FediThing has moved!Jul 28, 2023

International sales tax advice needed!

I have a tip jar for my accounts and websites ( @feditips, https://fedi.tips etc) which I mainly use to cover their costs. One of them is through ko-fi, the other is through liberapay. **Income tax is not an issue, I declare what I get to my country's government as part of my tax return.**

The problem I have is that my payment processor is now informing me I might (or might not) have to keep track of sales tax on donations:

-I'm not selling anything, there are no perks for donors. The services will happen regardless of whether anyone tips me.

-It would be incredibly complicated, it would mean registering with dozens of different countries.

-The total donations from each country are tiny, usually a few euros per year. The largest one is a few hundred per year.

-I'm not earning enough to have an accountant.

-I can't find any advice on this situation!

Can anyone help?

#AskFedi #Tax #Taxation #SalesTax #VAT #KoFi #LiberaPay #Accountancy #Accountants #Money

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Show threadJohn MeyerJul 28, 2023

@FediThing @feditips
Haven’t worked in this area for a while, but as someone else pointed out there will be registration thresholds and unless you are raking in $$$ (highly unlikely) you will not have crossed any registration thresholds..

The other issue is the classification of the tips and this will be a jurisdictional issue, but in the EU the rules should be the same. Ie it could be argued that the tips are a payment for a service even if it is voluntary. Best bet would be have a look at your local revenue webpage or the EU’s for guidance..

The US sales tax (state based) is a nightmare, but not every jurisdiction seeks to tax digital services (only approx 30 of 50) the kicker is no consistent definition of what is or is not to be taxed. Again there are threshold issues…

Re the tips from an Australian perspective they are not subject to sales tax (gst) if they are distributed to the staff and not retained by the business, but are subject to gst if retained by the business……

Good luck

Show threadFediThing has moved!

@johnmeyer

"Best bet would be have a look at your local revenue webpage or the EU’s for guidance.."

This is the thing, I cannot find any advice anywhere on this situation! :/

The assumption is always that people only provide services when they are receiving payment. There is never any example of a service that is provided free, with a tiny percentage giving a voluntary donation to support the service.

The nearest example I can think of is busking (playing music in the street), but that doesn't have an international component.

Jul 28, 2023 at 12:10pmWeb
Show threadJohn MeyerJul 28, 2023

@FediThing hmmm…

The revenue would likely take the view that the tips are a payment for a service (even if voluntary and not everyone pays). It could be argued that those not paying are paying $0.

The other issue which just occurred to me is where the service is (legally from a tax perspective) being provided/consumed will determine its taxation point (this is another horror show) as it can be manipulated in common law countries…

This is a very, very, very arcane (read exceptionally painful) area of VAT law that kept me employed and flitting round the world for 10 or so years trying to work on consistent rules (this work is still ongoing some 13 years later).

I would argue given the minimal $$ involved you are under the registration thresholds for the relevant jurisdictions and hence not required to report.

If you want to cover yourself;

Can you geographically analyse the contributions and keep a short record of where they are from with a link to the registration thresholds for the jurisdictions? This would provide the evidence that you don’t need to register if anyone asks.