What is Steady from a tax and legal perspective?
Find out about Steady's legal relationship to creators.
What Steady is
Simply put, creators sell their memberships to Steady, and Steady sells them to members under its own name and own invoice. Steady is the buyer or distributor, and creators are the supplier, for taxation purposes.
For that reason, Steady includes Value-Added Tax (VAT) in the amount it charges members. In Germany VAT is 19% (as of April 2017). Therefore, a €10 plan contains €1.60 VAT.
🤓 Read more: What is Steady? (Opens in a new window)
What Steady is not
1. Steady is not a payment provider through which creators can sell their memberships directly to customers. Creators that wish to use such a platform must undertake much more work themselves, such as handling all customer invoices.
2. Steady is not an agent that sells memberships for creators under another name and invoice. Such activity is considered a financial service and involves handling money similar to a bank, which Steady does not do. This would require a difficult and expensive process of applying for approval from the German financial regulator BaFin. And it would create more work for creators to deal with their customers.
3. Steady is not a service that creators purchase and receive an invoice for. Steady does not include service charges for creators on its invoices, and therefore does not add VAT. Steady's revenue comes indirectly from the reduced amount received by creators.
How does the sale of memberships via Steady work from a tax and legal perspective?
In order to reduce the creator's hassle with invoices, correct taxation and other details, Steady on-sells memberships from creators.
To be able to sell memberships, Steady first buys a license from the creators. In exchange for this license, creators receive a membership payment from Steady (after the deduction of our fees (Opens in a new window)). These payments are sent via PayPal and are detailed in a monthly statement (Opens in a new window).
For tax purposes, the monthly statement is similar to an invoice that creators would otherwise send. The difference is that Steady prepares the income statement for the creator (because Steady has the payment data). The income statement includes the net revenue owed to the creator, and the creator's VAT rate (either 0%, 7% or 19% in Germany).
Please note: for creators based outside of Germany, and especially those in the EU, the reverse charge mechanism applies. Please consult with your tax advisore for more information.
Example Calculation (for creators based in Germany):
Steady sells 10 memberships for €10 each.
5 paid via PayPal
5 paid via bank transfer
The creator's registered VAT rate is 19%.
Gross revenue for Steady:
€100 gross, including €16 VAT
Net revenue for Steady:
€84 net (after VAT is deducted)
Payment transaction costs:
€2.70 for PayPal (€0.35 plus 1.9% per membership)
€0.50 for bank transfers (1% of €50)
= €3.20 net
Net revenue for creator:
Additional VAT to creator:
Gross payment to creator:
€84.25 (including VAT)
Ready to try Steady?