How We’re Handling VAT at Gumroad

The EU recently made a major change to its VAT regulations that requires businesses to pay VAT according to the locations of consumers. This was meant mainly for large companies that have been avoiding higher taxes by establishing presences in places with lower VAT. Unfortunately, the regulation change also put a burden on independent creators who sell digital products to customers in Europe.

We’ve talked a lot in the past about how we approach building Gumroad: We ask ourselves what creators are spending time on that isn’t making things, and then we figure out how to do those things for them.

We are tackling VAT in the same way. Going forward, this is what creators on Gumroad need to do to properly handle VAT for their digital products:

Go back to making awesome stuff.

In other words, we’re on it. Gumroad will collect VAT as required and remit it to the EU. You won’t need to fill out any forms, register for anything, or send anything out. Your (EU-based) customers, will see (and pay) the added VAT on their purchases.

These changes were neither easy nor cheap, but it was crucial to us to make this as smooth and invisible as possible. Handling VAT will cost us approximately 1% of each transaction. We’ve decided it is important to absorb that cost so there will be no change to our 5% + 25¢ fee.

We like how easy our platform is to use and how low our fees are, and we plan to keep things that way for as long as possible.

As always, let us know if you have any questions about these changes! We’re here to help.