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. Although aimed at the Amazons, Ebays, Netflixes, and Etsys of the world, the way these laws were written and the way they’re being interpreted means that in many situations they apply to Patreon.
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 center article: VAT (Value Added Tax) on Patreon
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.
Whether or not a patron pays sales tax 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 money through Patreon, whether that’s monthly, annual, or per thing, if the benefits offered are taxable in the patron’s location.
The rates and laws about what is taxable are different for every country, and in the U.S. those things vary from state to state and sometimes by zip code. So to charge sales tax accurately, and only on those things which 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?
Patreon will automatically detect what’s in your tiers, and apply the right tax rate for each patron’s location, so you don’t need to take any action, and sales tax will be handled.
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.
If the patron is not receiving any benefits, the pledge is not taxable in most places. For example, any pledge where the patron didn’t select one of your tiers, and any amount of money added on top of the tier cost is not in most places 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. That 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 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 in our case the patron. It’s possible for Patreon creators to 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 the US, we are not legally allowed to include sales tax in the pricing. It must be broken out as a separate line item and added on top of the base price. In other regions, most of the time prices do include sales taxes, such as VAT in Europe which is normally included in any price reflected.
How are you determining what is in my tiers?
Patreon will automatically detect what’s in your tiers, and apply the right tax rate for each patron’s location, so you don’t need to take any action, and sales tax will be handled.
However, if you want to take some time to make some optimizations, you will be able to use the advanced sales tax settings to provide more detail on the benefits you’re offering, and the relative value of those benefits. This may save patrons a small amount of sales tax in some cases.
Details on Sales Tax: How it works in different regions and how that applies to Patreon
Which benefits on Patreon will be considered taxable?
Outside of the United States, it is common for all electronically supplied services and physical goods to be subject to tax. Within the United States, what’s taxable varies greatly by location. As a rough guide, we’ve broadly sorted benefits into 5 categories that are each taxed differently.
Finally, note that any amount a patron supports that is a custom amount that is not to a specific tier, or pledge amounts over your tier amount, are not currently taxed in the United States and many other countries.
Where is Patreon collecting tax, and what are the tax rates?
Patreon handles the collection, filing, and remittance of VAT (European sales tax) for patrons in the EU, and has been doing so since 2015 when the laws changed in the EU: Article about change to VAT at Patreon. .
Patreon will begin charges and pays sales tax in the below list of additional countries. As sales tax laws change, Patreon will add or remove regions as needed to comply with new regulations.
***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 that same country. 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
Europe VAT - Country breakdown
|
Country
|
Value-Added Tax Rate
|
|
Austria
|
20%
|
|
Belgium
|
21%
|
|
Bulgaria
|
20%
|
|
Croatia
|
25%
|
|
Cyprus
|
19%
|
|
Czech Republic
|
21%
|
|
Denmark
|
25%
|
|
Estonia
|
20%
|
|
Finland
|
24%
|
|
France
|
20%
|
|
Germany
|
16%
|
|
Greece
|
24%
|
|
Hungary
|
27%
|
|
Ireland
|
23%
|
|
Italy
|
22%
|
|
Latvia
|
21%
|
|
Lithuania
|
21%
|
|
Luxembourg
|
17%
|
|
Malta
|
18%
|
|
Netherlands
|
21%
|
|
Poland
|
23%
|
|
Portugal
|
23%
|
|
Romania
|
19%
|
|
Slovakia
|
20%
|
|
Slovenia
|
22%
|
|
Spain
|
21%
|
|
Sweden
|
25%
|
|
United Kingdom of Great Britain and Northern Ireland
|
20%
|
United States - State Breakdown
What is the rate being charged?
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 our and your obligations and will keep this page up to date and with as much advance warning as possible.
How will US Sales tax work for a creator that charges ‘per thing’?
Sales tax applies on each transaction. For patrons that pay per thing, if they are in a location that required 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?
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 to 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 nonprofit). 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 the 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 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 only on the taxable portion.
