Digital Content Tax Handling Outside Europe and the United States

This article explains how Teachable handles calculating, collecting and remitting tax on sales of digital products and services in Australia, India, Canada (Federal and Provincial when applicable), Chile, Mexico, Malaysia, New Zealand, Singapore, Taiwan, Moldova, Kenya and Russia. The following information helps you learn about some of the tax requirements that might apply to you when providing services via Teachable.

CAUTION: This article is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors to determine tax requirements related to your school.

Overview

Tax is charged in many countries on purchases made by customers. In those countries, tax generally applies to any merchant selling a product or service (often including digital products like an online course) to customers. Tax laws can be complicated and you should take time to understand the laws as they apply to you and your particular situation.

For example, if you are selling or intend to sell products or services on a regular basis, you may need to register as a ‘business’ (Taxable ‘Person’) with tax authorities in your country. You would then be required to file tax returns and collect and remit tax with respect to the revenues you generate through Teachable.

On top of this, you may even be required to register and pay tax in other countries. This is because generally the country where the student resides may determine (i) whether tax should be applied and (ii) whether the creator or Teachable is responsible to pay tax to local tax authorities. Teachable determines where a user is located based on the information provided by the user during checkout.

Tax laws also provide for exemptions based on the purchaser tax status and/or the type of product sold. Requirements may vary per country. We recommend consulting your tax advisor to determine the specific tax treatment of your products.

Please note that Teachable may also be required under tax- or reporting laws to share information about your earnings with tax authorities.

How we charge, collect, and remit tax

In many countries, the following two scenarios for tax collection and remittance will apply:

  1. Teachable will automatically calculate, collect and remit tax to the respective tax authorities on all purchases if:
  • the creator is located outside of the country of purchase and selling to students located in the country of purchase (ie if a student lives in Australia and purchases products in Australia, but the creator lives in a different country)
  • In Mexico, Teachable will automatically calculate, collect and remit tax if the creator and student are both located in Mexico
  • the creator is selling the product through a Teachable Native Payment Gateway (either Teachable Payments or Monthly Payment Gateway), and
  • The product is considered taxable
  • In India, Malaysia, and Singapore, Teachable will only calculate, collect and remit tax on products that contain no live component and which are sold in a different country than the creator's location (known as non-domestic sale). See below for more information.

    Please note that all tax collected by Teachable will be remitted to the respective tax authorities.

  1. Teachable will not automatically calculate, collect and remit tax to the respective tax authorities if:
  • the creator is located inside the country of purchase and selling to students located in the country of purchase, (except for Mexico),
    the creator is selling the product through a Custom Payment Gateway (all countries), or
    In India, Malaysia and Singapore, the product contains a live component and is therefore not considered electronically supplied content. See below for more information.

Note that when Teachable does not calculate, collect and remit tax, it is the creator’s responsibility to collect and remit the tax. Creators should consult with their tax advisor on how to proceed.

The following table explains how each country is handled based on payment gateway and purchaser location:

 

Gateway Taxability Chart:

Country

Gateway

 
 

TP/MPG Non-Domestic

TP/MPG Domestic

CPG Non-Domestic

CPG Domestic

Release Date*

Australia

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

23/07/2021

Canada (Federal)

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

09/08/2021

Canada (Quebec QST)

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

09/08/2021

Canada (Saskatchewan PST)

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

09/08/2021

Chile

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

23/07/2021

India

Teachable will calculate, collect and remit tax on purchases of products with no live component (1)

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

30/08/2021

Kenya

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

30/08/2021

Malaysia

Teachable will calculate, collect and remit tax on purchases of products with no live component (1)

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

30/08/2021

Mexico

Teachable will calculate, collect and remit tax on all purchases

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

30/08/2021

Moldova

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

30/08/2021

New Zealand

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

09/08/2021

Russia

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

09/08/2021

Saudi Arabia

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

09/08/2021

Singapore

Teachable will calculate, collect and remit tax on purchases of products with no live component (1)

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

30/08/2021

Taiwan

Teachable will calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

Creator’s responsibility to calculate, collect and remit tax on all purchases

30/08/2021

TP = Teachable Payments, MPG = Monthly Payment Gateway, CPG = Custom Payment Gateway

Non-domestic = creator does not reside in the same country as the student purchasing products/services.

Domestic = creator resides in the same country as the student purchasing products/services.

Countries with special tax handling - India, Malaysia, Singapore and Mexico

In India, Malaysia and Singapore, Teachable will only calculate, collect and remit on electronically supplied services—these are products and services with no live interaction. This means that Teachable will not calculate, collect, and remit tax on courses with enabled comment box functionality or coaching products. If a creator is selling products with live interaction (coaching or courses with comment box enabled), they should consult with their tax advisors on any potential tax liability.

In Mexico, there are specific tax rate circumstances to consider. The tax rate will depend on the creator’s tax ID (known as an RFC number). For domestic sales where the Mexico-based creator has provided their 13-digit RFC number, tax will be charged at 8%. If the RFC is 12-digits, Teachable will not charge and collect any tax, this will be the creator’s responsibility. Sales where the creator does not have an RFC number will be taxed at the 16% rate. For all non-domestic sales, the tax rate is 16%.

* Future release dates are subject to change.

Student tax IDs

If a student intends to purchase the product as a business entity and has a valid tax ID, they may enter their tax ID on the checkout page . This will ensure that the transaction is processed as a sale to a business entity. If a student does not enter a valid tax ID or equivalent, the transaction will be processed as a sale to a consumer and tax will be charged. Note that students located in Mexico, Malaysia and Russia with a valid tax ID will still be charged the country-specific tax rate since these countries tax both businesses and consumers.

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.

An issued receipt will note whether the transaction is subject to reverse charge.

If a student inputs their tax ID at checkout, the tax ID number will be listed in the transaction CSV report. Students must enter in the tax ID in the country specific format when entering in their tax ID at checkout.

Read more about how Teachable works with tax IDs.

Student invoices/receipts

Where required by law, Teachable will issue an invoice in PDF format for purchases on products and services. If an invoice is not required by law, Teachable will issue a receipt for purchases. If you use custom text for student receipts, this text will not display on invoices in PDF format.

In accordance with tax requirements, the receipt or invoice issued to the student will display the student’s address, along with the student’s tax ID (when applicable).

If the student added a Business name at checkout, this will also be listed on the receipt in the Billing Address section.

Tax rates

Each country sets its own tax rate, which may change from time to time. Teachable will apply the tax rate set by the country where the purchaser is located.

Teachable Tax ID

Australia ARN 3000 2157 2220

Canada Tax ID 78769 7101 RT0001

Chile Tax ID 593039102

India Tax ID 9921USA29030OSR

Kenya Tax ID P052046484J

Malaysia Tax ID 21000042

Mexico Tax ID Pending

Moldova Tax ID E840000000020

New Zealand Tax ID 134-728-063

Quebec, Canada Tax ID NR 0002 8509

Russia Tax ID 9909588499

Saskatchewan, Canada Tax ID 7451271

Saudi Arabia Tax ID 311009777800003

Singapore Tax ID M90374082T

Taiwan Tax ID 88196042

United Arab Emirates Tax ID 100500265200003

FAQs

How will I and my students be notified of the changes?

In countries with applicable tax requirements, Teachable will notify creators selling in these markets in the app before it starts charging, collecting and remitting taxes on the sale of courses, coaching and other services. We will place messaging in the Teachable creator admin over time notifying creators of new markets in scope as more countries roll out. It is up to the creator to decide if and how they communicate this change to their students.

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 products as a business, your student will need to provide Teachable with their tax ID issued by the country in which they are located. Instructions on how to do this are above in the “Student Tax IDs” section.

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 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.

Why is tax being automatically added in European and United Kingdom markets, but not others?

In the EU and UK, Teachable automatically calculates and adds sales tax to sales pages. These are currently the only markets where tax is automatically included in sales pages. 

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?

No, at this time, owners outside the EU and UK cannot turn off tax collection. However, if the school owner believes that their products or services are exempt, they should email the tax department at tax@teachable.com.

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

Tax will be applied on new subscription payments as of the date that tax goes live in the country. Tax will not be applied on a retroactive basis or applied on existing subscription payments that were purchased prior to the tax launch.

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?

Non-U.S./non EU 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.

Does Teachable handle EU VAT, UK VAT, and U.S. Sales Tax?

Yes. Teachable collects and remits both EU/UK VAT and U.S. Sales Tax for creators on our native payment gateways (Teachable Payments and Monthly Payment Gateway). Those on custom payment gateways are solely responsible for remitting tax to the appropriate authorities.

Why is my student being charged tax?

Generally the country where the student resides determines (i) whether tax should be collected from a student and (ii) whether the creator or Teachable is responsible to collect and pay this tax to local tax authorities. Teachable determines where a user is located based on the information provided by the user during checkout. If your student resides in one of the countries listed in the Gateway Taxability chart above, tax will be collected according to (a) your payment gateway and (b) whether or not you share residence in the same country as your student, (c) whether the country-specific rules considers the products sold taxable and (d) whether the country specific rules exempt students with a valid tax ID. If you feel your student was incorrectly charged tax, you can refer to the FAQ above, “What if my student is tax-exempt but is still charged tax?”.

What is my obligation to pay tax based on where I am or where my students are?

Please see the Gateway Taxability chart above for clarification on where and when Teachable charges, collects and remits tax versus where and when it’s the creator’s responsibility.

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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