VAT in Germany - may be relevant for German Creators

Hey, Patreon, fellow Creators,

so I’ve just completed a fun battle with the German tax authorities which was dragged out over the last 1.5 years. :confused:
Essentially, I’ve had bad luck and run into a local tax officer that did not understand what Patreon was, and the thing started to escalate from there.

To make the long story short, I have just been condemned to pay double-VAT for all funds collected through Patreon for the rest of eternity.

The VAT that Patreon collects from my Patrons and remits via VATmoss has been rejected and deemed ‘not applicable’ in my case. So it is collected for nobody, and vanishes in the void of the EU tax system, benefiting… nobody? Don’t ask me how this is possible, I don’t write tax laws. :T

Patreon’s legal team tried to help me by drafting an explanatory letter as to why VAT is handled by Patreon the way it is, under which EU directive, and that there cannot be made exceptions for individual creators.
This, too, has been rejected by the German tax authorities. “Not applicable” and “Patreon has no right to do it on your behalf.” Oh-kay.

My tax accountants say that the only way to appeal this is to start a lawsuit on an EU-wide level. Chances of winning that for me are below 50%, and needless to say I will never have the money to afford the lawyers and legal fees needed for this. :sob:

So I’m putting this here as a… Warning? To Creators from Germany.
If you have slipped through the net so far, and had the luck to deal with tax officers that knew what Patreon was, or didn’t care much about VAT - lucky you.
If you want to make sure to be on the safe side, put aside thousands of euros per year in case you will be forced to pay VAT for your income in retrospective. :grimacing:

Patreon - it may be best if you put a little notice on the VAT info page in your help section that the way VAT is charged and remitted by Patreon may not be accepted in Germany.

I’m not sure how I’ll explain to my Patrons that they’re charged VAT for no reason now… any ideas? :fearful:

Would be interesting to see exactly what you declared in taxes and what their answer from the tax bureau to that was.
I am in Germany too and 95% of my business is online business with companies and individuals around the globe.
It shouldn’t matter at all whether the tax bureau understands Patreon. What it boils down to is this:
You are getting money from an US-based company. That is all that matters. The company is outside of the EU and so NO TAX whatsoever applies. It gets complicated within the EU. There is reverse charge taxation with VAT IDs, taxation based on consumer location and all that stuff.
But since I run my businesses since 1999 every income from anywhere outside the EU has been declared with 0% tax and the tax bureau had to accept that, since that is how it works.
I am not sure, what the problem was in your case. Maybe you confused them with pointing to the VAT MOSS collection? That is between Patreon and the patrons. It doesn’t concern you. All that matters to you is your net income from Patreon, which again is tax-free, since it is coming from an US company.

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They are not. When Patreon collects taxes, it is about THEIR responsibility in regards to the US government and/or the EU (in case of EU consumers). They are not collecting YOUR tax or some kind of collective service tax for patronage. It’s the tax that applies solely for the purchase of the patron from Patreon.

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Yup. That is how my tax accountants argued as well.

The tax officer lady in question argues that since I create artworks, AND interact with my Patrons, I am peforming a direct service to THEM, and am NOT supplying goods and services to Patreon.
My tax accountants pointed out that the EU-directives under which Patreon acts make no distinction between digital goods and services of artists vs. non-artists, but this fell on deaf ears.

Any attempts to convince her of the contrary have failed, she has not changed her opinion in the least and just kept digging up more reasons why Patreon is doing a service to me, I am doing a service to my Patrons, and somehow that means that I have to pay VAT for any and all funds coming through Patreon. :confused:

We asked her to validate this matter with the next-up higher tax authority, she claimed to have done that, has closed this matter and left only one option open: A lawsuit.

That makes no sense. She is just wrong. You’re not even writing any invoices which could have tax rates. You might not even know where the consumers are coming from that purchase your product on Patreon to even charge a certain tax rate. What tax rate does she want to slap on everything?

But yeah, it’s hard to fight a governmental body on such matter. Might not be worth it.

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