New Sales Tax Requirements on Patreon

[Guest]

It seems from next July many US states and 17 other countries will begin applying sales tax on streaming content from Patreon next month.

 

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I wanted to give you an update on some changes that we’ll be seeing which may affect some of your pledges. Due to new laws passing in several countries and US states, Patreon will be required to start charging sales tax on some pledges starting July 1st. 

Less than half of all patrons will be charged sales tax, and for most, the amount will be very small. For example, sales tax rates in the US range from 4% to 11%, so on a $5 pledge, that would be between 20 cents and 55 cents. 

Whether or not you will be charged sales tax depends on your location, and what is considered taxable there. Not every pledge is taxable, not all benefits are taxable in every location, and sometimes only a fraction of a pledge will be taxable. The money that Patreon collects as a result of these laws are paid directly to local governments.

I’m working closely with Patreon to ensure I’m able to save you as much money as possible when it comes to sales tax - which is not something that’s possible with other platforms.

If you’re in a location where sales tax will be required, you should expect to receive an email from Patreon with more information about this very soon, but I wanted to make sure you were aware of these changes way ahead of July 1st when they go into effect. 

 

 

While tax has been applied in the EU since 2015 to online streaming services, it has not been the case in the US for some until now. In the past only tangible goods could be taxed but as time moves on and a lot of money is flowing around online rules were bound to change. In some ways, it does seem odd that donations will be taxed, that would certainly not happen in religious institutions for instance. As it stands, YouTube do not pay similar tax in the US but that may change.

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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 shown. We are looking into how we can update Patreon to accommodate tax customs in more regions but this will take some time. 

Quite confusing for creators and patrons alike. I wonder how many creators who are barely surviving will cease to be soon?

 

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How are you determining what is in my tiers?
Patreon will automatically detect what’s in your tiers based on keywords, 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 new tax settings when they are available 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.

 
Are you telling my patrons about sales tax?

Yes. On June 1st we will email all patrons that are located in regions where we will start charging sales tax. 

In the short term is seems creators will have to be creative in their use of keywords to save as much tax as possible. 
 

I do not use Patreon myself but I  would not be happy to not receive advanced notice of the changes, and only be told on the day they come into effect. IMO a bit of a poor choice by Patreon.

 

i wonder when Floatplane will be affected.

[williamcll]

Does this apply to paypal donations as well? I would imagine not a lot of streamers are going to be happy about this.

[blu4]

I remember when steam first added sales tax the good ole days. Now every game is like $2-$5 more expensive

[Guest]

6 minutes ago, williamcll said:

Does this apply to paypal donations as well? I would imagine not a lot of streamers are going to be happy about this.

If they are paying using PayPal via Patreon then yes. Direct payments I am not too sure about as I live in the UK and not the US. Here all our income is taxed but if you are self employed you can offset a lot of that tax in various ways. Far too complex a situation to discuss here.

 

I have had notifications from two creators and seen one YouTube video from another who was on the verge of tears by the end of the video. 

[GoodBytes]

 

1 hour ago, williamcll said:

Does this apply to paypal donations as well? I would imagine not a lot of streamers are going to be happy about this.

To my knowledge, unless you are a registered charity, PayPal takes around 30% service fee from donations.

[nick name]

1 hour ago, williamcll said:

Does this apply to paypal donations as well? I would imagine not a lot of streamers are going to be happy about this.

I can't imagine how it could.  You're not purchasing anything with a donation.  It might depend on the type of "payment" you select in PayPal though and the type of PayPal account you're donating to.  Patreon is actually purchasing content.  

[3rrant]

57 minutes ago, gabrielcarvfer said:

Damn ._.

They are not "donations". You are effectively paying someone who does it for money = a job

[Trik'Stari]

Someone really needs to come up with a form of currency that cannot be taxed or controlled by governments already. 

[CarlBar]

1 hour ago, Trik'Stari said:

Someone really needs to come up with a form of currency that cannot be taxed or controlled by governments already. 

 

Never happen. If someone did governments would just change laws to either make it taxable, or if that was impossible somehow, ban it's use.

[Windows9]

1 hour ago, Trik'Stari said:

Someone really needs to come up with a form of currency that cannot be taxed or controlled by governments already. 

 

1 minute ago, CarlBar said:

Never happen. If someone did governments would just change laws to either make it taxable, or if that was impossible somehow, ban it's use

Bitcoin enters the chat

[Tristerin]

2 minutes ago, Windows9 said:

 

Bitcoin enters the chat

 

Ahhh taxes, why don't we just stop accepting them, since the government only increases taxes and spending and toss it all in the Boston Harbor.

[jagdtigger]

25 minutes ago, Windows9 said:

Bitcoin enters the chat

It should be called failcoin IMO, aside from speculators no-one uses it. Its the world biggest legalized pyramid game.

[Curious Pineapple]

2 minutes ago, jagdtigger said:

It should be called failcoin IMO, aside from speculators no-one uses it. Its the world biggest legalized pyramid game.

Aye, it could have been something much better, but nope.

[wanderingfool2]

25 minutes ago, gabrielcarvfer said:

30% of a transaction without doing shit = damn. Credit card processors charge 1~5%.

While I do think paypal has an unfair monopoly and that their profits are bolstered by unfair agreements.  The actual number is 2.9% + 0.30CAD (sorry I am canadian)...so it isn't too unreasonable.  At the same time, it isn't like paypal is doing nothing.  They need to maintain servers, security, pay support staff, and continue development (even though things may not always be visible).  What is bad is when it things like the refunding and such (last I hear, and I could be wrong) they still hit you with the % even when it isn't your fault.

 

1 hour ago, Trik'Stari said:

Someone really needs to come up with a form of currency that cannot be taxed or controlled by governments already. 

Barter system...ultimately though no form of currently can avoid government taxation (and rightfully so).  If there wasn't any taxes, there literally wouldn't be any modern society.  There are many things that cost millions, that no right minded person would spend for the greater good of the people for free (GPS comes to mind, along with roadways, etc).

 

I am actually surprised that taxes weren't applied before.  Although, I do believe there needs to be some sort of tax reform in regards to this (like sales/transactions totaling over x amount of dollars in a year by a company should result in them having to apply the tax rules).  This is more due to the fact that charging tax is really complicated, especially when you have many states having different taxes and exemptions (it can really make someone think twice about having to deal with all that when starting up).

[Trik'Stari]

49 minutes ago, wanderingfool2 said:

Barter system...ultimately though no form of currently can avoid government taxation (and rightfully so).  If there wasn't any taxes, there literally wouldn't be any modern society.  There are many things that cost millions, that no right minded person would spend for the greater good of the people for free (GPS comes to mind, along with roadways, etc).

 

I am actually surprised that taxes weren't applied before.  Although, I do believe there needs to be some sort of tax reform in regards to this (like sales/transactions totaling over x amount of dollars in a year by a company should result in them having to apply the tax rules).  This is more due to the fact that charging tax is really complicated, especially when you have many states having different taxes and exemptions (it can really make someone think twice about having to deal with all that when starting up).

I'd prefer a voluntary tax system. It would be bad at first as things fell into disrepair (not like they aren't already) but eventually people would start paying them willingly, and maybe pay closer attention to how our taxes are spent.

 

We pay far too much in taxes as it is, and get far too little for what we pay. As you say, "it makes you think twice about having to deal with all that when starting up", taxes stifle business and innovation. I'm not talking big business or small, I'm talking about everyone.

 

But that's completely off topic.

[hishnash]

7 hours ago, williamcll said:

Does this apply to paypal donations as well? I would imagine not a lot of streamers are going to be happy about this.

If you are a charity no but if your a company/private person yes. you might call it a donations but legally only charities can have donations for everyone else it is a form of payment (even if there are not goods handed over).

 

In Fact in many regions it is advisable to at min provide something to people who donate (maybe a option to have their name on the supporters list etc) otherwise its not realy them giving you the money.. aka they have the right to ask for it back at any time since no product or service was provided to them.

[SansVarnic]

-= Locked =-

 

Since this discussion has taken the turn to discussion on taxation [politics] so you all know what that means.