Important Update Information

TL;DR: Patreon says it will begin charging a sales taxes on pledges from 1st July 2020. However, it is not a uniform policy as this highly depends on where you, the Patron, are based.  Patreon itself says that it will contact people accordingly depending on the situation. The CEO posted a video stating as such here.  Patreon put up an FAQ here.

Why is this happening?

Over the course of several years now, countries around the world have started applying their own respective sales taxes to online businesses (more information about that here and how it affected Patreon here). There has been increasing pressure from multiple entities (predominantly the Organisation for Economic Co-operation and Development) for US-based companies operating internationally online (i.e. Amazon, eBay, Etsy, Netflix, etc) to be subject to taxation. This is irrespective of whether the content provided is tangible (exists in the real world) or digital.  

Therefore, to comply with domestic (US) and international laws, Patreon has to add a sales tax for Patrons. 

So what is going to happen exactly?

There may be a surcharge on top of your pledge. However, as stated above, it really depends on whether the content creator (me) is producing taxable content, based on the laws of where you live. 

It is my understanding that the policy coming in July will predominantly affect Patrons living in the USA, or countries where pledges haven’t already been taxed.  I’m going off the fact Patreon already handles UK/European VAT as stated here.  Furthermore, Patreon have put up a list here of the places affected by the upcoming taxation, both internationally and within the USA.  Please note that this list may be subject to change, depending on future developments. 

As for what these surcharges will be (if they’re applicable to my content) I don’t think it’ll be anything too outrageous.  Frankly, I’m no math whiz or financial adviser, so I’ll just quote what Patreon said to me:

“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¢ and 55¢. 

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.” 

Believe me, if I could absorb the costs by paying the sales tax myself and keep your costs down, I would do it, no hesitation.  But geographical, financial and law-based logistics make that impossible. 

So what do I have to do?

Wait and see. 

Patreon said it will contact all the Patrons who are subject to the new tax rule before it comes into effect in July. I’m on tenterhooks myself If I hear any other information, I’ll let you all know on Discord before writing a more refined update here as a Patreon Journal post.

That’s all I wanted to say. I won’t blame anyone at all for rescinding their pledge if things get too expensive or what not. In the meantime, stay safe, stay sane, and please look forward to what I’ll produce this month. Thank you all for enabling me to continue this venture, irrespective of your pledge amount; I wouldn’t exist without you.  

Also, major special acknowledgements go out to SilverZeo for informing me of this tax development. 

Yours Sincerely,

‘Kamidu

P.S.  In case Patreon squishes the image, I've attached the original size one you to download, along with a textless counterpart.