This article explains how school owners can handle the collecting and remitting of EU VAT.
Understanding VAT and Your Tax Liability as a School Owner
The European Union Value Added Tax (VAT) is a tax that is assessed only on purchases made by customers located in the EU. VAT applies to any merchant selling a product or service (including digital products like a course) to a customer based in Europe. It doesn’t matter where the merchant is based—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.
Filing and Remitting 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 Teachable automatically files and remits VAT for your school. Schools using custom payment gateways are responsible for filing and remitting VAT on their own.
Determining VAT Rates
VAT rates are determined based on a combination of factors; Teachable automatically collects information about a user's location based on factors such as their IP address and billing country. Once we have 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. If you’ve enabled VAT inclusive pricing, then the VAT amount is included in the purchase price across your entire school.
Displaying VAT Inclusive Pricing on Your Sales Page
As a school owner, you can choose to display VAT inclusive prices on your course’s sales page and your school’s course directory.
You can enable VAT inclusive pricing in the Settings > Taxes section of your school’s admin area. When enabled, customers located in countries that levy 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, follow these steps:
- Log in to your Teachable admin area.
- Select Settings from the admin sidebar.
- Click Taxes in the submenu.
- Under Show VAT Inclusive Prices, toggle it to be on.
- Click Save.
Disabling VAT Collection
If you have BackOffice enabled, VAT collection is optional but will be on by default. VAT collection can be disabled in the admin area under Settings > Taxes > EU VAT Tax Collection.
NOTE: If you switch between enabling/disabling VAT collection, subsequent course subscriptions will be based on 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.
Viewing 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.