Merchant of Record

Polar is building a platform to empower open source maintainers to offer value-add content, services and subscriptions to their backers. Going beyond donations and creating more powerful & beneficial opportunities within the open source ecosystem.

Sales tax & EU VAT

However, such value-add services are often subject to international taxation. Calculating, capturing and remitting them to separate governmental agencies is almost an impossible overhead and ask from individual maintainers. Polar is therefore proud to take this on and to manage value-add taxes for subscriptions offered by maintainers.

How it works (Example)

1. A backer from Sweden wants to subscribe to your $10/month tier.
2. You've setup the $10/month tier to include premium posts (tax applicable) & other custom benefits. Given the choice of benefits and their tax settings, Polar recognizes the tier is subject to taxation.
3. Backer goes to checkout. Automatically, 25% (Swedish VAT) is applied & shown. They see that the subscription is $10 and $2.5 VAT (25%), i.e $12.5 total per month.
4. Once they subscribe, payments are made to Polar first. We capture the $2.5 VAT, deduct Polar & Stripe fees and transfer the rest directly to your connected Stripe account (setup in Polar dashboard).
5. Polar then declares & remits all VAT in accordance with EU VAT legislation via our Irish OSS VAT registration. We deal with the quarterly reporting, declaration & remittances as the merchant on record.

• You are still in charge of personal income tax filings and witholdings of the money you receive from Polar. Polar will only capture, report and remit value-add taxes. Please check with your local authorities or tax professionals for any local filing requirements you may have personally as a creator.

• International taxes is a complex and evolving topic. Polar works with tax professionals & lawyers and our best efforts to stay up-to-date, but will continuously need to adapt the below based on evolving legislation, surpassing local thresholds (see Registrations below), and benefits offered.

• In case we surpass local value-add tax thresholds in certain markets we're not registered in yet (see Polar Registrations you already have subscribers in, we will notify you & the backer ahead of the upcoming billing cycle. The backer would need to opt-in to the increased monthly cost - increasing chances of churn. We will therefore also offer you the chance to opt-in for Polar to deduct the necessary taxes from impacted subscriptions instead if you'd prefer. Of course, new subscriptions would automatically have the taxes applied at the point of subscribing.

Polar Tax Registrations

Currently, Polar has the following registrations:

1. US (Delaware). Polar Software Inc. is incorporated here.
2. EU VAT (Ireland OSS VAT)
3. UK VAT. Registration in progress

Many states and countries only require value-add taxation after a certain threshold. Polar does not apply value-add taxes until such thresholds are reached and will continue to monitor, expand and register for local taxation based on their legislations to the best of our abilities.

Note: Each registration comes at both an upfront and ongoing cost. Polar does not guarantee to support all countries short-term and will focus expansion on markets with the most demand and potential for maintainers.