Patreon adds sales tax, VAT, or other similar taxes to Patron payments in parts of the US and several other countries as required by law. Review which countries sales taxes apply to, here: List of locations where Patreon is collecting sales tax
Patreon handles charging and paying VAT (European sales tax) for patrons in the EU, and has been doing so since 2015 when the laws changed in the EU. Over the past couple of years, many countries and many states in the United States have passed similar laws that require “online marketplaces” as well as video and audio streaming platforms 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 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.
Who will pay sales tax?
Whether or not you will pay sales tax/VAT as a patron depends on where you are located, and what benefits the creators you support are providing. The laws and tax rates in effect in your country of residence will be applied whenever you pay a creator money through Patreon, whether that’s monthly, annual, or per thing, if the benefits offered are taxable in your location. Within the US, we estimate that less than half of all patrons will have sales tax added to their pledge. Outside the US, it very much depends on the country where you are located.
If Patreon is charging sales tax in your location, an additional line item will be listed on your receipt. Since tax laws and rates vary from country to country and state to state, the amount will be different for different patrons. The money that Patreon collects as a result of these laws will be paid directly to your local government, and there are no Patreon fees on this portion of your payment.
About sales tax
Should sales tax apply to Patreon? Is supporting a creator on Patreon the same as making a purchase?
The way these laws were written, if you are receiving benefits in exchange for your payment, it may be subject to sales tax, depending on what is considered taxable in your 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 you are not receiving any benefits, the payment is not taxable in most places. For example, if you pledged to a creator but didn’t select a reward tier, your payment is not taxable in most places. In addition, if you added any amount of money on top of the tier price, that additional amount is not taxable in most places. One notable exception is the EU, where we are currently required to apply tax (VAT) all payments regardless of whether the patron is receiving any benefits. We are working with EU tax authorities to secure reductions and exemptions for support-based payments in the future.
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 sometimes streaming.
Can creators absorb the cost of sales tax so that it’s not an additional charge for the patron?
Some creators would prefer this and we wish we could provide this option, but 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 shown.
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.
Where is Patreon collecting tax, and what are the tax rates?
Patreon already 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. .
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 regulation.
*** 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
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 you will be taxed, and at what rate, depends on both your location and the types of benefits the creator provides you.
Within the United States, sales tax 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 that 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 tax 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’?
