As tax liability varies from country to country, providing rewards to a backer based in a specific region might create a VAT liability for you. For creators using Kickstarter’s Pledge Manager, we will collect VAT (value-added tax) on items shipped to backers in the EU and the UK, when Kickstarter is the deemed supplier and, as authorized by the creator, when the creator is the responsible party.
Recent changes to VAT in the EU
In 2021, the role of electronic interfaces in terms of reporting, record-keeping and VAT duties changed drastically with the introduction of Article 14a of the VAT directive.
Reason for the changes
Sales made to consumers within the EU, both as part of the trading between Member States and in terms of import from third countries, are, to a large extent, effectuated via online marketplaces. The EU has been long struggling with effective collection of VAT on such transactions, especially in the case of sellers from outside the EU.
Kickstarter’s Role in VAT Compliance
Under the new guidance, there are certain instances where Kickstarter will act as a deemed supplier and is therefore obligated to collect VAT from EU-based backers, including:
- Instances where rewards are shipped directly to EU based backers from outside the EU and the value of the parcel, inclusive of shipping and duties, is less than 150 EUR
- Instances where creators are from outside the EU and use EU-based hubs to ship rewards to EU based backers
VAT Collection Process
- Kickstarter will calculate and collect VAT for instances where it is considered the deemed supplier in accordance with the EU VAT Directive
- In instances where Kickstarter is not considered the deemed supplier, Kickstarter will charge tax on your behalf and remit funds to the creator in order for them to meet their VAT obligations
Tax Reporting
- Creators will receive detailed reports outlining VAT collected and remitted to authorities to help you manage compliance and recover VAT paid at import if applicable
UK VAT
- There are certain instances where Kickstarter can be considered the deemed supplier in accordance with UK VAT laws, including when:
- Rewards are delivered to UK individuals or non-VAT registered businesses from creators outside of the UK and,
- The consignment is worth 135 GBP or less OR is already located in the UK
- In instances where Kickstarter is operating as the deemed supplier and is required to collect VAT, Kickstarter will collect and remit to the UK authorities.
- Kickstarter will supply reporting to creators to assist with VAT reclamation, if applicable. Creators should consult with a tax advisor for this process.
- In instances where Kickstarter is not considered the deemed supplier, Kickstarter will calculate the taxes and remit to the creator during the pledge manager.
Disclaimer
This guidance is for informational purposes only and does not constitute tax advice. For specific questions about your VAT obligations, consult a qualified tax advisor.