Taxes Europe

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#1

I’m in the process of doing my taxes and have one major request and one (old) question:

  • Please make it possible to export income data by year (I can’t seem to find that function) and maybe in the form of a proper invoice.

  • Patreon already handles charging and paying VAT (European sales tax) for patrons in the EU
    I 've read every help article multiple times, but I still don’t get how this works. Because for me (in Austria) it works like this or should work like this:

  1. My patrons pay me money
  2. I add the money to my yearly income which I report to the proper authority
  3. I then pay income tax but I DO NOT have to pay VAT because my income is low enough

So what taxes are patreon collecting exactly and which authority is getting money for a VAT I don’t have to pay? I don’t earn that much with patreon right now, so the collected tax is a bit of a punch to the gut, especially since I’m not sure who, what or why is getting the money.

3 Likes
#2

I’m with you on this Katrin. I also don’t pay VAT as I am well below the threshold and will be for the foreseeable future. I think it is very unfair that we have to do this. WHERE is the money going i wonder! I’m guessing the people getting that money are the government, however since neither you nor I are registered VAT it means we will not be reimbursed so are losing out a LOT. Also patrons of mine balk at the added VAT and it is unnecessary. This is yet another reason that I’m trying to find ways to move my membership somewhere else so I have control over this stuff.

1 Like
#3

Try to think of it as two separate business transactions. Patreon is charging patrons for using the Patreon service (to access your content) and Patreon can be forced to collect VAT for this digital service. This type of consumer-specific tax was introduced in 2015 in the EU to avoid big companies just setting up their EU business in a country with the lowest possible consumer tax rate. You don’t have to worry about this tax at all.

The other transaction is the payout from Patreon to you, which is non-EU transaction from a US business.

Keep in mind: Patreon is NOT a payment service like PayPal that just passes on money from one account to another instantly. It’s a digital service. Patrons pay Patreon and Patreon pays you. It might look similar to what a payment service does, but it is not.

By the way: I also do not declare my Patreon income based on what was received in every month on Patreon’s end. I only declare the payouts I issued, since again, it’s not a payment service. I declare the income once it reached my bank account, PayPal account and so on. So I only need a proper statement for that transaction, not what I possibly made in a given month or year.

5 Likes
#4

Emily, There’s a minimum threshold for VAT on physical goods but not for digital goods/services.

1 Like
#5

Ah damn I didn’t know that! Crap!

#6

Thank you :slight_smile:

#7

Actually, for UK sales, there is a zero rate for eBooks:

I believe that collecting VAT on zero-rated items is actually a criminal, not civil, offence, but my understanding of UK law is limited, as I am not a lawyer of any stripe.

Please note, I do not know how this interacts with Patreon being a US-based concern.

@reyna - this needs addressing as some of my UK patrons are objecting to paying VAT on my ebooks.

#8

thanks for the article, @Michael_Loucks! I’ve shared with the tax team, I’ll let you know what they say.

1 Like
#9

But they’re not buying your ebooks they’re buying a subscription that gives access to your Patreon content.

#10

Did you miss the part where I said I wasn’t a tax expert? And where Patreon said they’d review it?

I was simply relaying the complaints from my Patrons.

#11

Did you miss the part where it says “Community Forum”? I was simply relaying information in an attempt to help you with said complaints.

#12

Well, unless you are an expert on UK VAT, your speculation is no different from mine. Our Community Manager sent the link about the taxes to the tax team, as noted above. I’m pretty sure they’ll consult someone authoritative.