TCommerce: Sales Tax and VAT Solution

Optionally, you can enter your tax registration number, if you have one. A tax registration number is a unique identifier issued by your government tax authority to individuals or entities for the purpose of tracking and managing tax obligations. If you do not enter your tax registration number, the option I am not registered for tax will be selected by default.

To enter your tax registration number:

1. From your Admin Dashboard, select Settings
2. Select the Tax tab
3. Under the Sales tax in the US and Canada section, click on Enter tax registration
4. Select I am registered for tax or I am not registered for tax
5. If you are registered for tax, enter your EIN/TIN in the field provided
6. Click Save Tax Registration

US Businesses: Have trouble verifying your EIN? Check that the account’s company name and EIN match exactly what’s shown on the company’s SS-4 confirmation letter or Letter 147c. Learn more about IRS documentation and TIN.
If you are unable to update your account details or require further assistance, please contact Support.

Tax categories are used during checkout to determine whether tax is applicable in the jurisdiction where a student is located and if so, what tax should be collected. The same product tax category can have a different tax rate (or no tax at all), depending on the student’s jurisdiction.

Learn more about product categories here.

If a seller (you) provided a relevant tax registration from the same jurisdiction, VAT will be calculated for students located in the following countries:

• Austria
• Belgium
• Bulgaria
• Croatia
• Czech Republic
• Cyprus
• Germany
• Estonia
• Finland
• France
• Denmark
• Greece
• Hungary
• Ireland
• Italy
• Latvia
• Lithuania
• Luxembourg
• Malta
• Netherlands
• Poland
• Portugal
• Romania
• Slovakia
• Slovenia
• Spain
• Sweden
• The United Kingdom

To enable VAT in the UK and the EU:

1. From your Admin Dashboard, select Settings
2. Select the Tax tab
3. Under the VAT in the UK and EU section, toggle the setting Charge VAT on sales in the UK and EU on

When the VAT Solution is enabled, buyers in the UK and the EU will see VAT and billing information details fields (regardless if the full address collection feature is on), and will be able to input their VAT number.

Provide the address of your business head office to ensure that the tax is accurately calculated on your sales. A tax address is required for VAT calculations.

To add your tax address:

1. From your Admin Dashboard, select Settings
2. Select the Tax tab
3. Under the VAT in the UK and EU section, find the Tax settings section
4. Click on Add next to Tax Address
5. Enter your business head office address
6. Click Save

In the same section, you will see the option to set a default product tax code - this section is optional and we recommend leaving it blank. If you decide to set the default tax code, we recommend choosing Digital Audio Visual Works - streamed - subscription - with conditional rights.

Each product tax code (as set up in Step 4) will override this default setting, so we recommend leaving it blank. 

To add your tax registration number:

1. From your Admin Dashboard, select Settings
2. Select the Tax tab
3. Under the VAT in the UK and EU section, find the Tax Registration section
4. Select Add registration
5. Select the country in which you are registered
6. Select your registration type
   You must confirm your tax registration type with your tax authority. Our support team is unable to provide information about which registration type is applicable in your case.
7. Click Add registration
8. Repeat steps 4-7 for each country you are registered in
9. Under the VAT in the UK and EU section, find the Tax Number section
10. Click on Add tax number
11. Select the Tax number type
12. Input a tax number for a country you selected in steps 4-7
13. Click Save tax number
14. Repeat steps 10-13 for each country you are registered in

Tax categories are used during checkout to determine whether tax is applicable in the jurisdiction where a student is located and if so, what tax should be collected. The same product tax category can have a different tax rate (or no tax at all), depending on the student’s jurisdiction.

Learn more about product categories here.

Students can update their location information during the checkout process when purchasing a new product on your site. You can also update the student location information by following these steps:

1. From your Admin Dashboard, select Users
2. Select All Users
3. Find a student, whose location information you want to update
4. Select the Details tab
5. Click Edit
6. Update address information
7. Click Save

If your student updates their location information while they have an active subscription, the new tax rate will apply to future payments only. No refund or adjustment will be made for past transactions.

Tax laws in the United States and Canada require Thinkific and other web platforms like ours to take on the responsibility of ensuring the collection and remittance of sales tax to the relevant tax authority on behalf of marketplace sellers (in our case, Creators). As a result, Thinkific  ensures that sales tax is collected and remitted on behalf of our Creators for sales made in these jurisdictions.

The main reason for this requirement is to promote fair competition in the online marketplace and simplify the sales tax collection process for all parties involved including sellers like you. By taking on the responsibility of collecting and remitting sales taxes on your behalf, Thinkific helps ensure compliance with tax regulations and reduces the administrative burden on you.

The reason why we are collecting tax on your sales is that we meet the economic nexus thresholds in all US and Canadian tax jurisdictions.

Yes, Thinkific will calculate, collect, and remit taxes on sales in the United States and Canada on your behalf, regardless of whether you are registered to collect taxes yourself or if you have never done this before.

No, you do not need to register to collect taxes in the United States and Canada, as Thinkific is already registered in all jurisdictions where the Sales tax is collected. Thinkific will be remitting any tax collected on sales made in these jurisdictions, under our registration numbers, as the platform that facilitated these sales. You might need to register to collect taxes in jurisdictions outside of the United States and Canada (e.g. the UK or the EU)

The sales tax amount collected on sales in the US and Canada will be withheld by Thinkific (therefore not included in the payout to the Creator) and paid by Thinkific, directly to the applicable Tax Authority.

Taxes get remitted differently, depending on the tax authority. In some jurisdictions, this might be monthly, in others, quarterly, bi-annually, or annually.

We can’t provide you with the actual tax return, because this is Thinkific’s company tax return, but you can see a breakdown of the taxes collected and remitted in your Thinkific admin account. Go to Sales, and click on the Transaction Report.

If you will be reporting a tax return regardless (for example, if you operate in Canada), you would report Total Sales in your tax return, but you would not report/remit any taxes collected on the sales made on TCommerce. You can add a note in your tax return indicating that "sales taxes for transactions made via a platform operator are collected and remitted by the platform". This will clarify to the tax authority why there is a difference between your total sales, and tax remitted.

On sales made by students in the United States and Canada, during the checkout flow, we use the following to determine whether tax is applicable, and if so, what tax must be collected from your students:

• The student's location
  Determined by the Country and Zip/Postal code entered by the student during the checkout. This is used by us to identify which tax jurisdiction is involved in this sale and therefore which tax regulations must apply to this sale.
• The product tax classifications
  Determined by the tax category assigned to each product, which can be found in Tax Settings. This is used by us to understand the tax treatment specific to the product, given the tax jurisdiction involved.
• The student's tax exemption status
  Provided the student has been verified as tax-exempt, no tax will be collected on their purchases. Students can claim a tax exemption by providing proof of their exemption, learn more about it here.

This is best illustrated through examples. Let’s assume in these examples, you are selling the same product, which is classified as an Online Course/Bundle, to the students listed below:

Note these are the examples only - the actual tax rates and rules might be different or might change.

1. Student A who's located in Ontario, Canada
   In Ontario, online courses are considered taxable and in Ontario, HST is collected on taxable purchases. So the standard 13% HST would be added to this sale during checkout and collected from Student A.
2. Student B who's located in NY, US
   In NY however, online courses are considered non-taxable so no tax would be expected on this sale and therefore, no tax will be added to or collected from Student B when they complete their purchase.
3. Student C who's located in Oregon, US
   In Oregon, sales tax does not apply at all, so no tax will be added to or collected from Student C when they complete their purchase.
4. Student D who's located in British Columbia, Canada
   In British Columbia, online courses are generally considered taxable so PST would be collected on this sale. The federal government of Canada also considers online courses taxable. This means that 5% GST and 7% BC PST would be added to this sale at checkout, and collected from Student D.
5. Student E who's located in Durham, North Carolina, USA
   In North Carolina, online courses are considered taxable and given the student’s location in Durham, a State, County, and District tax will apply. The sum of these three taxes will therefore be collected from Student E when they complete their purchase.

Sales taxes are calculated and applied (if required by the applicable tax authority) on:

• All sales made on TCommerce after TCommerce was enabled (with or without Order Bumps or Coupons)
• All product types (courses, communities, memberships, digital downloads, coaching, webinars, bundles, etc)
• All price types (one-time payments, subscriptions, and payment plans)
• Transactions made using all TCommerce payment methods (credit card, Digital wallets, Buy Now Pay Later, or any additional payment methods)
• Transactions made by students located in the United States and Canada

Sales taxes will not be applied to:

• Subscriptions and payment plans started before TCommerce was enabled
• Purchases made by students located outside of the United States and Canada
  Note that VAT might apply on sales made in the UK and the EU, if VAT is enabled and tax registration is provided. Learn more about the VAT Solution here.
• Zero-dollar transactions (free products, free previews, or orders where a 100% off coupon was applied)
• Products that are deemed non-taxable, as defined by the jurisdiction in which the sale is made and by the tax category applied to the product

Depends on the solution that applies.

For purchases made by students in the United States and Canada, the sales tax charge is applied on top of the price of the product.

For example: you sell a course for $100 and its product category is Online course/bundle. Your student is located in a state where products marked as Online course/bundle are taxed at 5%. This student's total will be $105, which consists of $100 course price and $5 sales tax. Note that this is an example only.

For purchases made by students in the UK and the EU, the tax is included in the product price.

For example: you sell a course for €100 and its product category is Online course/bundle. Your student is located in a country where products marked as Online course/bundle are taxed at 20%. This student's total will be €100, you will receive €100 minus applicable fees, but your tax liability will be €16.67 (i.e. 20% of €83.33). Note that this is an example only.

For purchases made by students in the United States and Canada, Affiliate and Revenue partner commission is calculated on the payment amount, less any tax that might have been added to this. This ensures that commission is not earned on the tax portion of the payment. For example, if a 10% commission is to be earned on a product priced at $100, and $5 in tax is added to this payment, the commission to be paid to the Affiliate or Revenue partner is calculated as 10% of $100.

When you provide a full or partial refund, the associated tax will be refunded to the student as well. In the case of a full refund, the full tax charge is refunded. In the case of a partial refund, only the proportional amount of the tax charge is refunded.
For example, a student buys a $100 course and is charged a $6 tax. If you decide to provide a partial refund of 50%, your student will receive 50% of the tax charge as well. In this case, they will receive 50% of a $6 tax charge, i.e. $3.

No, this Sales Tax Solution is turned on by default for all TCommerce customers and it is not possible to opt out. New tax rules applicable in the US and Canada require marketplaces to take on the responsibility of collecting and remitting sales tax on behalf of marketplace sellers, who use their platform to sell. This means that as a marketplace seller, you no longer have to worry about collecting and remitting sales tax yourself, on those sales made through the marketplace, which can simplify your operations.

The tax is calculated based on the student's location, not the location of the seller. If a student lives in a state with no sales tax or the sales tax does not apply to the product they are purchasing, they will see a tax rate of 0%.

In many jurisdictions, purchases that charities/non-profits make are sales tax exempt, however sales that charities/non-profits make are generally not sales tax exempt. A charity/non-profit must generally charge sales tax on its invoices. If you have received tax advice that your business is tax-exempt from charging sales tax, GST or VAT, please send us your tax exemption certificate and we will review it. For more information, refer to the Creator Sales Tax Guide.

On sales made by students in the UK/the EU, during the checkout flow, we use the following to determine whether tax is applicable, and if so, what's the calculated tax rate, and who bears responsibility for the tax:

• The student's location
  Determined by the address entered by the student during the checkout. This is used by us to identify which tax jurisdiction is involved in this sale, whether you have a tax registration in this jurisdiction, and therefore which tax regulations must apply to this sale.
• The product tax classifications
  Determined by the tax category assigned to each product, which can be found in Tax Settings. This is used by us to understand the tax treatment specific to the product, given the tax jurisdiction involved.
• Buyer’s VAT registration
  If a buyer has provided their VAT registration number for reverse charging (see above), the tax responsibility will shift from the seller to the buyer. Buyers can provide their VAT registration number for reverse charging by following these instructions.

This is best illustrated through examples. Let’s assume in these examples, you are selling the same product, which is classified as an Online Course/Bundle, you are registered for VAT in France and Germany, and you are selling to the students listed below:

Note these are the examples only - the actual tax rates and rules might be different or might change.

1. Student F who's located in Paris, France
   Let's assume that in France, online courses are considered taxable. Since you have provided tax registration information for France, the system would calculate the VAT of 20% which is already included in the product price.
2. Student G who's located in Berlin, Germany
   Let's assume that online courses are considered non-taxable in Germany so a VAT of 0% would be expected and calculated on this sale, even if you are registered for VAT in Germany.
3. Student H who's located in London, the United Kingdom
   Let's assume that in the UK, online courses are considered taxable. However, since you have not provided tax registration information for the UK, the system would calculate the VAT of 0%.
4. Student I who's located in Paris, France and provided their own VAT number
   Let's assume that in France, online courses are considered taxable. Since you have provided tax registration information for France, the VAT should be calculated on the sale. However, since the buyer has provided their own VAT number for reverse charging, the responsibility shifts to the buyer. 

Value Added Tax (when enabled) is calculated and applied on:

• All sales made on TCommerce after the VAT Solution was enabled (with or without Order Bumps or Coupons)
• All product types (courses, communities, memberships, digital downloads, coaching, webinars, bundles, etc)
• All price types (one-time payments, subscriptions, and payment plans)
• Transactions made using all TCommerce payment methods (credit card, Digital wallets, Buy Now Pay Later, or any additional payment methods)
• Transactions made by students located in the UK and the EU jurisdiction where a seller’s (your) tax registration is provided

Value Added Tax will not be calculated on and applied to:

• Subscriptions and payment plans started before the VAT Solution was enabled
• Purchases made by students located outside of the UK, and the EU
• Purchases made by buyers located in the UK and the EU if the seller has not provided their own tax registrations in those regions
  Note that Sales Tax will apply on sales made in the US and Canada. Learn more about it here.
• Zero-dollar transactions (free products, free previews, or orders where a 100% off coupon was applied)
• Products that are deemed non-taxable, as defined by the jurisdiction in which the sale is made and by the tax category applied to the product

Depends on the solution that applies.

For sales made by students in the UK and the EU, the tax is included in the product price.

For example: you sell a course for €100 and its product category is Online course/bundle. Your student is located in a country where products marked as Online course/bundle are taxed at 20%. This student's total will be €100, you will receive €100 minus applicable fees, but your tax liability will be €16.67 (i.e. 20% of €83.33). Note that this is an example only.

For sales made by students in the United States and Canada, the tax charge is applied on top of the price of the product.

For example: you sell a course for $100 and its product category is Online course/bundle. Your student is located in a state where products marked as Online course/bundle are taxed at 5%. This student's total will be $105, which consists of a $100 course price and $5 sales tax. Note that this is an example only.

For purchases made by students in the UK and the EU, Affiliate and Revenue partner commission will be calculated against the total amount paid by the buyer. For example, if a 10% commission is to be earned on a product priced at €100, and the calculated VAT is €16.67, the commission to be paid to the Affiliate or Revenue partner is calculated as 10% of €100.

When you provide a full or partial refund, the associated tax portion is included in the refund, as the VAT included in the product price.

Note that the VAT is included in product price shown at the checkout, so the total includes the product price AND the VAT portion that is based on that price.

For example, if your product price is €100 and the applicable VAT is 20%, your tax liability is €16.67, because €16.67 is 20% of €83.37 (the amount after the tax obligation).

No. For purchases made in the UK and the EU, tax is calculated (inclusive of the product list price) and collected and sent to you as part of your Thinkific Payments payouts, but it is your responsibility to remit it to the relevant tax authority (i.e. send collected taxes to the relevant authorities).

For purchases made in the UK and the EU, VAT is calculated (inclusive of the product list price), but it is your responsibility to remit it to the relevant tax authority (i.e. send collected taxes to the relevant authorities). The VAT Solution, however, provides tax reports where you can find the calculated tax obligation in the EU and the UK. You can download the tax report by following the instructions here. To complete the process of remitting the VAT you collected, please refer to the instructions provided by relevant tax authorities.

No, we do not include tax threshold monitoring at this time. You need to monitor sales on your own, based on your business' total sales, including any sales you made outside of Thinkific.

Yes, you can turn off the VAT Solution by turning the toggle off (go to Settings > Tax > VAT in EU and UK). When the VAT Solution is turned off:

• VAT will not be calculated on new payments and subscriptions that start or are made by students in the UL and the EU after the solution is turned off
• VAT will continue to be calculated on subscriptions and payment plans that are were started before the solution was turned off

If you do not want to turn the VAT Solution off but your tax registration in the UK or a EU jurisdiction has ended, you can mark it as such. To do that:

1. From your Admin Dashboard, select Settings
2. Select the Tax tab
3. Under the VAT in the UK and EU section, find the Tax Registration section
4. Click on the three dots next to the registration you want to end
5. Click End registraton

If your product falls under two or more categories, consider the bases of the sale when selecting the appropriate category. For example, if your main offering is a course with live lessons (that's the bases) and community access is the add-on, you can select the Online course/bundle with live lesson category. If it is community access (that's the basis) and the live event is the add-on, you can select the Community access category.

This is an example and a suggestion only and not professional tax advice. If you are unsure what category your products fall under, please contact a tax professional. Our Support team is unable to offer legal or tax advice.

Yes. When duplicating a course or bundle, the PTC defined for the product being duplicated will also apply to the new duplicate product.

Both Sales Tax and VAT are calculated on the final price of the product. This means that if a coupon is applied at checkout, and a discount is awarded, the tax due is calculated after this discount has been applied.

For example, if your student applies a 50% off coupon to the $100 course, the tax will be calculated based on the price of $50 ($100-50%).

As orders made through Paypal are processed outside of Thinkific Payments, the tax is not collected on Paypal payments.

Wherever applicable, the tax will apply to gift or group order purchases. The tax will be calculated the same way it is calculated for regular purchases, using the above criteria. The tax will not apply to the gift or seat redemptions, as those are $0 transactions.