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What Does Clickbank Do With The VAT It Charges My Customers?

by IMstudier
13 replies
Clickbank charges my European customers about £4 VAT per purchase of my ebook. (I'm in the UK)

Is this something automatic or can I opt out of it?

Also, where does this go and is a tax on Clickbank's earnings or mine?

Does it affect how I should fill out my self-employed tax return at the end of the year?

Hopefully some UK warriors can advise me on this. Many thanks!
#charges #clickbank #customers #vat
  • Profile picture of the author KirkMcD
    It goes to whatever country the product was purchased in.
    No you can't opt out of them collecting it. Otherwise you would have to collect it and remit it to the government.

    It's not income to you or clickbank.
    What do you report as earnings? Whatever CB says they paid you.
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    • Profile picture of the author IMstudier
      Thanks!

      So I can ignore this and simply report what CB pays me?
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      • Profile picture of the author seasoned
        Originally Posted by IMstudier View Post

        Thanks!

        So I can ignore this and simply report what CB pays me?
        YEAH! Clickbank's OFFICIAL position is basically the VENDOR/SELLER! YOU, as the real vendor basically just get a commission, and THAT is what you pay tax on. You don't have to worry about the VAT, because it is ALREADY paid by clickbank.

        ODD though, since I believe VAT is public over there and the term VAT is understood in every applicable country. I would think you would be used to the idea. Since they want to be the VENDOR/etc... they are basically REQUIRED to collect and pay the vat. Were that NOT the case, YOU would have to.

        BTW I'm sure VAT THERE works like sales taxes do in the US. It would STILL not affect your "self employed tax return"! You would simply have OTHER tax returns(for VAT and associated taxes ONLY) that would have to be sent to applicable governments. And such returns specify what you OWE, so the money would also be SENT.

        BTW in the US, sales tax is not specified and often not even referred to. It is just a given. And even different cities may have different sales taxes. Some states have NO tax and even some that DO sometimes have "tax holidays". You can shop, during such a holiday, and pay NO sales taxes. But, as I recall, it is different in Europe.

        Steve
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  • Profile picture of the author Alan Petersen
    That's one of the reason I like using ClickBank even though their fees are higher they handle the tax stuff.

    ClickBank is basically the final retailer so they have to collect the necessary taxes required.

    Luckily in the U.S. digital products don't get dinged for sales tax yet... it's changing. New York now requires this so ClickBank collects sales tax for NY bases merchants selling via ClickBank.

    Wow, VAT % is huge if paying 4 pounds of sales tax for an e-book!
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    • Profile picture of the author Alan Petersen
      Originally Posted by Chris Kent View Post

      Alan, do you or does anyone else know of any other platform that takes care of VAT? I don't need affiliates. I'm just looking for an alternative to Paypal because refunds are rife in the IM niche and I don't wish to offer a guarantee on my IM products.

      I intend to migrate to a position where I am 100% fully compliant. Problem is, I don't know anyone else who takes all this hassle out of VAT who doesn't have a dumb refund policy.

      The only alternative is to make it clear that I can't sell to European customers. That would suck, but I'm prepared to do it.

      Heck, why doesn't Paypal offer this? They are in a prime position to do so!
      Yea that's my main beef of using Clickbank are the folks who use their refund policy to get a freebie.

      Take a look at e-junkie. It's a monthly fee to use them but they're pretty sweet and in the admin dashboard you can select to charge sales and VAT taxes for you. They also protect your download links and even have an affiliate program built in. It's nothing fancy but works nicely.

      E-junkie Shopping Cart for selling downloads & tangible goods

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      • Profile picture of the author Steven Wagenheim
        The VAT goes to pay for Bob King's new Lexus every year.

        ** EDIT ** Check that. I think Brad Wiskirchen is the current CEO.
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      • Profile picture of the author Alan Petersen
        Originally Posted by Chris Kent View Post

        Hey Alan, thanks for that. I was aware that e-junkie had VAT configuration in its dashboard.

        But I presume that is purely for your own purposes? You still have to pay VAT to each European tax authority and I guess you have to register with them too?
        That is my understanding as well. That's why using Clickbank is nice because they handle all of that stuff.

        If you're going to charge for it then you better make sure you're paying out. In the U.S. the state revenue agencies will come down hard on you if you charge customers for sales tax and you don't send it to the state. I'm assuming same thing applies over in Europe.

        Check with an accountant to be sure on all this stuff.
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  • Profile picture of the author spearce000
    VAT on downloads is a grey area. In the UK you have to be VAT registered and charge, collect, and pass on VAT if your turnover is (or is likely to be) £70,000 in a 12 month period. If your turnover is less than that, you don't have to be VAT registered and collect VAT, but you can be if you want to.

    Unlike US sales tax, if you are VAT registered you can reclaim the VAT you pay on goods and services, so even if your turnover is under £70000 you might want to become VAT registered anyway so you can claim the tax back.

    Here's the UK government site that explains all about it:

    HM Revenue & Customs: Introduction to VAT

    It gets more complicated, though....

    Different countries in the EU have different VAT rates and thresholds, so a business registered in (say) France or Germany will have different criteria to a UK registered business.

    Exactly how it works if you're based outside the EU, is a mystery to me. ClickBank may well have a subsidiary based somewhere in the EU which handles all the VAT. In addition to ClickBank, 2checkout.com will charge VAT, and the UK PayPal site has a section where you can set up VAT collection, but you have to pay it to HMRC yourself.
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