European Union / United Kingdom VAT on Teachable

This article covers how Teachable calculates, collects and remits Value Added Tax (VAT) in the European Union (EU) and United Kingdom (UK).

Overview

VAT is charged on purchases made by consumers in the EU and UK. VAT applies to any merchant selling a product or service (including digital products like an online course) to a consumer based in Europe. In general, the location of the merchant doesn't matter—it is the location of the consumer that determines whether or not VAT should be applied.

Brexit - EU VAT implications

As of January 1, 2021, Teachable has registered for a separate UK VAT that it will display on its receipt if the purchaser is located in the UK. This line item will display on receipts starting in early August.

NOTE: These are general recommendations. Teachable cannot give tax or financial advice and is not liable for any losses or tax liabilities due to actions taken (or not taken) based on these recommendations. Always consult a local tax professional when planning your taxes.

Charge, collect, and remit VAT

If you are selling content to students in the EU/UK, Teachable automatically charges tax on all purchases made from the EU/UK, regardless of which payment gateway processes the transaction. That is, Teachable will calculate the tax amount and will automatically include it with the charge amount on the product sales page. On the checkout page, the tax amount will be listed as a line item.

By default, Teachable will also collect and remit tax to the EU/UK for any transaction that occurs through Teachable’s native payment gateways (the Monthly Payment Gateway or Teachable Payments).

However, creators processing transactions through a custom payment gateway are solely responsible for remitting tax to the relevant tax authorities. Teachable will not file tax for these transactions. If you are responsible for remitting tax payouts, then you can use Teachable’s transaction reporting tools to determine the tax rates charged to your students.

Payment Gateway Process
Teachable Payments Teachable will automatically calculate, collect and remit tax depending on the student’s location.
Monthly Payment Gateway Teachable will automatically calculate, collect and remit tax depending on the student’s location.
Custom Payment Gateway Teachable will automatically calculate tax at checkout. Creators must collect and remit tax themselves.

 

You can calculate this tax 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 non_us_tax_fees and delivery_address_country columns to determine your tax liability.

In the EU and UK, creators can also disable tax collection in cases where their schools qualify for a tax exemption. Tax collection can be disabled by primary owners in the Settings > Taxes area of the Teachable admin by toggling the VAT Tax toggle:

EU_UK_Taxes.png

Additionally, if creators switch between enabling/disabling tax collection, subsequent course subscription charges will be the same as the initial subscription charge. For example, if tax collection was disabled at the time of purchase, then tax will not be charged if you enable tax collection after the initial subscription charge.

NOTE: Tax collection should only be disabled in cases where the school qualifies for a tax exemption. Creators should consult with their tax advisors before disabling tax collection.

You can see whether or not Teachable has filed VAT for a transaction by going to the individual transaction details :

VAT_tax_remission_summary.png

Student VAT IDs

If a student intends to purchase the course as a business entity and has a valid VAT ID, they may enter their VAT ID on the checkout page. This will ensure that the transaction is processed as a sale to a business entity. If a student is located in the EU or UK and they do not enter a valid VAT ID, the transaction will be processed as a sale to a consumer and VAT will be charged.

NOTE: The reverse charge rule applies to most sales to a business entity, if that business entity is established in another country than the creator. If the reverse charge rule applies, tax will not be charged. The Student will then be responsible to report and where needed pay the tax to the respective tax authorities.

If a student inputs their VAT ID at checkout, the VAT ID number will be listed in your transaction CSV report.

Students must include their VAT ID in the country-specific approved format at checkout for Teachable to verify the tax ID. Please review this list of country-specific formats for guidance if needed.

VAT rates

Each EU member state and the UK sets its own VAT rate, which may change from time to time. Teachable will apply the VAT rate set by the country where the user is located.

Disable VAT collection

VAT collection can be disabled by primary owners in Settings > Taxes by disabling the VAT Tax toggle. Tax will still be collected in other countries and US states where products and services are taxable. It’s important to note that disabling VAT can only be performed by creators in the EU and UK. No other countries are eligible to disable VAT tax.

NOTE: VAT collection should only be disabled in cases where the school qualifies for a VAT exemption. Creators should consult their tax advisors before disabling VAT collection.

admin-settings-taxes-disable-vat.gif

CAUTION: If you switch between enabling/disabling VAT collection, subsequent course subscription charges will be the same as 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 delivery_address_country and non_us_tax_fees columns to determine your tax liability.

Teachable Tax ID

EU Tax ID EU372005114

UK Tax ID 380760685

FAQs

Where does the tax appear in a sale?

The tax, if applicable per local tax laws, will appear as a separate line item on the following - student checkout page, receipt, or invoice where required.

How are students that purchase products as a business handled?

Similarly to subscription purchases, if your student intends to purchase your content as a business, your student will need to provide Teachable with their VAT ID issued by the country in which they are located. Instructions on how to do this are above in the “Student VAT IDs” section.

Students from businesses who purchase products or services on the Teachable platform and paid tax should submit a refund request to tax@teachable.com. The refund request should include a copy of the purchase receipt showing the tax paid and Order ID, as well as a copy of their tax ID. Teachable will issue a refund once the documentation has been reviewed and approved. Usually the process takes about 7 days.

What if my student is tax-exempt but is still charged tax?

Students may submit a tax refund request or exemption on a purchase to Teachable in the following situations:

  • Student has a valid VAT tax ID but did not enter the data during point of purchase
  • Student is exempt from taxation per country-specific tax regulation (e.g. non-governmental organization employee)
  • Student was incorrectly charged tax on their purchase

Students under these circumstances can submit a refund request to tax@teachable.com. The refund request should include a copy of the purchase receipt showing the tax paid and order ID, as well as a copy of their tax ID certificate. Teachable will issue a refund once the documentation has been reviewed and approved.

Why is Teachable charging tax in some countries but not others?

Teachable, Inc is constantly monitoring tax obligations in all markets. We will update you once we start calculating, collecting and remitting in new markets.

Can I include tax with my product price to show a single, all-inclusive price?

No, at this time, tax displays as a separate line item at checkout and within the email receipt.

Can I disable tax collection in my school?

Yes, if the creator resides in and does business from the EU or UK, they may disable VAT tax collection. Instructions are above in the “ Disable VAT collection ” section. No other countries are eligible to disable VAT tax.

How will existing student subscriptions be treated for students who enrolled before the tax rolled out?

Tax will be applied to subscription payments as of the date that tax goes live in the country. Tax will not be applied on a retroactive basis.

Because tax is determined based on the purchasing student’s address and local laws in that country, students who don’t have a shipping address on file will be presented with a dialog box after login directing them to a new page where they will input their delivery address. Students will be presented with this dialog box and experience each time they login until they supply a delivery address.

How is tax calculated with coupons?

Tax is based on the sale price; whatever the final checkout price is, that is the taxable amount. For example, if the course is $100 and the student has a -$20 off coupon, the taxable amount is $80.

Do refunds include tax?

Yes.

How can I see how much tax Teachable has collected and remitted on my sales?

On the Teachable platform, go to the Sales area and you’ll see a list of transactions completed. Click “Export CSV” in the upper right-hand corner and you will be emailed a transaction report that lists information such as address, net price and tax fees (listed as us_tax_fees and non_us_tax_fees ). This report can then be downloaded into your tool of choice - Google Sheets, Excel, or pdf for your bookkeeping purposes.

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