Substack Has a VAT Problem
And it’s not Substack’s problem. It’s yours.
The moment you turn on paid subscriptions, you become a business. Not a hobbyist. Not a writer with a tip jar. A business selling digital services to consumers in other countries.
And in Europe, that comes with tax obligations most creators have never thought about.
What Substack Says
Substack’s documentation does not bury this. It’s stated clearly: Substack does not add, collect, or remit taxes on your behalf. For Europe or Australia or anywhere else.
Substack is not a Merchant of Record.
That phrase matters. A Merchant of Record is the legal entity responsible for a transaction, the one who calculates and collects the tax, files the returns, and pays the authorities.
When you buy something on Gumroad, Gumroad is the Merchant of Record. When you buy something on Lemon Squeezy, same thing. Your tax problem is their tax problem, and they solve it.
Substack uses Stripe for payment processing. Stripe moves money. It does not handle your tax compliance. Those are different things.
So when a reader in Hamburg signs up for your paid Substack at $7/month, Germany is owed VAT on that transaction. Substack doesn’t collect it. Stripe doesn’t collect it. You’re supposed to.
Most of us aren’t.
