Tax Categories
When adding products to your store you need to select a tax category that applies to what you’re selling to make sure the correct amount of tax is added (or not added) to your customers’ orders.
Different products can have different tax rates in different countries, meaning Lemon Squeezy needs to properly calculate and apply the right tax amount on each individual order.
Selecting the correct tax category is important so that you don’t overcharge tax on your customers’ purchases.
To select a tax category for your product, open the product editing panel and choose the most appropriate option from the list.
You are able to choose different tax categories for each of your products individually.
The following tax categories are available:
- Software as a Service (SaaS) - SaaS refers to cloud-based software accessed over the internet. This software is not customized for individual buyers and is usually available for download, like an app.
- Example: Google Workspace (formerly G Suite), Dropbox, or Shopify.
- Software - This is software that users download and is ready-made (often called “canned”).
- Example: Microsoft Office, Adobe Photoshop, or antivirus programs.
- Online Video Content - This includes videos that move and have accompanying sounds, such as movies, music videos, animations, news programs, and live events. You can either stream these videos or download them for permanent access. However, this doesn’t include video greeting cards or electronic games.
- Example: Netflix movies, YouTube music videos, training services, or webinar recordings.
- Information Services - These are services that provide information electronically but don’t involve a SaaS program.
- Example: Online news subscriptions, research databases, or digital magazines.
- eBooks - These are digital versions of books that you can download for permanent access. They include a variety of works like novels, encyclopedias, dictionaries, repair manuals, and cookbooks.
- Example: Kindle books, Project Gutenberg texts, or digital cookbooks from publishers.
- Digital Graphics/Templates
- Digital Newsletter - A digital newsletter is an electronically distributed publication that provides subscribers with updates, articles, and information on specific topics. Delivered via email or downloadable formats, it can include text, images, and links, making it engaging and easy to access.
- Digital Template - A template is a pre-designed layout that serves as a starting point for creating documents or digital content. It includes placeholders and formatting styles, allowing users to easily customize and fill in their information while maintaining a consistent design.
- Digital Graphic - A graphic is a visual element, such as an image, illustration, or icon, used to communicate ideas or information. Graphics can enhance content by making it more engaging and easier to understand, and they are widely used in digital media, including newsletters and websites.
- Example: Printable art from Etsy, design graphics from Adobe Stock, or digital illustrations, digital icons, emojis.
- Video Games - These are digital games that you can download and keep. Note that this does not cover games associated with betting or gambling.
- Example: Fortnite, Minecraft, or downloadable game titles from Steam.
- Digital Goods or Services - These are digital services mainly provided over the internet with little human interaction, relying on technology. Consider specific categories like software, digital goods, and website services.
- Example: Website hosting services, online file storage, or cloud computing services.