Recently the US have changed their sales tax legislation so that sales tax must be paid by all companies at state level, even if you do not have an economic nexus within the US (for more information please read our blog). Paddle has now completed our registration for sales tax due to this and will begin charging a variable sales tax amount (depending on each state) on all purchases made from buyers located within the US going forward. For reference, the sales tax can range anywhere from 0% to 9% depending on each state.
As of today, December 18th 2019, we have started our initial rollout of sales tax in South Dakota, West Virginia, Maine, Wyoming and Nebraska, before rolling out to all applicable states.
How this affects you:
If your current vendor settings are set to have VAT excluded from the price of your products, we will start charging your customers from these US states an increased price on the checkout. You will need to make sure this matches any prices you have listed on your website, if appropriate, but do note that customers from the US are used to having the price during checkout increase, as typically sales in the US are always displayed excluding sales tax. Also, your existing subscriptions will have their recurring cost increased to accommodate the new tax, resulting in your customers paying more for their subscriptions.
If your current vendor settings are set to have VAT included in the price of your products, we will start deducting the sales tax amount from your sales in the US. This includes existing subscriptions. You only need to take action if you wish to adjust your product pricing to ensure that your earnings remain the same.
If you have any questions, you can get in touch with our team via email@example.com or simply open the support icon to start a conversation.