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by TekMol 2097 days ago
How does collecting donations via PayPal work? Isn't it that everyone who donates is doing something similar to a purchase, so you would have to collect VAT depending on where you are and where the "customer" is?

At least this is how I think it would be in Europe. But I would imagine similar rules for VAT are in place all around the world.
2 comments
Xylakant 2097 days ago
I can’t speak for all of Europe, but according to our tax accountant, In Germany, pure donations to a company can be VAT-free. To count as a donation, the money must be freely given, with no expectation of any reward. If you promise swag, sponsor benefits, ... it’s no longer a donation. Benefits can include things like the promise of a prominent logo placement. (Promotion)

Obviously, if you plan on doing any of this - talk to your tax accountant.

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TekMol 2097 days ago
Can Patreon be used in Germany then? Websites all seem to offer some perks in return for the Patreon "donations".
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mcdevilkiller 2097 days ago
Yes, but not as donations.
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fuzzy2 2097 days ago
I don't see why not, it wouldn't be a donation (in the tax law sense) though.
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TekMol 2097 days ago
Which means that you would have to collect VAT based on the location of the person who paid the money.

Is Patreon handling that for you?

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opencl 2097 days ago
Yes, Patreon automatically collects VAT. So if somebody in Finland pays you €1 they're charged €1.24 to cover VAT.
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TekMol 2097 days ago
Are the whole €1.24 then transferred to the website owner plus the information to pay €0.24 in VAT?
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Xylakant 2097 days ago
That is a good question that you should discuss with your tax accountant :)

I don’t know about the specifics of how payment works on patreon, but there are services that help with the tax issue. Quaderno https://www.quaderno.io/ is one that we have used for selling (remote) trainings. It ties into stripe, so that’s fairly simple to set up. Keep in mind that if you have to do the VAT dance, you’ll most likely need to provide the customer with a suitable receipt as well, so you’ll have to own that part of the checkout process.

Also consider that the VAT rules are less complicated for physical goods - the complicated ruleset mostly applies to digital-only goods. Things may also be less complicated if you’re a private person and use patreon as support for a hobby.

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austhrow743 2097 days ago
I know that here in Australia you don't need to collect/pay tax for revenue generating hobbies.
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