Patreon Sales Tax Change (MK2)

Helllllo Rivans

I posted back in May about upcoming changes to Patreon's Sales Tax which will be taking effect from the 1st of July. I've just gone through and tweaked the individual settings for each reward tier to best comply with the new changes. As I found this all very confusing (and think I may finally have got my head round it), I thought I'd try to explain things.

Linked above is Patreon's full explanation about it. It's long and complex. Please have a look if there's anything you want to check or of which you are unsure.

If I have read and understood things correctly, here is how they affect you:

1. What is this?

Basically Patreon is now required to charge sales tax on certain kinds of rewards (or 'benefits' as the linked page refers to them). Specifically any reward that offers streamed content (such as extra videos), downloadable content (such as art or documents) and physical goods (t-shirts or other merchandise). From what I can tell, these are the only rewards that are currently taxable.
The only one of these I offer is the streamed content. The $5+ tiers all include rewards that are taxable in some countries/states.

2. Who pays the tax?

The sales tax is added to your pledge, depending on where YOU are. The full list of 16 (at time of writing) countries that this will affect is in the post linked above. This includes Austrailia, Russia, South Africa and over half the United States.
Currently no EU country is affected. I highly suggest that you check if your country is affected.

3. How much is the tax?

This also varies by country. Some US states pay as little as 4% all the way up to Norway where patrons will have to pay an extra 25%. These tax rates are also listed on the linked page, so please check the tax rate for your country.
NOTE: This extra isn't for the entire pledge. Patrons are only taxed on the 'taxable' part of the pledge. More on that below.

4. How have the rewards changed regarding this?

The content of the rewards has not changed at all. Patreon Creators are encouraged to manually assign each individual 'benefit' a tag from a dropdown list. What we choose on this list determines if that part of the reward is taxable. We then have to assign a percentage of the overall pledge to each benefit.

For example:
The $5 reward, the Minun Tier, has the following 'benefits' as part of its reward:
Video Voting, Discord Role, Exclusive Episodes.
Of these, only the third part, the exclusive PokeSins episodes, is a taxable benefit. As the reward is for a $5 pledge and the previous tier (which offers the vote and the Discord role) is $3, that'd value the taxable exclusive episodes at $2 of the total pledge.
Therefore pledging at the $5 tier would add your country's tax rate of $2.

That is as simple a description as I can do. Frankly the whole thing is a very complex mess of different country tax laws, flexible interpretations, and technical jargon.

Finally 5. What does this all mean?

This means that if you're in one of the countries listed on that linked page, the cost to you to pledge will increase. I've done my best to limit how much tax you pay, by accurately assigning percentages to various benefits, but I can't reduce it any more without risking it being seen as tax evasion. Frankly this seems like a very exploitable system and I don't like the way Patreon have phrased certain 'advice' to creators...

If this increased cost means that you have to reduce or even cancel your pledge, I completely understand.

Thank you for reading this all and I hope I explained things well enough. Do note that this is all based on my understanding of what I've read and seen, and I can't guarantee that it's correct, accurate or will stay as it is. If my understanding changes, I will be sure to let you know.

Thank you for pledging and supporting me.
- Geran 'Gar1onriva'