Patreon Tax Update (Patreon)

Hi guys!

On July 1st Patreon will be changing their tax policy. Since this affects patrons in some parts of the US and 17 other countries (see list) I wanted to give you a heads-up 👍 It's nothing much to be honest, but nevertheless it's better to know why you may be charged few pennies more next month 😤

Patreon already 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” to apply sales tax to transactions.

I know this topic is pretty boring but here are some details you can dig into:

Who is affected?

Whether or not a patron pays sales tax depends on where they are located, and what a creator offers in their tiers. The laws and tax rates for that patron’s location will be applied whenever a patron pays money through Patreon, whether that’s monthly or per thing, if the benefits offered are taxable in the patron’s location.

Within the US, Patreon estimates 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 a patron is located. For most patrons the impact will be minimal, and many patrons won’t see any sales tax added to their pledge at all.

How will this affect you?

Some patrons will see an additional line item on their receipt for sales tax starting July 1st. 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 local governments.

Do you need to take action?

No. This change is targeting creators on patreon and there no need for patrons to do anything on their side.
For creators who wanted to dig into the details, Patreon is launching some advanced tax settings later this month that will allow creators to do so. I already took a dive into these and changed it so you can save some money 👌

If you want to get more information about the topic Patreon made few articles that you can dig into. 👍