Tax for marketplaces
Learn about indirect tax requirements for platforms and marketplaces, and how to enable Stripe Tax to collect tax on transactions when the Connect platform is liable.
Tax requirements for platforms and marketplaces
Many countries and US states require marketplace operators to collect sales tax and VAT on their facilitated sales. The US refers to these businesses as marketplace facilitators, while other regions, such as Europe, might refer to them as deemed sellers.
As a marketplace operator, your tax collection requirements differ depending on the country or state. However, if your electronic interface enables transactions between customers and sellers and you directly or indirectly collect customer payments, you might need to fulfil tax collection responsibilities.
If your business operates a marketplace or platform, you must first determine whether it qualifies as a marketplace facilitator or a deemed seller, then make sure that you maintain tax compliance. If you’re unsure about your business’s tax requirements, consult a tax advisor.
US 1099 tax reporting
Marketplace tax obligations can include both indirect taxes, such as sales tax, VAT and GST, and information reporting obligations, such as US 1099 forms. This guide covers indirect tax collection, filing and reporting with Stripe Tax. To learn when a platform is responsible for filing 1099 forms for connected accounts, see US tax reporting for Connect platforms and Get started with tax reporting.
If your business operates a marketplace and wants to collect tax on sales facilitated through this marketplace, refer to details below to enable Stripe Tax for marketplaces.
Enable Stripe Tax for marketplaces
Stripe Tax enables businesses to calculate, collect, and file indirect taxes in over 100 countries, across hundreds of product categories.
Use this guide if your platform is responsible for collecting, filing and reporting indirect taxes.
- Configure your platform account for tax collection
- (Optional) Assign tax codes to product catalogue
- Integrate tax calculation and collection
- Withhold the collected tax amount
- Access Stripe Tax reports
Since your connected accounts don’t collect or file taxes:
- Their tax status columns (tax settings status, tax threshold status and tax registration status) in your Dashboard appear empty.
- We calculate taxes based on your platform’s head office location, preset tax code, and tax registrations. We don’t use the connected account information for tax purposes.
Configure your platform account for tax collection
To collect taxes, you need the platform account’s tax settings and registrations.
Use the Stripe Dashboard
Use the Stripe API
Assign tax codes to your product catalog
To calculate taxes, Stripe Tax requires that you classify products into tax codes. You can do so by supplying a preset tax code for the platform account, which might be sufficient if you typically sell a single category of items or services.
Additionally, you can map tax codes to each product to give you more control over tax categorisation. You might have to map each product that a seller sets up on your marketplace. You can find a list of supported tax codes from available tax codes or retrieve it from the Stripe Tax Code API.
Integrate tax calculation and collection
You need to integrate with Stripe Tax to estimate taxes as part of your checkout flow.
Payment Links
Payment Links for one-time payments
Payment Links for subscriptions
Checkout
Checkout Sessions for one-time payments
Checkout Sessions for subscriptions
Billing
Subscriptions
Invoicing
Custom flows using the Stripe Tax API
PaymentIntents
Off-Stripe payments
After you implement it, Stripe automatically starts collecting tax in jurisdictions where you have an active registration.
Caution
Independent of the payment APIs, we credit the transaction amount to the connected account. You need to withhold the collected tax amount on the platform because the platform is liable for tax.
Withhold collected tax amount
You must make sure that the tax collected is transferred to your marketplace account, so that you can then remit the tax to relevant jurisdictions.