krysdecker
patreon
Taxes changes starting on july!
🕑 Added 2020-06-11 19:48:37 +0000 UTCHey everyone,
I imagine many of you received an e-mail from patreon about this or read from other creators about the tax change that's happening.
1) What happened?
Basically there's bew a change in the US laws about taxes in digital goods. It's based on the state you are at, and this is something out of the control of creators and Patreon itself. It's simply complying to a change in US taxes.
You can find a detailed explanation in here on which states are affected and by how much. They range from 4% to 11% depending on the state.
https://support.patreon.com/hc/en-us/articles/360043054911-New-Sales-Tax-Requirements-effective-July-1st-2020#h_ea3105cc-d58a-4039-a7f0-ce4c7a4fb851
2) So what changes for you, patron?
I'll be very clear that it doesn't change ANYTHING in how the rewards are handled!
In order to mitigate the amount of taxes you guys pay, us, creators can make a simple update in the tiers (which I already did!). So from my part, I updated all tiers to a simple struture:
- Exclusive posts and updates: early access to previews, patreon feed and such.
- Exclusive voting power: voting on our pin-up polls etc
- Private community: Discord access.
- Digital Downloads: HD jpg / wip / wallpapers / NSFW versions
That makes it's easier for patreon to detect which "parts" of the rewards are taxable and which aren't.
So instead of them applying a tax on the flat value of your tier, it will apply the taxes only to the content that is actually taxable.
3) Quick example to be easier to understand
- For example, imagine that you are in the $5 tier and you live in a US state that have a 10% tax.
- If only 1 of those itens above are taxable, you'll have a 10% tax on top of $1,25 instead of the full $5.
This is the best the creators can do to help mitigate the amount of tax paid by the patrons.
4) For non-US residents
A few new countries were included in the digital sales TAX (a lot of countries in Europe were included a few years ago). You can find the full list here:
https://support.patreon.com/hc/en-us/articles/360043054911-New-Sales-Tax-Requirements-effective-July-1st-2020#h_ea3105cc-d58a-4039-a7f0-ce4c7a4fb851
I know this is not a great news, but it's something that I think it's important to be clear about, since those laws are going to affect a lot of digital services in the near future.
Anyway, if you have any questions, feel free to ask and I'll do my best to reply!
Comments
Lee
if your country already had VAT, as far as I'm aware, it's unchanged. The change was that new countries were added to the mix.
Lee
yeah, as far as I'm aware some new countries (and the US) were included, patreon didn't inform us on any change on countries that already had those taxes.
Lee
Thank you! I think it's important to be crystal clear about those things!
Header
Lol I thought every1 is paying VAT tax, considering the 20% I've beeing paying since I joined and being EU citizen. So for EU patrons nothing changes pretty much?
Lee
No, it's automatic. It's a simple update on my part on the tiers that add those fields for the patreon system. It doesn't show up for you guys (as far as I'm aware).
Kim Åkerman
Unfortunately I don't think this will help EU patrons. I'm still going to be stuck being taxed 25% of the entire pledge as always.
Do I need to update my pledge since you updated your tiers?
Anthony
Appreciate you being open and clear on this, not to mention your thoughtfulness on trying to mitigate our cost impact
