Thinkific doesn’t automatically calculate sales tax and VAT for students buying your products in the EU.
There are tools that you can connect to your Thinkific account, like Quaderno and Invoicebus, which make it easy to keep your business tax-compliant in the EU.
Key Takeaways:
- Thinkific requires you to calculate and collect your own sales taxes for the EU
- Quaderno is our recommended software to use with Thinkific to calculate EU VAT
- You can also use an external payment solution or manually calculate EU taxes
Does Thinkific Automatically Calculate EU VAT?
No. Thinkific Payments (TCommerce) only manages the sales tax for students purchasing your products in the US and Canada.
If you have students in the EU purchasing your products, you will be responsible for calculating and charging VAT.
However, Thinkific offers several options to make it easier to calculate and collect VAT.
How to Remain VAT Compliant for the EU Using Thinkific
There are several ways to ensure your Thinkific sales are VAT compliant.
The easiest way to do this is using Quaderno. But you could also use Invoicebus, manually calculate your VAT, or use an external payment solution like Shopify.
The method you choose will depend on your business and what works best for you. We’ll look at each option and who it’s most suitable for.
Quaderno
Quaderno is a tax compliance software. It automatically calculates and collects the VAT and sales taxes and can generate and send invoices to your Thinkific EU customers.
Quaderno also tracks how much you owe, so you can easily file your taxes. It will also alert you if you need to register your business in new places for tax purposes.
These features help to keep your business tax compliant across the world.
Quaderno is a paid platform with prices starting at $49 per month.
Who Is Quaderno Best for?
Quaderno is best for Thinkific users who sell in many countries, as its database covers over 14,000 tax jurisdictions.
We also recommend it to those who sell primarily outside the US and Canada. This is because you cannot use Thinkific Payments (TCommerce) with Quaderno; instead, you need to use Stripe or PayPal. Thinkific Payments are optimal for US and Canadian customers.
How to Use Quaderno and Thinkific
There are two options for using Quaderno to help keep your business VAT compliant for your EU sales on Thinkific. These include either using a Thinkific checkout or a Quaderno checkout.
There are two main differences between the options.
- Tax Amount – The Thinkific checkout option deducts the tax from the product cost, and the Quaderno checkout allows you to add the tax percentage on top of the product cost, depending on the buyer’s location.
- Enrollment – If you use a Thinkific checkout, your students will be automatically enrolled in the course they purchase. The Quaderno checkout option requires you to manually enroll students or use an automation tool like Zapier to do so.
We’ll look at both options in-depth so you can decide which is best for your business.
Use a Thinkific Checkout
The first option is to continue to use your Thinkific checkout.
If you choose to continue using the Thinkific checkout, all customers will pay the same price regardless of where they live. The tax percentage will be deducted from the cost of the purchase.
For example, if you sell in two locations with a tax rate of 20% and the other 5%, the customers will pay the same amount. You will receive the remaining 80% of the first and 95% of the second. This would look as follows:
| Location 1 | Location 2 | |
|---|---|---|
| Product Price | $100 | $100 |
| Tax Amount | 20% | 5% |
| Customer Pays | $100 | $100 |
| You Receive | $80 | $95 |
How to Use a Thinkific Checkout with Quaderno
To enable Quaderno to automatically calculate your VAT for EU customers, you need to link Quaderno with your Thinkific payment processor (PayPal or Stripe) and tell Thinkific where the customers purchase your products from, so it knows how much tax to charge.
To do this, follow these steps:
- Ensure your Thinkific account is connected to either Stripe or PayPal.
This is done through your settings, under “Payments.”
- Sign up for a Quaderno account.
- Go to “Integrations” on your Quaderno dashboard.
- Follow the steps to integrate either Stripe or PayPal (depending on which you use for Thinkific) with Quaderno.
- Go to the Thinkific settings.
- Click “Orders and Accounts.”
- Select “Custom Sign Up Fields.”
- Click “Add Field” twice, so you end up with two new custom fields.
- Complete the first custom field as follows:
-
- Custom Field Name: Country
- Field Type: Country
- Tick the Field: Make this custom field required.
- Complete the second custom field as follows:
-
- Custom Field Name: Postal Code
- Field Type: Text
- Tick the Field: Make this custom field required.
- Save both of the fields.
Quaderno will now know where your customers are buying your products from so they can correctly calculate the taxes and send the invoices. The invoice will be automatically generated for each payment.
Using the example above, the invoice would be broken down as follows:
| Location 1 | Location 2 | |
|---|---|---|
| Course | $80 | $95 |
| Taxes | $20 | $5 |
| Total Cost | $100 | $100 |
Use a Quaderno Checkout
If you want the tax amount added on top of your prices, you will need to use a Quaderno checkout. This option allows you to set the price of the course and then, depending on the location of the customer, add the tax on top.
We can use the example in the Thinkific Checkout section, with one tax rate of 20% and the other of 5%. That will look as follows using a Quaderno checkout:
| Location 1 | Location 2 | |
|---|---|---|
| Product Price | $100 | $100 |
| Tax Amount | 20% | 5% |
| Customer Pays | $125 | $105.26 |
| You Receive | $100 | $100 |
How to Use a Quaderno Checkout for Thinkific
To add the tax on top of your product price, you’ll need to create a Quaderno checkout link, set your course to private, add the checkout link to your Thinkific page (usually on your landing page, but it can be added anywhere), and enroll your students once the purchase is made.
To do this, follow these steps:
- Open Quaderno, click “Checkout,” and select “Links.”
- Create your checkout. You’ll need to add the product information and other checkout details.
- Click “Create Link” and copy the link.
- Open Thinkific and choose the course you want to add the Quaderno checkout link to.
- Go to the settings and click “Private Course.”
- Click “Build Landing Page.”
You’ll need to add a button to the landing page builder that links to the Quaderno checkout.
You can add the button to any section of the page, but we’ll show you how to add it to the banner.
- Click “Banner.”
- Select “+ Add Button.”
- Choose “A Custom URL” from the “Link To” dropdown menu.
- Paste in the Quaderno checkout link.
- Update the button text and click “Save.”
Now, anyone who clicks the button to purchase the course will be redirected to your Quaderno checkout. From here, they can buy your course.
However, as customers haven’t used the Thinkific checkout, Thinkific won’t know the customer has purchased the product. Therefore, you will need to grant them access to the product they’ve purchased.
You can do this manually or use Zapier. Zapier allows you to connect Thinkific and Quaderno to automate the enrollment process.
To do this, you’ll need to set a trigger and action:
- Trigger – Quaderno – Successful Checkout
- Action – Thinkific – Enroll User
Invoicebus
Invoicebus is a software that generates and sends invoices.
You can connect Invoicebus with Thinkific, and it will automatically create tax-compliant invoices for your EU customers. The correct tax amount will be clearly shown on the invoice. You can also customize the invoice, so it suits your brand and products.
It’s an affordable platform, with monthly plans starting at $9.95.
Who Is Invoicebus Best for?
Invoicebus is best for Thinkific users selling mostly outside the US and Canada. If you’re selling in the US and Canada, you will likely want to use Thinkific Payments rather than Stripe.
Invoicebus is a good option for smaller businesses, compared to Quaderno, as it’s more affordable. However, it is only an invoicing tool rather than compliance software, like Quaderno.
How to Connect Invoicebus and Thinkific
- Click “Integrations” from the left-hand menu.
- Click “Visit App Store.”
- Search for Invoicebus.
- Click “Install.”
- Connect your Stripe account with Invoicebus.
External Payment Solution
External payment solutions have more options than Thinkific’s built-in payment solution: TCommerce.
External payment solutions can automate charging VAT for EU customers.
Who Is an External Payment Solution Best for?
You might want to use an external payment solution for various reasons, like if you sell in multiple currencies and the external payment solution supports the sales tax requirements of all your locations. Alternatively, you might sell in a country with very specific tax requirements.
You might also already use another external payment solution, like Shopify, which works for your business, so it makes sense to keep everything in one place.
How to Connect Thinkific with an External Payment Solution
The three external payment solutions are all connected to Thinkific in the same way.
However, the payment solution you choose will determine the features that are supported.
For example, if you use Shopify, you will likely want to add your courses to your Shopify sales channel. If you use Infusionsoft, you will likely use your own checkout workflow and Infusionsoft checkout.
We won’t go into this in this article, but we’ll show you how to connect the platforms with Thinkific.
- Click “Integrations” from the left-hand menu.
- Click “Visit App Store.”
- Search for the external payment solution you want to add.
- Select the app.
- Click “Install.”
- Read the permissions and app details.
- Click “Accept and Install.”
- Enter your Shopify domain.
- Click “Install on Shopify.”
- Click “Install App.”
- Sign in to your Thinkific account.
Manually Manage Your Own Taxes
There is always the option to manually calculate and charge sales taxes.
Who Is this Manually Managing Your Own Taxes Best for?
We recommend this option for those who don’t make a large volume of sales and who only sell to a small number of countries or locations.
This is because it’s time-consuming and complex to manually calculate and collect sales taxes.
Pros of Manually Managing Your Own Taxes:
- More Control – You know exactly what’s happening with every sale and how much tax is charged. This gives you full control over your business.
- Better Understanding of Taxes – If you use software or rely on a payment solution, you will likely only need a rough understanding of EU VAT. By doing them yourself, you will have to learn how to calculate, collect, and submit your taxes. This can help you understand how the tax system works, which can potentially help you save money on your future tax returns.
- Save Money – You don’t need to pay for automation software or an external payment solution if you manually calculate your own taxes.
Cons of Manually Managing Your Own Taxes:
- Complicated to Manage – If you have a large volume of sales and sales from a variety of countries, it can be complicated to calculate your taxes.
- Time-Consuming – Manually calculating and sending your taxes will take far more time than using automation software.
- Friction for Customers – If your process isn’t fully ironed out, it might cause friction for your customers when they check out and pay, which can reduce your conversion rate.
- Higher Risk of Errors – Manually calculating your taxes, rather than using automated software, has a higher risk of mistakes, especially if you operate in multiple countries or locations with different sales tax percentages and requirements.
Frequently Asked Questions
Should I Use Quaderno or Invoicebus with Thinkific?
It depends on what you’re looking for. If you want tax compliance software that simplifies and automates collecting VAT from EU customers, choose Quaderno. If you want help creating and sending invoices, choose Invoicebus.
Does Thinkific Handle EU VAT?
No, Thinkific only calculates and collects taxes for students based in the US and Canada. For EU customers, you will need to choose a way to handle sales taxes. This could be done manually or using a tool like Quaderno.
Is VAT Charged on My Thinkific Subscription?
As of June 2023, Thinkific subscriptions are charged in GBP or EUR with VAT added on top. Currently, Thinkific has 29 tax-supported European countries and is working on bringing this feature to the whole of the EU.
