Sales Tax for user upgrades?

[cdub]

Got this from Stripe:

Based on your recent Stripe transactions, you may have exceeded a tax threshold. You might need to start collecting tax through a solution like Stripe Tax.

Do I need to charge sales tax or VAT for user upgrades? I'm based in the US. Can anyone recommend any good resources on where to look into this as to when a sales tax or VAT is required?

 

[AndyB]

(3) Incidental Sales. Charges for membership fees not related to anticipated retail transactions are not subject to tax. For example, when a country club or similar organization charges fees (dues) to members and provides substantial service benefits, e.g., the use of golfing, tennis and swimming facilities, the membership fees are not related to sales even though the organization may establish minimum meal and drink purchase requirements for its members.

Source: https://www.cdtfa.ca.gov/lawguides/vol1/sutr/1584.html

 

[briansol]

Interesting -- i was a member of a country club for a few years, and there most certainly was tax on the membership dues.

 

[Mr Lucky]

It's all a bit complicated. It's worth checking with EU regulations and then decide if you want to abide by them or ignore them.

VAT on digital services - What VAT is due?

What VAT is due on digital services? What is VAT? What are considered digital services? How does VAT apply to digital services? Who is liable for VAT? Read this guide on VAT on digital services for more information.

www.rocketlawyer.com

 

[wedgar]

Interesting -- i was a member of a country club for a few years, and there most certainly was tax on the membership dues.

In the US, each state determines whether they charge will sales tax and if so, what services and/or products are taxable. A while ago, I was a member of a country club in Pennsylvania and there was no sales tax charged on membership dues or intiation fee.

 

[Mendalla]

In the US, each state determines whether they charge will sales tax and if so, what services and/or products are taxable. A while ago, I was a member of a country club in Pennsylvania and there was no sales tax charged on membership dues or intiation fee.

Canada can be similarly confusing, esp. since have both federal and provincial sales taxes. In many provinces, they have been harmonized but not all. And even in harmonized ones, there are sometimes items that are only subject to either federal or provincial portion, not both. And then there's Alberta, which has always been proud of not having provincial sales tax so only the federal Goods and Service Tax (GST) applies.

So in Ontario, we have Harmonized Sales Tax at 13% which breaks down to 5% federal (the aforementioned GST) and 8% provincial. But you still encounter the odd items that are only subject to the 5% federal. So harmonization is more "mostly" than "completely". Fun times for businesses trying to figure what to collect/pay when.

And now some of the candidates in our provincial election are talking about changing the rules again.

 

[cdub]

A user upgrade is nebulous.... It's more like a subscription to a virtual magazine and not a physical product. Is that taxed a sales tax?

I noticed that I don't get charged a sales tax when I renew my XF license... Is that included in price or is there no tax on that?

 

[Paul B]

VAT is charged for XF purchases from the UK and EU.

 

[wedgar]

Canada can be similarly confusing, esp. since have both federal and provincial sales taxes. In many provinces, they have been harmonized but not all. And even in harmonized ones, there are sometimes items that are only subject to either federal or provincial portion, not both. And then there's Alberta, which has always been proud of not having provincial sales tax so only the federal Goods and Service Tax (GST) applies.

So in Ontario, we have Harmonized Sales Tax at 13% which breaks down to 5% federal (the aforementioned GST) and 8% provincial. But you still encounter the odd items that are only subject to the 5% federal. So harmonization is more "mostly" than "completely". Fun times for businesses trying to figure what to collect/pay when.

And now some of the candidates in our provincial election are talking about changing the rules again.

Jeepers... We have several tax jurisdictions in the states that the state, county, city and transit authority each assess sales tax.

You are entirely correct that it makes it difficult to figure what to charge.

A global company I worked at paid $50,000 annually for sales tax rates.