This article goes over how school owners can handle collecting and remitting EU VAT.
EU VAT and Your Tax Liability as a School Owner
The European Union Value Added Tax (VAT) is charged on purchases made by customers in the EU. VAT applies to any merchant selling a product or service (including digital products like an online course) to a customer based in Europe. The location of the merchant doesn't matter—only the location of the customer determines whether or not VAT should be applied.
NOTE: For schools using Teachable Payments and/or the Monthly Payment Gateway, Teachable's address will appear on receipts whenever a valid VAT ID is applied during checkout. To comply with VAT laws, Teachable is considered the merchant of record for transactions processed by Teachable Payments and the Monthly Payment Gateway.
Teachable automatically collects VAT on all purchases made from the EU, regardless of which payment gateway processes the transaction. VAT funds are paid out to the primary owner, along with earnings. However, if you opt-in to BackOffice, then Teachable will automatically keep VAT funds collected from your students for filing and remittance.
File and Remit VAT
While Teachable automatically collects VAT, filing and remitting VAT is the responsibility of the school owner. However, if you opt-in to BackOffice, then every quarter, Teachable will automatically file and remit VAT collected from your students to the appropriate VAT-MOSS authorities. Schools using custom payment gateways are responsible for filing and remitting VAT on their own.
VAT rates are determined based on a combination of factors; Teachable automatically collects information about a user's location based on their IP address and billing country. Once we've determined where a user is located in the EU, we use their country’s current VAT rate to add the appropriate tax on top of the purchase price.
Display VAT Inclusive Pricing on Your Sales Page
If you've opted-in to BackOffice, you can choose to display VAT inclusive prices on your course’s sales page, and your school’s course directory in the Settings > Taxes section of your school admin.
When enabled, customers located in countries that charge VAT will see VAT inclusive prices on the sales page and course directory. While the precise VAT amount won’t be noted on the course sales page or course directory, students can see how much VAT they are being charged on the checkout page in the Order Summary section.
To enable VAT inclusive pricing, turn on the Show VAT Inclusive Prices toggle.
Disable VAT Collection
If you have BackOffice enabled—or are using both Stripe and PayPal custom payment gateways—VAT collection is optional but will be enabled by default. VAT collection can be disabled by primary owners in the school admin area under Settings > Taxes > EU VAT Tax Collection.
NOTE: If you switch between enabling/disabling VAT collection, subsequent course subscription charges will be the same as the the initial subscription charge. For example, if VAT collection was disabled at the time of purchase, then VAT will not be charged if you enable VAT collection after the initial subscription charge.
View VAT Fees in Your Transaction History
If you’ve set up custom payment gateways, and are therefore responsible for remitting VAT payouts, then you can use Teachable’s transaction reporting tools to determine the VAT rates charged to your students.
You can calculate this by exporting your transaction data in the Sales section of your school admin. Once you have downloaded a CSV of your transaction data, you can reference the VAT Fees and Charge Country columns to determine your tax liability.