other Sales Tax questions
General information about Advanced Sales Tax Settings
Not all benefits are taxable in all regions. Having these details from you will allow us to charge tax only where absolutely necessary. Sometimes, these details may also allow us to charge tax on just a fraction of a patron’s pledge. Tax laws change frequently and Patreon is always working to keep up with those changes to meet our obligations in the most creator-first way possible.
If you don’t use the settings, we will still apply sales tax to pledges from your patrons in required locations automatically, but some patrons may end up paying a bit more sales tax than they would have with your custom settings in place. Learn more about required tax locations in this help article: Patreon's Sales Tax Requirements
The settings have different instructions depending on whether you created a tier for your membership prior to 20 May 2020. If you created your first tier after that date, skip to these instructions: Advanced Sales Tax Settings for tiers created on or after 20 May 2020
For creators who created their first tier prior to 20 May 2020:
There are two steps you need to complete on each and every one of your tiers to finish the process successfully.
Step 1: List your Benefits
List all the benefits you offer on that tier by selecting each one from the drop-down menu or entering details manually. This step only applies to tiers that were created before 20 May 2020. Tiers created on or after this date have a new tier builder that has this step automatically built in, to make this even easier. Once you’ve used the Advanced Sales Tax Settings to list your benefits on an existing tier and saved your work, the next time you edit that tier you will use the new tier builder that has the process of listing benefits built into the flow.
Step 2: Adjust benefit value
This step only applies if you have at least 2 benefits in a tier. This is where you tell us how much each benefit in that tier should be valued for sales tax purposes, using percentages. For example, if you have 2 benefits in a tier, you might decide that they are both equally valuable, and set them each at 50% of the tier’s value.
Not all benefits are taxable in all regions. By giving us more detail about the unique benefits you’re offering, you allow us to be more accurate about applying tax only where absolutely required. The settings allow you to choose from common benefit types or create a custom benefit if what you offer is not listed. When you’re finished with this step, we’ll have a clean, organised and detailed list of what you’re offering in each of your tiers in our database to make it possible for us to charge the most accurate and, in many cases, the lowest amount of sales tax possible for your unique membership. You can update this at any time and our sales tax logic will update along with it.
IMPORTANT: Listing “General Support” as a benefit
If your patrons are at all motivated by the idea of supporting your work, alongside or instead of wanting the benefits or content you provide, you can account for that fact in your tax settings. Pledges with the purpose of support are not taxable in some regions, but tax law cannot be applied based on your patrons’ intentions. We can only apply tax law according to whether or not a patron is receiving something taxable in return for their pledge, and the value assigned to each thing.
If your patrons in one or more of your tiers receive no benefits, you should add General Support as the only benefit. That way we can consider those pledges to be support-motivated and we will not apply sales tax to them from patrons who live in the following countries: the US, Australia, Canada, New Zealand, Norway and Switzerland. We are working hard to expand that list, but we have to obtain permission from taxing authorities in more countries.
If your patrons receive some benefits but they are also motivated by supporting your work, you should still add “General Support” as a benefit along with your other benefits. In Step 2, Adjusting benefit value, you will decide how much this support motivation plays a role in your membership. For example, if you have a tier that gets an exclusive video every month (taxable in most places), and has an element of support motivation (nontaxable in most places), you might determine those things are equally important to most of your patrons, and assign each item a 50% value. Then in the countries where support motivated pledges are not taxed, we will only apply sales tax to 50% of the pledge.
Adjusting benefit value also comes into play when your patrons are motivated by supporting your work rather than, or in addition to, getting benefits. If this is the case, as it is for many Patreon creators, make sure you have added “General Support” as one of your benefits so you can then adjust its value accordingly. Our data shows that when patrons are asked why they joined a creator's membership, the research shows that just under 40% of patrons report being interested in getting stuff, with an almost equal amount stating that they "just want to support the creator. I don't care if I get anything in return". Of course, this varies per patron; you are aiming to set values that generally apply to your audience.
Value can be challenging to determine. It can be about more than just the wholesale cost of an item. Think about why your patrons participate in your membership. A t-shirt is a commodity, but wearing your t-shirt may also be about the patron demonstrating their overall support for your creations. Your podcasts aren’t just about the file itself, but how the patron can engage in the community discussing the episode and shaping future content as well.
IMPORTANT: Some benefits are one-time gifts or giveaways. Set those to 0% value!
If you offer any benefits that patrons only get once after they join, or after a certain number of months, that should be considered a giveaway or thank you gift, like the tote bag you get if you support a public radio station. You can list that benefit, but set it at 0% value so it is not generally considered taxable.
Accessing and Using the Settings
Where do I find the Advanced Sales Tax Settings?
Advanced Sales Tax Settings are located within each individual tier you've created. Head to your Tiers settings page and click Edit for each individual tier to access and use your tax settings.
Using the Advanced Sales Tax Settings
To customise your tax settings, follow the steps below. Patreon's CEO Jack Conte also made a great video where he demonstrates how to use the advanced sales tax settings: Learn how to use Patreon’s advanced sales tax settings
Step 1: This link will take you to the page to get started. The pop-up pictured below will populate for you.
Step 2: Click the "Edit Tier" button on your first tier.
Step 3: You'll be auto scrolled down toward the bottom of the page into the Advanced tier settings in the Sales tax section. This is where you will list all the benefits you offer. Start by clicking the "List your benefits" button.
You can choose to distribute values evenly between all the benefits in this tier by checking the box next to “Distribute values evenly”. In this case, if you have 4 benefits, each would be given a 25% value. If you have 5, they would each be given 20%, and so on.
If you’d like to specify your own percentages, leave that box unchecked and enter each benefit’s value in the corresponding boxes. Please note that this has to add up to 100% total.
Please note that you need to do this for each membership tier that you are offering.
Advanced Sales Tax Settings FAQ
How do I determine what value to assign to my benefits?
What if I’m using Patreon’s Merch for Membership product? How do I set sales tax settings?
If I use the tax settings incorrectly, will I be liable for taxes?
Other Sales Tax Questions
I noticed that the amount of tax changed for one or more of my patrons. Why?
I don’t believe my tier should be taxable, or I believe too much tax is being charged
What if I said there would be merchandise in a tier but then didn’t send merchandise?
I want to issue a refund for sales tax you collected, how can I do that?
I am exempt from tax on my purchases (as a school, or Native American group, or other). What do I do?
Unfortunately, our system does not currently support this. However, please contact us if you would like more information.
Do I need to submit my own sales tax filings in all the places where my patrons are located?
Is the additional sales tax charged to the Patron reported on my 1099K?
What is Patreon doing to help?