KickstarterForum.org

[diver]

Greetings,

My question concerns VAT for EU based backers. My campaign is registered in France. Thus, I have to collect a 20% VAT from all EU based backers. I have seen other EU based projects charging a VAT to their EU backers. They indicated for each pledge ''European Union backers will be charged 20% VAT i.e. € XX incl. VAT".

I contacted Kickstarter to ask if they apply charges to the VAT. As a reply, they told me to refer to fees their pricing policy.

If you are an EU based project founder, was a fee collected by Kickstarter and the payment processor on the VAT you charged to your EU backers?

I don’t know if the VAT should be included in the targeted funding goal, or if it is something that is separated from it.

Let's say I have to raise EUR 10,000. If this funding goal does not include the 20% VAT from my EU backers, that's fine. It’s hard to predict how many EU backers can support a project. If you include the VAT to your funding goal but have more EU backers than your initial estimation, you might be in trouble, cash-wise.

Thanks in advance for your help.

[nomlinz]

Hey diver -

If you add the 20% VAT charge to your crowdfunding reward pricing, then Kickstarter will still take their 5% fees and Stripe will still take their 3-5% processing fees from that.

What other creators have done is one of the following:
- increase your reward pricing to cover those charges. This might make your project less attractive to backers.
- include those VAT charges into your cost projections and cover them yourself. This will be a big hit to your bottom line.
- work with a third-party pledge management platform (like BackerKit) to charge only those in the EU those VAT charges. Remember, the pledge managers will still take a percentage, albeit a slightly smaller percentage.

For additional details, Jamey from Stonemaier Games has written in detail about how he gets his board games shipped worldwide. Although you might not be launching a board game, it's still worth understanding the rules, logistics and who you might be able to partner with in order to decrease those costs.

I'd recommend you start by reading theses:
1. https://stonemaiergames.com/lessons-learned-insights-mistakes-and-solutions-for-offering-worldwide-shipping-on-kickstarter/
2. https://stonemaiergames.com/how-to-provide-free-shipping-worldwide-on-kickstarter-a-comprehensive-guide/
3. https://stonemaiergames.com/5-shipping-partners-in-the-eu-for-kickstarter-reward-fulfillment/

Best of luck!

[diver]

Hi Nomlinz,

Thanks for taking the time to reply to my questions and for sharing great resources with me. I have a question regarding what I see is as the best option you suggested to me.

work with a third-party pledge management platform (like BackerKit) to charge only those in the EU those VAT charges.

.

If I got it right, when working with a pledge manager such as BackerKit, the VAT will be charged independently from Kickstarter. Thus, I do not need to include the VAT in my Kickstarter funding goal. Is that correct?

I like this option, as I do not want to make non-EU backers pay a ''hidden'' VAT by including this VAT to all rewards. It will lower the attractiveness of my campaign.

Thanks in advance and have a great Sunday.

Cheers,
Brice

[nomlinz]

Hey Brice -

Yes, if you use BackerKit (or CrowdOx or anything else similar) the VAT will be charged independently from Kickstarter.

In terms of charging people on crowdfunding, you have the option to charge different shipping prices to backers around the world. As such, you do have the option to increase the price of shipping for Europe backers to cover VAT.

Whatever option you decide, please do be transparent with your backers as that will help create a group of loyal fans for you!

Best of luck with your launch!

[diver]

Dear Nomlinz,

Thank you so much for your kind reply and explanation.

I am planning to offer free shipping to my backers. Thus, I can't use the shipping fee as a way to cover the VAT.

Based on many comments I have read from backers of various projects, free shipping is always something appreciated.

I have set up a call with BakerKit to discuss their services.

Cheers!

Edit: perhaps I could use the shipping option and convert it into the VAT. This "shipping fee" would be only charged to EU based backers.

[nomlinz]

Hey Brice -

You can definitely use the shipping option and let them know that it's actually VAT

Free shipping is appreciated, but don't go into deep losses trying to offer this. Campaigns usually increase their prices to cover this (while still making sure that their prices work for their particular niche). If you have a unique product and have found the absolute right audience for it (this is key), a little bit of shipping won't derail their plans to contribute to your project. I've also been spoiled by Amazon's "free 2-day shipping", but still pay for shipping for projects that I'm totally excited about.

Keep us all updated in what you end up deciding to do!

[diver]

Hi Nomlinz,

Sorry for the late reply. Thanks for getting back to me.

I will launch a watch on Kickstarter. Almost all watch projects have offered free shipping. When they don't, I have seen people complain about it. The most successful watch projects on Kickstarter always offered free shipping. I am afraid my project might lose potential backers if no free shipping.

Best regards,
Brice

[nomlinz]

It's true people are spoiled by Amazon "free" 2-day shipping. However, if you've built a crowd that really wants your project, a few dollars for shipping won't deter the majority of people from backing! Keep us updated, Brice!

[Zwuits inc.]

This is a very helpful thread. Thanks for putting up the concerns.


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