Do I have to collect taxes?
Effective September 1, 2020, Vimeo OTT will collect and remit US state sales tax on your behalf for all transactions (subscriptions, one-time payments, and renewals) for both new and existing customers. Customers in states where Vimeo has nexus* will be charged tax based on local laws, meaning you no longer need to calculate or file sales tax yourself.
- *What is Nexus?: Nexus describes the amount and degree of business activity that must be present before a state can tax an entity’s income, or for taxes on sales within the state. If a taxpayer has nexus in a particular state, the taxpayer must pay and collect/pay sales taxes in that state and pay income tax on income generated in that state.
We will also be collecting and filing international taxes for certain countries, in addition to countries where we had already been collecting and remitting VAT.
Once this change is in effect, you can see how much tax and VAT was collected and remitted by checking your statements (Settings > Billing > select a statement). You can also adjust the pricing of your product by navigating to Products > select the product > Pricing; note that only new customers will be impacted by a price change.
As of January 1, 2015, European VAT laws changed with respect to digital goods. VAT in these cases is calculated based on the location of the end-user (customer purchasing your content). Vimeo OTT will collect and remit this VAT on digital goods on your behalf.
How do I calculate the taxes I owe?
From now until September 1, 2020, you will still need to consider tax and VAT when pricing your product. Once you’ve determined that you need to collect sales tax, the next step is to build that tax into your product’s pricing. Vimeo does not add sales tax onto the product price for you but instead provides you with the necessary information to calculate your own taxes based on the geographic location of your customers. Buyers are always charged the amount that you set so taxes will need to be netted out of that gross price.
If you set your product price at $10, your buyers will always pay $10, and you receive $8.50 for every sale. In the state without taxes, the sale price is $10. In the state with a 20% tax rate, you should set aside $2 for later remittance based on a pre-tax price of $8. While Vimeo OTT does not collect tax for you, we do provide a geographic breakdown of your sales based on the state of purchase (in the U.S.) and country of purchase (outside the U.S.).
Every month, Vimeo OTT delivers the money from your sales to your bank account. At the end of the year (or more frequently depending on your tax professional's advice), you should send the money that was collected as sales tax to your state's filing office. This process is known as remittance. You can pay the taxes collected directly to each state, or use a tax remittal service.