The problem is there is no real way of displaying the final price, as the price to a user in the UK (20% VAT) will be different to the price displayed to a user in Germany (19% VAT). The only way to have one price throughout, is to have the creator take the knock for the VAT. I.e. if your tier is $20 it will be $20 for everybody who subscribes, but you’ll get more out if the user is from Germany.
It is annoying, but the fact that Patreon handles the VAT this way removes a massive administrative burden from creators who would otherwise need to handle this themselves.
The “impossible” argument is just false. Every other (VAT aware) sales website does location based prices, and Patreon is already doing it on their final checkout screen. They are legally required to that everywhere they display the price, not just at checkout.
All I’m asking for is for Patreon itself to show the price VAT inclusive, as is legally required, on the community page. Patreon already has all the required info, they just choose not to address this.
I recognise that for creators it’s inpossible to do that in their promotional material, but that doesn’t stop the Patreon website from doing it correctly, so at least you get a real overview when you’re on the platform.
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I agree 100% if the user is logged in and would have disclosed their country already. Patreon would have their location and could easily show the price they would pay. I’m referring to users who are not logged in and visit the website. They might see $20 and only once they register/log in, the platform can determine the final price, e.g. $24. Before that happens, you can’t show the price with accuracy as IP-based location is not 100% accurate (so if there is a legal requirement to show it as inclusive, this approach is prone to error). Like I said above, the only way to have the same price to guests and members throughout would be for the creator to take the VAT knock.
Sure for that 0.1% of cases where the GeoIP data is not accurate enough, it might be a inconvenience, but isn’t 99.9% better than 0%? Every other VAT aware website has long figured this out, why wouldn’t patreon be able to?
They can just do the same thing everyone else does and give user the option to change location with a modal or dropdown. But even that should just be step 2, after they do it properly for the majority of cases.
VAT law is complex. There are countless other edge cases of couse. Patreon can’t build in support for all of them. The oversimplified solution Patreon has implemented (and is not adjustable at all) is very much lacking.
IMHO the biggest other issue with the current implementation: Patreon assumes everyone is creating digital services, which might not be the case.
Example: If someone sends me a physical item and it’s stopped by customs, I have to pay VAT on it twice…
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Yes. Improving the payment system and everything that comes along with it, should have been a priority on Patreon’s road map for years. It might be not as “sexy” as implementing things like Lens or photo galleries, but it all should be there, as Patreon’s core business is a platform for paid memberships in the first place.
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I don’t think this description is right. The “digital service” is Patreon itself. They run the membership platform and the patrons pay them and VAT is charged accordingly. Patreon is not a payment provider, nor is it a shop where you order physical products—the legal and financial setup would be completely different in this case. There is a difference between buying a product and buying a digital service (that happens to include a perk or thank-you gift).
But your are certainly right with your notion that VAT must be shown everywhere for European customers, not just at checkout. That’s just the law.
I’d argue that it shouldn’t be, but you might be right on that.
Oh look: Sales Tax AMA with Jack Conte
This makes it clear to me that the “digital service” is not in fact Patreon itself, they call themselves a market place.
I’m happy they are making a tool, I’m just sad it’s taken them 4+ years to create. And I suspect it’s only because it’s now a US law that they even care. But better late than never I suppose.
I just hope it will be available to EU people as well…
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