Set up Stripe Tax

Complete your Stripe Tax set up in three steps: set an origin address, the default tax codes, and set the location where you’re registered to collect tax. You aren’t charged until you add an active registration and you enable automatic tax on your transactions. You’re only charged for using Stripe Tax on transactions to customers in states or countries where you’re registered to collect tax. If the registration options you’ve selected are either VAT OSS - European Union or Small Seller - European Union, you’re charged on all EU transactions.

Activate Stripe Tax

Go to your settings in the Dashboard and click Tax in the Explore more products section.

To activate Stripe Tax, go to settings in the Dashboard and select Tax.

1. Enter the origin address of your business, which is where your business is located or where you’re shipping goods from.

2. Set default tax codes:

   • Default product tax code: This code represents your product or service in Stripe Tax. We use this if you don’t explicitly specify a tax_code on your products or in product_data on your transactions.
   • Default shipping tax code: This code represents the tax treatment for shipping fees when charged. We use this if you don’t explicitly specify a tax code on a shipping rate in a Checkout session.

3. Add registrations:

   Complete your tax settings by adding a registration for all states and countries where you’re registered to collect tax. If you’ve been processing on Stripe, you’ll see a comparison of your past sales to thresholds for local registrations. We base your progress against state and country thresholds on the default product tax code that you select. You can view this information in the potential registrations section.

You’re now ready to use Stripe Tax directly on invoices and subscriptions in the Dashboard, or by passing automatic_tax[enabled]=true in your Checkout Session.

Adding registrations in Stripe Tax

When setting up Stripe Tax, confirm the states or countries where you’re registered to collect tax—only collect tax where you’re registered or intend to register. You can only add a registration using your Stripe Dashboard in Tax settings.

A registration can take one of three statuses: Active, Scheduled, or Expired.

• An active registration means tax is collected.
• A scheduled registration has a date when it will become active in the future.
• An expired registration was active in the past but no longer collects tax.

Stripe Tax is free until you add an active registration; you’re charged only on volume where you have an active registration. If the registration options you’ve selected are either VAT OSS - European Union or Small Seller - European Union, you’re charged on all EU transactions.

You can either add a registration manually, or through the Potential registration flow. Additionally, you can schedule a registration to begin at a date in the future if you’re planning to register in the future.

When you’ve selected a state or country, you’ll see the local tax rate, specific to the default tax code you set.

Some US states offer a simplified registration for remote sellers and others may require registration at each individual lower level jurisdiction. Review the list below to see how Stripe Tax treats each state and confirm with your tax advisor you’re registered correctly.

• Alabama: Stripe Tax uses the standard sales and sellers use rate, and doesn’t support the remote seller simplified rate.
• Texas: Stripe Tax uses the remote seller simplified rate.
• Colorado: Stripe Tax assumes you’re registered at all local level jurisdictions with economic nexus laws.
• Chicago: Stripe Tax doesn’t support charging tax to buyers located in Chicago unless a registration for Illinois is added.

To collect tax in Canada at a federal level, you only need to add one GST or HST registration—this registration accounts for the collection of both GST and HST. To collect tax at the provincial level, you must explicitly select the provinces where you have registrations.

Canada imposes harmonized sales tax (HST) in five provinces (Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario, and Prince Edward Island) at the federal level. In the other provinces, the federal tax is called goods and services tax (GST) and in four of these (British Columbia, Manitoba, Saskatchewan, and Quebec) a provincial sales tax (PST, RST, or QST) applies in addition to GST.

Monitoring your obligations

Stripe Tax provides insights about your potential tax registration obligations (economic nexus), that is, your potential obligation to register, collect, and remit tax based on your sales into a state or country, even if you don’t have a physical presence.

Under Potential registrations, you can see the list of locations where you haven’t yet added a registration but may be selling into. Stripe Tax also incorporates the taxability of your product, based on your default tax code. You may not need to register if your business only sells nontaxable products into a jurisdiction. Stripe Tax doesn’t show potential registrations for your home country or US state as economic nexus (lack of presence) wouldn’t apply.

You may also see “Unattributed revenue” which happens occasionally when we couldn’t determine a customer’s location (e.g., if you didn’t collect a zip code for a past transaction). Where possible, we break out globally unattributed revenue and US unattributed revenue. For instance, if we were able to determine the customer was in the US (e.g., using an IP address), but didn’t have enough granular information to make an accurate determination, we could categorize that as US unattributed revenue.

For most locations we sum up all revenue received from a location within a time window defined by local tax rules. There are a few exceptions to this:

• EU Small Seller - if your business is registered as an EU Small Seller we additionally calculate total revenue from all EU member states excluding the country where your business is located.
• Switzerland - if your business has any transactions from Switzerland we calculate global volume from all countries including Switzerland.

Potential registrations has two groupings:

1. Threshold exceeded: where your estimated sales or transactions are over the jurisdiction’s threshold and your business should likely register for tax.
2. To monitor: where you haven’t exceeded the threshold yet, but you do have buyers located in that market. We’ll surface a percent-to-threshold to help you determine when you should register.

To learn more about an individual state or country comparison, click Review, which contains information about the threshold itself and your latest sales.

Each jurisdiction may 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. Stripe Tax supports the following calculation windows and methodology. You can see how each individual jurisdiction calculates economic nexus as part of the Review flow.

• 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.