Monitor your obligations

Stripe Tax provides insights about your potential tax registration obligations (called economic nexus in the US). We help you understand where you might have to register, collect, and remit tax based on your sales into a state or country, even if you don’t have physical presence there. You can also use Stripe to register on your behalf.

How it works

Tax uses your preset tax code and location attribution for each Stripe-processed sale minus refunds to see how your total sales within a given time window compare to tax thresholds in different jurisdictions. Tax uses time windows defined by local tax rules and assumes all sales are B2C unless you have included a VAT ID for your customer. Your obligations might differ if you only sell nontaxable items or make B2B sales. Learn more about when you need to register to collect tax in each location.

Connect

By default, transactions linked to your platform’s connected accounts don’t count toward your platform’s tax registration thresholds. They only count toward the connected accounts’ tax thresholds. To change this:

1. Go to the Connect settings for Sales tax collection.
2. Choose to be held liable for sales made by your connected accounts.

Connected accounts’ transactions with the following charge types are then included in your platform’s threshold monitoring:

Separate charges and transfers without on_behalf_of aren’t included. This is because Stripe can’t know who the liable party for the transfer is. Stripe assumes the settlement party to be the liable entity, which is the Connect Platform.

Exceptions

• We provide insight into the places where you don’t have a physical presence so obligations aren’t monitored for your home US state or country.
• Obligations are only monitored in live mode.
• Application fees that Connect platforms charge don’t count toward the platform’s tax registration thresholds.
• We monitor locations that Stripe Tax supports. Learn more about those locations.
• We don’t monitor transactions that might contribute to exceeding a threshold to collect retail delivery fees.
• We treat obligations for tangible product sales and services the same.
• We can’t differentiate between retail and wholesale sales.
• For Connect platforms liable for sales made by their connected accounts, a location might be marked as undetermined. This means that Stripe lacks the information needed to support you on tax obligations for this location. This can occur if the customer’s location is outside the United States and not in the United Kingdom or European Union with a default PTC of Digital Goods.

Location attribution

Location attribution is an important part of monitoring tax thresholds. To correctly determine your tax obligations, Stripe Tax attributes a location to each processed transaction once per day, adding new resulting transactions to your monitoring threshold in a 24-hour cycle. Location attribution happens even if tax isn’t calculated for the transactions, and it’s a different process from the address validation that we perform to calculate tax. You might not need specific tax rates and precise address information for threshold monitoring purposes, unlike when Stripe calculates and collects tax for transactions.

To attribute a location, Stripe Tax uses available information for that transaction and prefers some information sources to others—some examples are the current customer address, country of the card issuer, and the customer’s IP address.

Stripe Tax uses information in the following order:

1. Stripe Tax validated address: if we calculated tax for the transaction, Stripe Tax already validated the address. We use the same address when calculating the tax threshold.
2. Customer address: property in the Customer object responsible for the transaction. Stripe Tax uses the country, state, and postal code fields to determine a jurisdiction.
3. Address Verification (AVS) postal code: AVS is a service that verifies the authenticity of a transaction by checking if the provided address matches the cardholder’s billing address. If the transaction is successful, Stripe Tax converts a US or Canadian postal code into a state and determines the jurisdiction.
4. Country of the card issuer: Stripe Tax uses the credit card issuer’s bank country to determine a jurisdiction for the transaction. For transactions in the US and Canada, we might also need state information.
5. Payment method: Stripe Tax uses country-specific payment methods to determine the location of a payment. We assume that a transaction through iDeal is from the Netherlands and that a transaction through Giropay is from Germany, for example.
6. Customer’s IP address: as a last resort, we use the customers IP address to determine a jurisdiction.

When Stripe Tax can’t determine the location for a transaction, we group its information under Unattributed revenue. Where possible, we break out globally unattributed revenue and US unattributed revenue. For example, if we’re able to determine the customer is in the US (perhaps by using an IP address) but don’t have enough information to make a granular determination, we categorize that as US unattributed revenue.

Handling unattributed revenue

The table below explains what information is needed for different countries.

Using the Dashboard

See Thresholds to get insights about your potential tax registration obligations.

You can monitor tax obligations in the following categories:

• Exceeded: Where your estimated sales or transactions are over the location’s threshold and your business likely needs to register for tax.
• Monitoring: Where you haven’t exceeded a threshold yet, but you do have buyers located in that market. We’ll provide a percent-to-threshold to help you determine when you might need to register.
• Unattributed: When Stripe Tax isn’t able to determine the location for a transaction, we group its information under this category. Where possible, we break out globally unattributed revenue and US unattributed revenue.

To learn more about an individual state or country comparison, click the overflow menu (), then View details. This page contains information about the threshold itself and your latest sales.

When downloading your transaction data, the is_customer_business and is_customer_taxable fields are included for completeness, but might not be relevant or applicable in all jurisdictions. Learn more about the tax requirements in each of our supported jurisdictions.

If you have questions about your latest sales in a location, send an email to: [email protected].

Time windows

As noted above, each jurisdiction might have a different time window for calculating nexus obligations. For example, some only look at the past calendar month or quarter whereas others use a rolling basis. You can see how each individual jurisdiction calculates economic nexus as part of the Review flow, but in general, Stripe Tax supports the following calculation windows and methodology:

• Previous or current year: Stripe Tax uses the previous or current calendar year to calculate the count and amount of transactions.
• Previous year: Stripe Tax uses the previous calendar year to calculate the count and amount of transactions.
• Rolling year by quarter: Stripe Tax uses the last four full quarters to calculate the count and amount of transactions.
• Rolling 12 months: Stripe Tax uses the last 12 months to calculate the count and amount of transactions.

Stripe Tax API transactions

By default, Stripe Tax monitors all Stripe Tax API transactions. You can choose to exclude your Stripe Tax API transactions by adjusting the API transactions setting in your Tax Settings.

Tax threshold notifications

Stripe Tax notifies you about potential tax obligations (known as economic nexus in the US). We send notifications after you hit a threshold in any location. Stripe sends tax threshold notifications by email, and displays them in the Dashboard to the account owner.

Email notification

We send email notifications from support+updates@stripe.com to the account owner’s email. The email notification includes your account name and links to the monitoring tool and other resources that provide additional information.

Dashboard notification

If you log into the Dashboard as the account owner, you can see notifications. Click the bell icon in the navigation bar to show all of your Dashboard notifications.

Crossing a tax threshold in a single location

Crossing tax thresholds in multiple locations

You can exceed a tax threshold in a single location.

Tax threshold notification preconditions

Stripe only notifies you when you have exceeded a tax threshold based on Stripe’s calculations. To receive tax threshold notifications, you must meet the following requirements:

• You must have opted into Stripe Tax.
• You must not have disabled Stripe Tax notifications.
• You must not have an active live mode tax registration for the location.
• You must not have received any tax threshold notification within the past 7 days.

Tax threshold notification frequency

After you cross a threshold, Stripe sends you a notification within 1 or 2 days. If Stripe sent you a notification in the past 7 days, you receive batched notifications for new threshold status changes a week after the last notification.

Disable tax threshold notifications

If you’re the account owner, you can disable tax threshold notifications by going to the Product updates tab in your communication preferences.