Sales Tax coming for Some, Not All, Users July 1

I mentioned on the show that Patreon will be implementing sales tax on July 1 in 35 states and 17 countries. They have a full FAQ up for creators if you want to know the whole scoop.

Patreon already collects tax in some locations. The new taxes are for areas that have enacted laws to collect taxes from online services. The taxes vary by region. Some pertain to video and audio, others only to merchandise but they all center around taxing the idea of getting a benefit.

Patreon has been talking with all the different governments about this and has agreed to start collecting the taxes starting July 1. 

The tax must be paid by the patron not the creator. It's based on where the patron lives. If you live in one of these countries you're subject to the tax law (though maybe not the tax, depending).

Australia

Belarus

Canada (Quebec only)

Iceland

India

Japan

New Zealand

Norway

Russia

Saudi Arabia

Singapore

South Africa

South Korea

Switzerland

Taiwan

Turkey

UAE

US (see below)

NO TAX

14 US states will NOT collect tax. These are the states where you will NOT have to pay sales tax. All other US states and DC will collect them. (Alaska, Delaware, Florida, Georgia, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Hampshire, Oregon, Tennessee)

TAX RATE - It varies by region. Outside the US it's 5-20%. IN the US it's 4-11%.

WHAT GETS TAXED

Even if you live in a taxable region you may not get taxed depending on the benefit. In most regions if you get no reward there is no tax.  IN most US states there is no tax for shout outs in credits, exclusive posts or Discord. 

About half the US states tax bonus episodes and digital art (Like the Len art). And all states tax physical goods unless it is a one-time thank you gift. 

SO WHAT NOW

By the end of May Patreon will have a tool that lets us tell it what benefits we give so they can calculate who needs to be taxed by how much. In some cases you may get charged less than the full rate of tax if the benefit is of a certain kind. 

June 1 Patreon will contact patrons directly to let them know what they can expect as far as the increase from tax. 

July 1 Patreon will collect sales tax for the first time. So you have plenty of time.

And again if you want to look into your specific region, rate and benefit, you can look at their FAQ for creators. 

Just remember that another one meant specifically for Patrons will be coming in June.