Online creators who develop education content and courses for global audiences are a growing segment of the internet economy. The creator economy industry employs as many as 300 million people worldwide and is valued at $250 billion. And experts predict continued growth. By 2026, the global e-learning industry will be worth nearly $460 billion.

Online creators have limitless reach through social media, websites, and marketplace platforms—whether they’re business owners, entrepreneurs, coaches, creatives, educators, or trainers. The internet economy enables an educator in Canada to teach a course to customers in South Africa, Malaysia, Brazil, and the United States. While growing their businesses, they need to manage the tremendous bureaucracy of complying with nuanced sales tax laws around the world when selling education and learning products online—especially as regulations evolve to catch up with the internet economy.

Tax authorities are implementing new laws that vary depending on the location of the creator and the customer, as well as the form their courses and digital learning products take (prerecorded or live) and any platforms or marketplaces they’re selling on.

This guide breaks down the tax compliance obligations of creators who develop and sell online content, courses, and other learning products. This guide does not focus on physical goods or sponsored services, which are in a different tax category. The majority of this information pertains to creators based in the US and Canada, or creators selling to customers in those countries. Our goal is to help you understand how to comply in a complicated, evolving tax environment—whether you run a business and work with a tax advisor, or are just launching your first online course.

An introduction to US and Canadian tax systems

Canada

Each of the country’s 10 provinces and federal government set all regulations for taxes in Canada. The goods and services tax (GST) applies nationally, and it’s charged in every province. Provincial-level taxes vary widely across the country, although five provinces—New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island—applied the same tax rate and added it to GST to create the harmonized sales tax (HST), which is inclusive of both provincial and federal taxes.

The scope of other provincial sales tax (PST) varies widely. The provincial governments of British Columbia, Manitoba, Quebec, and Saskatchewan all collect their own provincial sales tax at separate rates. Four provinces—Alberta, Northwest Territories, Nunavut, and Yukon—do not apply any provincial sales tax.

United States

In the US, there are no federal-level sales and use taxes. Officials of more than 11,000 tax jurisdictions—which include state, county, district, and local city or towns—each enforce their own regulations. Not only do the laws themselves vary, but the language that officials use to describe the tax laws also vary.

Here’s a breakdown of what terms states use to discuss sales tax:

• General Excise Tax: Hawaii
  
• Gross Receipts Tax: New Mexico
  
• Retailers’ Occupation Tax: Illinois
  
• Sales, Use & Service Provider Tax: Maine
  
• Sales and Use Tax: Alabama, Alaska (local only), Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming
  
• Transaction Privilege Tax: Arizona
  

Five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—have no state sales tax, but some of them do have a variety of other fees that are applicable to specific kinds of transactions or products.

Some states grant local governments additional control over tax rates and collection, whether or not they charge taxes themselves. For example, the Colorado home rule system gives local communities more authority than any other state in the country. Cities and towns determine what products and services to charge tax on and how much they want to charge.

Registration obligations for creators

Canada

The Canada Revenue Agency (CRA) requires online creators selling to Canadian customers to comply with tax obligations, regardless of their residency. If a Canadian creator’s total revenue from direct sales to Canadian customers exceeds $30,000 CAD in a single calendar quarter or over the last four consecutive quarters, they must register for GST/HST.

This regulation only applies to content that’s subject to Canadian GST/HST, not exempt sales. Sales through marketplaces also do not count toward this threshold. Upon registration, creators receive a unique nine-digit business number (BN) with a GST/HST account suffix RT 0001.

Creators based outside of Canada must also register for GST/HST if their direct sales to Canadian customers exceed $30,000 CAD over any 12-month period. If the marketplace operator collects taxes on behalf of creators, those sales do not count toward the registration threshold. Foreign businesses benefit from a simplified registration process.

Creators based in or selling to customers located in the four provinces that levy separate taxes must also register separately with these local governments. Once registered, they must charge the applicable taxes and remit them to the CRA and relevant provinces.

United States

Given the complexity and diversity of tax compliance obligations in the US across jurisdictions, it can be challenging for creators to know where to register—especially as they scale their business. Online creators are liable to comply with the tax code in a state or local jurisdiction if they fit into one of two categories:

• They have a “physical nexus.” This term refers to businesses or individuals who have a tangible presence of facilities, employees, or assets in the jurisdiction.
  
• They have an “economic nexus,” which means that they are connected to the area through economic activity instead of a physical presence in the state or local area.
  

South Dakota was the first state to impose an economic nexus law, which was upheld by the United States Supreme Court. The regulation requires out-of-state sellers to register for tax collection if their direct sales to customers in the state exceed $100,000 in the current or previous calendar year.

Many states followed with their own economic nexus laws, implementing the same threshold as South Dakota. Meanwhile, other states upheld the same principle with different monetary thresholds, or while dropping the transaction threshold entirely. In California and Texas, the threshold is $500,000. For businesses and individuals selling to customers in Alabama, it’s $250,000.

Although there are state-to-state nuances, in US jurisdictions, marketplace facilitators are generally required to collect and remit taxes on behalf of sellers. If sellers do not hit monetary or transaction thresholds through direct sales—but they do through marketplace sales—they are usually not beholden to register with state and local jurisdictions.

How jurisdictions tax online content

Canada

Canada applies GST/HST to the sales of all digital goods and services, with exemptions for specific educational services:

• Music lessons
  
• Courses from vocational schools leading to a certificate or diploma for a trade or vocation
  
• Tutoring approved by a school authority or following a designated curriculum
  

There are also provincial tax exemptions in British Columbia, Manitoba, and Saskatchewan, but they vary per province. For example, the following educational services are exempt in British Columbia:

• Programs provided by qualifying schools or educational institutions, such as online courses from recognized universities
  
• Instructional or training programs that develop skills for a specific trade or profession, such as courses for social workers meeting professional development requirements
  
• Real-time educational programs, such as webinars with live interaction between participants and instructors
  

United States

In the US, local jurisdictions and states decide which products and services to tax. In most jurisdictions, taxes apply to tangible and physical products, such as toys, appliances, and equipment. As the internet economy grows, regulators have also begun applying taxes to downloaded software, remote access software, online information services, online data processing services, and digital goods.

Thirty years ago, no government would have taxed live virtual training because it was a rarity. Now, creators need to apply sales tax to virtual trainings if they have customers in the District of Columbia, Hawaii, New Mexico, Pennsylvania, South Dakota, and West Virginia—all at the local rate.

Online courses that are filmed ahead of time and not presented via live stream present an even more complicated tax compliance process for creators. Many states categorize online courses with digital audio, video, and images as software-as-a-service (SaaS), which can be taxed differently than other online services. Creators are liable to understand the nuances and variety of sales tax laws, even and especially because the same course can be taxed within different product categories, depending on local legislation.

How to calculate sales tax

Canada

When selling digital content to Canadian customers, you can follow the tax rate that applies to each customer based on their location. The CRA offers detailed guidance to help businesses and creators determine where their customers are based. The home address, the business address, the billing address, the Internet Protocol (IP) address of the device or payment-related information can all serve as information that points you to the appropriate tax rate.

At the federal level, the CRA manages compliance with the national goods and services tax (GST). Five provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) merged their provincial taxes with GST to create harmonized sales tax (HST). HST includes both provincial and federal taxes.

Federal-level taxes:

• 5% (GST) in Alberta, British Columbia, Manitoba, Northwest Territories, Nunavut, Quebec, Saskatchewan, and Yukon
  
• 13% (HST) in Ontario
  
• 15% (HST) in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island
  

Separate provincial taxes:

• 7% provincial sales tax (PST) in British Columbia
  
• 7% retail sales tax (RST) in Manitoba
  
• 9.975% Quebec sales tax (QST) in Quebec
  
• 6% provincial sales tax (PST) in Saskatchewan
  

Four provinces—Alberta, Northwest Territories, Nunavut, and Yukon—do not apply any provincial sales tax.

United States

In most states, creators charge the tax rate that aligns with the customer’s location. Under these laws, which are called destination sourcing laws, the creator uses the tax jurisdiction of the customer to determine the tax rate. In some jurisdictions, though, creators must tax their customers based on the tax rate in their location, which tax experts refer to as origin sourcing. Arizona, Illinois, and Texas all use origin sourcing; if you’re selling to customers in those states, you must charge them your own tax rate. California is unique in that it uses origin sourcing for state, county, and city taxes, but district taxes use destination sourcing based on the address of the customer.

The tax implications of platform or marketplace sales

Canada

Creators working and living in Canada need to charge and collect GST/HST when they meet registration requirements—whether or not the customer is a business or individual. However, creators based outside of Canada that have met registration requirements are only required to tax and remit sales tax made directly to individuals in Canada. They do not need to charge sales tax if they are selling directly to businesses. Customers should supply their GST/HST account number when they make a purchase if they’re a business.

With the rise of online marketplaces, Canada also implemented tax liability laws that affect the compliance obligations of creators who sell their courses and other digital learning products online through a marketplace operator. The CRA states that marketplace operators always either collect or receive the payment and transmit all or part of it to the creator, directly or through third parties. In Canada, marketplace operators do not include a person or business that solely operates a website allowing creators to list their courses, such as classifieds or advertising websites, or solely a payment processor.

A marketplace operator only needs to collect GST/HST on digital content or courses made to private individuals in Canada if the content creator is neither located nor registered under the normal GST/HST regulations in Canada. If the content creator is based in Canada and registered to collect GST/HST, the content creator is responsible for tax collection, regardless of whether it is made through a marketplace.

Here’s a breakdown of the GST/HST liability for creators when sold directly or through a marketplace based on their location and the kind of customer they’re selling to:

• Creator based outside of Canada
  
  • Sold directly to a business in CA: Not liable for GST/HST
    
  • Sold directly to an individual in CA: Liable for GST/HST once threshold is reached
    
  • Sold through a marketplace operator: Not liable for GST/HST (marketplace operator is liable)
    
• Creator based in Canada
  
  • Sold directly to a business in CA: Liable for GST/HST once threshold is reached
    
  • Sold directly to an individual in CA: Liable for GST/HST once threshold is reached
    
  • Sold through a marketplace operator: Liable for GST/HST once threshold is reached
    

United States

Creators based in the US need to collect and remit sales tax on digital content made directly to customers once they exceed the economic nexus thresholds for each jurisdiction, regardless of whether the customer is a business or individual.

Every state in the US has enacted marketplace facilitator laws that shift the liability for sales completed through online marketplaces and platforms. Although the laws differ across jurisdictions, the vast majority require marketplace facilitators to collect and remit taxes on behalf of creators for sales that are made through a marketplace. As part of these regulations, the sales made through marketplace facilitators do not apply to economic nexus thresholds for registration requirements.

• Creator based in the US
  
  • Sold directly to a business in the US: Liable to collect and remit taxes according to regulations at the state and jurisdiction level once economic nexus has been established
    
  • Sold directly to an individual in the US: Liable to collect and remit taxes according to regulations at the state and jurisdiction level once in economic nexus
    
  • Sold through a marketplace operator: Generally not liable for sales taxes
    
• Creator based outside of the US
  
  • Sold directly to a business in the US: Liable to collect and remit taxes according to regulations at the state and jurisdiction level once in economic nexus
    
  • Sold directly to an individual in the US: Liable to collect and remit taxes according to regulations at the state and jurisdiction level once in economic nexus
    
  • Sold through a marketplace operator: Generally not liable for sales taxes
    

Compliance around the globe

Although this guide focuses on the US and Canadian markets, there are extensive laws around the world that are relevant to creators regardless of their location. Each law has its own nuances and exceptions.

For example, if a Canadian creator sells prerecorded video courses to individuals in the EU or the UK, the creator needs to register and collect local value-added tax (VAT) from the first sale. However, the EU and the UK also have narrow definitions for digital content compared to other countries, specifying automation and minimal human interaction. Real-time online training, for example, is not considered digital content, and it does not require registering, collecting, or remitting EU or UK VAT.

Content creators selling to individuals in New Zealand and Australia only need to register for taxes if their revenue hits a specific threshold. In Australia, creators need to register if they exceeded $75,000 AUD in sales to Australian customers within the past 12 months or will exceed that amount in the next 12 months. For New Zealand, the tax threshold is $60,000 NZD. Both countries tax all digital services from content creators—both live virtual trainings and prerecorded courses.

Relevant tax regulations vary around the world, and they will continue to evolve as more businesses turn to online platforms and tools to reach a global audience.

How Stripe can help

Stripe helps marketplaces build and scale powerful global payments and financial services businesses with less overhead and more opportunities for growth. Stripe Tax reduces the complexity of global tax compliance so you can focus on growing your business. It automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services in all US states and in 40 countries. Stripe Tax is natively built into Stripe, so you can get started faster—no third-party integration or plug-ins are required.

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you might need to collect taxes based on your Stripe transactions. After you register, you can switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection to Stripe’s no-code products, such as Invoicing, with the click of a button.
  
• Register to pay tax: Stripe Tax provides links to the websites where you can register once you meet a state or country’s tax registration requirement.
  
• Automatically collect sales tax: Stripe Tax calculates and collects the amount of tax owed. It supports hundreds of products and services, and it is up-to-date on tax rule and rate changes.
  
• Simplify filing and remittance: With our trusted global partners, users benefit from a seamless experience that connects to your Stripe transaction data—letting our partners manage your filings so you can focus on growing your business.
  

Learn more about Stripe Tax.