longlivetheprincess

An update on sales tax for Long Live the Princess

Added 2020-05-07 07:30:41 +0000 UTC

Hi, patrons!

I'm sure half of you fell asleep just reading the title. I understand. This is important, though, at least for some of you. You might already have received similar updates to this from other campaigns you support. If not, you most likely will very soon.

Here's an edited version of what Patreon wants me to tell you. You'll find my own thoughts at the end of this post.

Patreon is making some big changes that 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.

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.

If you have questions, you should be able to find answers here. If you still have questions, the best place to get an answer is from Patreon's customer support team, here.

My own thoughts

So, sales tax. According to what Patreon has told me, this change should affect roughly 30% of all patrons. That doesn't mean it will affect 30% of my patrons, but it gives a rough idea of the scale here.

Some of you are probably angry at Patreon right now for introducing this concept. Please don't be. This change is vital. Many Patreon campaigns, mine included, have most likely operated illegally because sales tax wasn't supported adequately outside of the EU until now. And as everyone knows, ff there's one thing you don't try to skip out on, it's taxes. Competing platforms, like SubscribeStar, will have to make the same changes soon enough.

In fact, I contacted Patreon about this very subject more than two years ago because I was worried about it, but they never got back to me. Turns out, they were probably working on a solution behind the scenes.

I'm not happy to see that some of you will be forced to pay more money to support your favorite creators, however. Thankfully, Patreon will offer a comprehensive tool for me to make fine adjustments to what the various pledge levels contain. This should allow me to minimize the cost for as many of you as possible. For example, if you pledge at the $10 level, you're basically pledging $5 for early access to digital goods, and $5 for access to my longer posts and polls. In many places, only the first half of that qualifies for sales tax. The new solution from Patreon will support such granular detail in how taxation is handled.

The following image shows the current range of countries that should expect to pay sales tax from July 1st. Note that if you're in the EU, there should be no changes. You are already paying VAT on your pledges.

So, there you have it. Things will proceed as normal until July 1st, at which point this change comes into effect. I apologize for the inconvenience and additional cost this will impose on some of you.

Feel free to ask any questions you like, though be aware that I don't currently possess all the answers myself.