By law, Paddle must apply VAT / Sales Tax to any transaction where it is applicable.

Vendors can choose how they want to handle sales tax in the Sales Tax Settings page in the Paddle dashboard. There are two options available to you as a seller;

1. Include VAT in the price (VAT inclusive pricing)
2. Add VAT to the price (VAT exclusive pricing)

By setting VAT inclusive prices, the price you’ve input will be the price the customer sees, and the sales tax will come of out this price. Whereas, if you choose to have VAT added on, the % rate of sales tax the customer is due to pay (eg. 20% in UK, 18% in Spain, etc) will be added on top of the product price you’ve set.

In our experience, for the highest conversion we recommend VAT inclusive pricing, with overridden, rounded prices in each currency.

If you’d like some assistance setting the price for your products (for the best conversion or to pass on the sales tax to the customer, etc) or any other advice - please get in touch.

Paddle entirely handles VAT (sales tax) for all digital products sold to countries where this is a legal requirement, eg. EU member states, India, Australia and more.

VAT registered businesses who purchase products through Paddle will not pay VAT if the transaction is cross-border (they do this by entering their VAT ID at the time of purchase).

Paddle acts as a Digital Platform for the purposes of EU VAT. Put simply, Paddle acts as a re-seller of your product, meaning that we can collect the relevant information about your customer, charge them the correct amount of tax, and return it to the relevant authority. No additional work is required on your part.

Learn more about Paddle Comply. Don’t hesitate to get in touch if you have any questions.

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. Whether you - as the seller of the product - are VAT registered has no impact on this process.

The good news is that by using Paddle, you don’t need to worry about any of this. We will make sure the appropriate VAT amount (see rates per country here) is collected from the buyer, and passed on to the authorities in the buyer’s home country on your behalf. How we do this is explained here.

When a customer purchases a product via Paddle, the country from which they are making the purchase may charge VAT. Paddle is registered and able to handle VAT payments for the regions listed below. The listed rates are for the “Standard Digital Goods” tax category.

Jurisdiction	Tax Rate, %	Indirect Tax	B2B/B2C	Date Introduced
Australia	10%	GST	B2C	01/07/2017
Bahrain - Previous rate	5%	VAT	B2C	14/04/2021 - 12/31/2021
Bahrain	10%	VAT	B2C	01/01/2022
Chile	19%	VAT	B2C	21/01/2021
India	18%	GST	B2C	01/07/2017
Indonesia	10%	VAT	B2B & B2C	05/07/2021
Japan	10%	Consumption Tax	B2C	01/10/2015
Malaysia	6%	SST	B2B & B2C	26/03/2021
Mexico	16%	VAT	B2B & B2C	10/11/2021
New Zealand	15%	GST	B2C	01/10/2016
Russia - Previous rate	16.67%	VAT	B2B & B2C	04/22/2019 - 18/01/2021
Russia	20%	VAT	B2B & B2C	18/01/2021
Saudi Arabia	15%	VAT	B2C	12/05/2020
Singapore	7%	GST	B2C	21/04/2020
South Africa	15%	VAT	B2B & B2C	01/01/2014
South Korea	10%	VAT	B2C	01/07/2015
Taiwan	5%	VAT	B2C	01/12/2021
Thailand	7%	VAT	B2C	07/09/2021
Turkey	18%	VAT	B2C	01/01/2018
UAE	5%	VAT	B2C	23/09/2019
Uzbekistan	15%	VAT	B2C	04/01/2021
Canada	_	_	_	_
Alberta	5%	Federal GST	B2B & B2C	08/08/2021
British Columbia	7% + 5%	PST + Federal GST	B2B & B2C	05/05/2021
Manitoba	5%	Federal GST	B2B & B2C	10/07/2021
New Brunswick	15%	Federal HST	B2B & B2C	10/07/2021
Newfoundland and Labrador	15%	Federal HST	B2B & B2C	10/07/2021
Northwest Territories	5%	Federal GST	B2B & B2C	10/07/2021
Nova Scotia	15%	Federal HST	B2B & B2C	10/07/2021
Nunavut	5%	Federal GST	B2B & B2C	10/07/2021
Ontario	13%	Federal HST	B2B & B2C	10/07/2021
Prince Edward Island	15%	Federal HST	B2B & B2C	10/07/2021
Quebec	9.975% + 5%	QST + Federal GST	B2C	01/01/2019
Sasketchewan	6% + 5%	PST + Federal GST	B2C	15/01/2021
Yukon	5%	Federal GST	B2B & B2C	10/07/2021
EU Countries	_	_	_	_
Austria	20%	VAT MOSS	B2C	01/01/2015
Belarus	20%	VAT	B2C	01/01/2018
Belgium	21%	VAT MOSS	B2C	01/01/2015
Bulgaria	20%	VAT MOSS	B2C	01/01/2015
Croatia	25%	VAT MOSS	B2C	01/01/2015
Cyprus	19%	VAT MOSS	B2C	01/01/2015
Czech Republic	21%	VAT MOSS	B2C	01/01/2015
Denmark	25%	VAT MOSS	B2C	01/01/2015
Estonia	20%	VAT MOSS	B2C	01/01/2015
Finland	24%	VAT MOSS	B2C	01/01/2015
France	20%	VAT MOSS	B2C	01/01/2015
Germany	19%	VAT MOSS	B2C	01/01/2015
Germany temporary VAT cut	16%	VAT MOSS	B2C	01/07/2020 to 31/12/2020
Greece	24%	VAT MOSS	B2C	01/01/2015
Hungary	27%	VAT MOSS	B2C	01/01/2015
Iceland	24%	VAT	B2B & B2C	24/10/2018
Ireland	23%	VAT	B2C	01/01/2015
Ireland temporary VAT cut	21%	VAT	B2C	04/09/2020 to 28/02/2021
Italy	22%	VAT MOSS	B2C	01/01/2015
Latvia	21%	VAT MOSS	B2C	01/01/2015
Liechtenstein	7.7%	VAT	B2B & B2C	21/01/2021
Lithuania	21%	VAT MOSS	B2C	01/01/2015
Luxembourg	17%	VAT MOSS	B2C	01/01/2015
Malta	18%	VAT MOSS	B2C	01/01/2015
Moldova	20%	GST	B2C	02/06/2020
Netherlands	21%	VAT MOSS	B2C	01/01/2015
Norway	25%	VAT	B2C	01/07/2011
Poland	23%	VAT MOSS	B2C	01/01/2015
Portugal	23%	VAT MOSS	B2C	01/01/2015
Romania	19%	VAT MOSS	B2C	01/01/2015
Slovak Republic	20%	VAT MOSS	B2C	01/01/2015
Slovenia	22%	VAT MOSS	B2C	01/01/2015
Spain	21%	VAT MOSS	B2C	01/01/2015
Sweden	25%	VAT MOSS	B2C	01/01/2015
Switzerland	7.7%	VAT	B2B & B2C	01/01/2010
United Kingdom	20%	VAT/ VAT MOSS	B2B & B2C	01/01/2015
United States*	_	_	_	_
Alabama	4%	Sales Tax	B2B & B2C	01/10/2018
Arizona	5.6%	Sales Tax	B2B & B2C	19/12/2019
Arkansas	6.5%	Sales Tax	B2C	19/12/2019
Colorado	2.9%	Sales Tax	B2B & B2C	31/05/2019
Connecticut	6.35%	Sales Tax	B2B & B2C	19/12/2019
Denver - Previous rate	4.31%	Sales Tax	B2B & B2C	01/06/2019 - 31/12/2020
Denver	4.81%	Sales Tax	B2B & B2C	01/01/2021
District of Columbia	6%	Sales Tax	B2B & B2C	19/12/2019
Hawaii	4%	Sales Tax	B2B & B2C	19/12/2019
Idaho	6%	Sales Tax	B2B & B2C	20/12/2019
Illinois	6.25%	Sales Tax	B2C	19/12/2019
Indiana	7%	Sales Tax	B2B & B2C	19/12/2019
Iowa	6%	Sales Tax	B2B & B2C	19/12/2019
Kansas	6.5%	Sales Tax	B2B & B2C	19/12/2019
Kentucky	6%	Sales Tax	B2B & B2C	19/12/2019
Louisiana	4.45%	Sales Tax	B2B & B2C	19/12/2019
Maine	5.5%	Sales Tax	B2B & B2C	18/12/2019
Maryland	6%	Sales Tax	B2B & B2C	27/05/2021
Massachusetts	6.25%	Sales Tax	B2B & B2C	01/10/2017
Michigan	6%	Sales Tax	B2C	19/12/2019
Minnesota	6.88%	Sales Tax	B2B & B2C	31/10/2018
Mississippi	7%	Sales Tax	B2B & B2C	29/09/2020
Nebraska	5.5%	Sales Tax	B2B & B2C	18/12/2019
New Jersey	6.63%	Sales Tax	B2B & B2C	01/11/2018
New Mexico	5.13%	Sales Tax	B2B & B2C	19/12/2019
New York	4%	Sales Tax	B2B & B2C	21/06/2018
North Carolina	4.75%	Sales Tax	B2B & B2C	01/11/2018
North Dakota	5%	Sales Tax	B2C	10/11/2020
Ohio	5.75%	Sales Tax	B2B & B2C	01/01/2019
Pennsylvania	6%	Sales Tax	B2B & B2C	01/07/2019
Rhode Island	7%	Sales Tax	B2B & B2C	19/12/2019
South Carolina	6%	Sales Tax	B2B & B2C	19/12/2019
South Dakota	4.5%	Sales Tax	B2B & B2C	18/12/2019
Tennessee	7%	Sales Tax	B2B & B2C	19/12/2019
Texas	8.00%	Sales Tax	B2B & B2C	21/06/2018
Utah	4.85%	Sales Tax	B2B & B2C	19/12/2019
Vermont	6%	Sales Tax	B2C	19/12/2019
Washington	6.5%	Sales Tax	B2B & B2C	01/10/2018
West Virginia	6%	Sales Tax	B2B & B2C	18/12/2019
Wisconsin	5%	Sales Tax	B2B & B2C	18/12/2019
Wyoming	4%	Sales Tax	B2B & B2C	18/12/2019

* 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 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 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.