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Which countries does Paddle charge sales tax or VAT for?

What is VAT?

VAT (Value Added Tax, sometimes known as Sales Tax), is a tax on purchases. VAT must be collected on digital products sold to consumers within the EU, on certain inter-state US transactions, and in a growing number of other countries. It is charged on top of the sale price of a product and must be returned to the relevant tax authority i.e. the governing body at the buyer’s location.

This means that whether a VAT charge is applied to a purchase depends on the location of the buyer; if the buyer is from a country where VAT applies, a VAT charge will be applied to the transaction. The buyer is responsible for paying the VAT.

The PRIOje payment provider make sure the appropriate VAT amount is collected from the buyer and passed on to the authorities in the buyer’s home country on PRIOjet behalf.

Which countries does Paddle charge sales tax or VAT for?

When you book a subcription, the country from which you are making the purchase may charge VAT. The PRIOjet payment provider is registered and able to handle VAT payments for the regions listed below. The listed rates are for the “Standard Digital Goods” tax category.

For countries in the list that show B2B & B2C, B2B customers are responsible for reclaiming indirect tax back on their tax returns.

JurisdictionTax Rate, %Indirect TaxB2B/B2C
Armenia20%VATB2C
Australia10%GSTB2C
Bahamas10%VATB2B & B2C
Bahrain10%VATB2C
Chile19%VATB2C
Colombia19%VATB2C
Georgia18%VATB2C
Ghana15%VATB2C
Iceland24%VATB2B & B2C
India18%GSTB2C
Indonesia11%VATB2B & B2C
Japan10%Consumption TaxB2B & B2C
Kazakhstan12%VATB2B & B2C
Kenya16%VATB2B & B2C
Liechtenstein8.1%VATB2B & B2C
Malaysia6%SSTB2B & B2C
Mexico16%VATB2B & B2C
Moldova20%GSTB2C
New Zealand15%GSTB2C
Nigeria7.5%VATB2B & B2C
Norway25%VATB2C
Oman5%VATB2B & B2C
Saudi Arabia15%VATB2C
Singapore9%GSTB2C
South Africa15%VATB2B & B2C
South Korea10%VATB2C
Switzerland8.1%VATB2B & B2C
Taiwan5%VATB2C
Tanzania18%VATB2C
Thailand7%VATB2C
Turkey20%VATB2C
United Arab Emirates5%VATB2C
Uganda18%VATB2C
United Kingdom20%VAT/ VAT OSSB2B & B2C
Uzbekistan12%VATB2C
Vietnam11.11% / 17.65%FCTB2B & B2C
Canada___
Alberta5%Federal GSTB2C
British Columbia7% + 5%PST + Federal GSTB2B & B2C
Manitoba7% + 5%RST + Federal GSTB2C
New Brunswick15%Federal HSTB2C
Newfoundland and Labrador15%Federal HSTB2C
Northwest Territories5%Federal GSTB2C
Nova Scotia15%Federal HSTB2C
Nunavut5%Federal GSTB2C
Ontario13%Federal HSTB2C
Prince Edward Island15%Federal HSTB2C
Quebec9.975% + 5%QST + Federal GSTB2C
Saskatchewan6% + 5%PST + Federal GSTB2C
Yukon5%Federal GSTB2C
EU Countries___
Austria20%VAT OSSB2C
Belgium21%VAT OSSB2C
Bulgaria20%VAT OSSB2C
Croatia25%VAT OSSB2C
Cyprus19%VAT OSSB2C
Czech Republic21%VAT OSSB2C
Denmark25%VAT OSSB2C
Estonia22%VAT OSSB2C
Finland24%VAT OSSB2C
France20%VAT OSSB2C
Germany19%VAT OSSB2C
Greece24%VAT OSSB2C
Hungary27%VAT OSSB2C
Ireland23%VATB2C
Italy22%VAT OSSB2C
Latvia21%VAT OSSB2C
Lithuania21%VAT OSSB2C
Luxembourg17%VAT OSSB2C
Malta18%VAT OSSB2C
Netherlands21%VAT OSSB2C
Poland23%VAT OSSB2C
Portugal23%VAT OSSB2C
Romania19%VAT OSSB2C
Slovak Republic20%VAT OSSB2C
Slovenia22%VAT OSSB2C
Spain21%VAT OSSB2C
Sweden25%VAT OSSB2C
United States*___
Alabama4%Sales TaxB2B & B2C
Arizona5.6%Sales TaxB2B & B2C
Arkansas6.5%Sales TaxB2C
Colorado2.9%Sales TaxB2B & B2C
Connecticut6.35%Sales TaxB2B & B2C
Denver4.81%Sales TaxB2B & B2C
District of Columbia6%Sales TaxB2B & B2C
Hawaii4%Sales TaxB2B & B2C
Idaho6%Sales TaxB2B & B2C
Illinois6.25%Sales TaxB2C
Indiana7%Sales TaxB2B & B2C
Iowa6%Sales TaxB2B & B2C
Kansas6.5%Sales TaxB2B & B2C
Kentucky6%Sales TaxB2B & B2C
Louisiana4.45%Sales TaxB2B & B2C
Maine5.5%Sales TaxB2B & B2C
Maryland6%Sales TaxB2B & B2C
Massachusetts6.25%Sales TaxB2B & B2C
Michigan6%Sales TaxB2C
Minnesota6.88%Sales TaxB2B & B2C
Mississippi7%Sales TaxB2B & B2C
Nebraska5.5%Sales TaxB2B & B2C
New Jersey6.63%Sales TaxB2B & B2C
New Mexico5.13%Sales TaxB2B & B2C
New York4%Sales TaxB2B & B2C
North Carolina4.75%Sales TaxB2B & B2C
North Dakota5%Sales TaxB2C
Ohio5.75%Sales TaxB2B & B2C
Pennsylvania6%Sales TaxB2B & B2C
Rhode Island7%Sales TaxB2B & B2C
South Carolina6%Sales TaxB2B & B2C
South Dakota4.5%Sales TaxB2B & B2C
Tennessee7%Sales TaxB2B & B2C
Texas8%Sales TaxB2B & B2C
Utah4.85%Sales TaxB2B & B2C
Vermont6%Sales TaxB2C
Washington6.5%Sales TaxB2B & B2C
West Virginia6%Sales TaxB2B & B2C
Wisconsin5%Sales TaxB2B & B2C
Wyoming4%Sales TaxB2B & B2C

* Please note that sales tax laws and regulations are written, passed, and interpreted by states, and there is no unified federal agreement on how to approach the sales tax for digital products. The taxability of digital products varies greatly by (and within) states, and depending on local municipalities, the total tax rate can be higher than the stated rate.

Currently, digital products can be characterized as either: electronically downloaded software, SaaS, or digital goods, although you may see these referred to as tangible personal property, services, or intangible property in the official documentation.

Due to this situation, some states charge the sales tax for all categories, while others charge sales tax for some of the categories, or do not charge it at all. Hence why if you sell products from multiple categories, you may notice that customers from the same state may receive a bill with or without tax.

If you have any questions about the tax information on your invoice, please contact https://paddle.net/verify-email directly.

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