Courses & coaching2 min read
Digital course sales tax in the US and VAT on EU buyers
One business, three products, three tax answers. A recorded course is a digital product, a live call is a service, and a membership bundling both is the case that catches people.
Published
The tax treatment of what you sell follows what it is, not what your business calls itself. Most course businesses sell more than one thing, which is why a single answer never fits.
The three products
| What you sell | US state treatment | Why |
|---|---|---|
| A recorded course, downloaded or streamed | A digital product. Taxable in a substantial number of states, exempt in others. | States that tax digital goods generally reach pre-recorded content. |
| Live one-to-one or group coaching | A personal service. Most states do not tax services, so frequently exempt. | The value is your time, delivered live. |
| A membership bundling both, plus a community | The hard case. Bundling a taxable component with an exempt one can make the whole charge taxable in some states. | Bundling rules vary; separately stating the components can change the answer. |
The practical consequence: a business selling a $997 recorded course and a $500-a-month coaching programme may collect on one and not the other, in the same state, on the same day.
VAT is usually the larger number
Supplying a digital course to a consumer in the EU or the UK generally means VAT is due where the customer is, from the first sale. There is no small-seller threshold protecting a supplier established outside the region, and rates run to roughly a fifth of the price.
- It applies to consumer sales. Business customers with a valid VAT number are generally handled differently.
- Registration is through a single-return scheme for non-established suppliers, which is workable but is still a registration and a quarterly filing.
- Live, human-delivered coaching is treated differently from an automated digital supply, so the same distinction that matters in the US matters here too.
- Other countries have equivalent regimes, and the list has grown.
If you handle it yourself
- Separate your products in your billing, so a taxable course and an exempt coaching package are distinct line items rather than one charge.
- Get a determination for your top states by revenue, rather than applying a single assumption everywhere.
- Collect and store customer location evidence. VAT rules require it, and it is also what supports your US sourcing.
- Register where required and diarise the filings, including zero returns.
- Re-check annually. This area moves more than most.
Registrations and deadlines in one place
Founders 8 tracks the obligations your business picks up as it sells into new places.
Build your workspaceThis is one section of the courses & coaching structure guide, which covers the entity choice itself.
Founders 8 does not provide tax advice. Tax residency depends on facts and rules specific to each jurisdiction — review your position with a qualified adviser.