Set up Stripe Tax

Your head office is where your business is located or, if you sell physical goods, the address where you’re shipping goods from.

By default, we set your head office address to your Stripe business address so you only need to review and confirm that your details are correct on the tax settings page. Alternatively, you can retrieve and update your head office address using the API.

A tax code is a classification of your product or service for Stripe Tax. We use this to make sure that the correct tax rate is applied to your transactions.

• Preset product tax code: The preset product tax code is the default tax code that applies to your Products when you don’t explicitly specify a tax_code. To learn more about the relationship between products, prices, and tax codes, and how they impact tax behavior, see the products, prices, and tax codes documentation.

You must select the most appropriate product tax code for every product or service you sell. Visit the tax settings page to select a preset product tax code to serve as the default. Afterwards, visit the product catalogue to confirm that the default is correct for your existing products. If not, edit each product to select a more appropriate product tax code for it.

If you sell physical goods and want to charge tax on the shipping fees, use the preset shipping tax code. This code determines the appropriate tax treatment for shipping fees, aligning with state and country-specific regulations. It makes sure the correct tax treatment is applied, as shipping fees might be taxed differently than the products themselves.

Tax behavior is a setting that determines whether Stripe should add taxes on top of your price, or if the price already includes taxes. This ensures that taxes don’t affect the total amount charged to your customers.

To calculate the total amount, Stripe needs to know the tax behavior of each price in the transaction. The default tax behavior is the default setting that applies when you don’t explicitly specify the tax_behavior on a Price object.

You have three options:

• Exclusive: You want to exclude tax from prices so that you add tax on top.
• Inclusive: You want to include tax in prices so that tax doesn’t affect the total.
• Automatic: You want to use the currency of prices to let Stripe decide whether to include or exclude tax. Stripe excludes tax from prices in USD and CAD, but includes it in prices for all other currencies.

Learn about tax behavior for products and prices.

Before you start collecting tax from your customers, you must register with the local tax authority. A tax registration lets Stripe know that your business is registered to collect tax on payments within a region, enabling you to automatically collect tax. Our monitoring tool in the Dashboard helps you understand where you might need to register with the local tax authority.

Visit Registrations in the Dashboard to add your tax registrations. If you haven’t registered yet but are planning to do so, you can also schedule a tax registration to take effect at a date in the future. You can also use Stripe to register on your behalf. Additionally, you also can use Taxually to register in locations outside the US.

The final step in setting up Stripe Tax is to enable automatic tax on your Stripe integration. Here’s how:

Update existing recurring items

Enabling tax and configuring automatic collection in your integration doesn’t update your existing subscription, invoice, and payment link instances. You must update them separately to begin calculating and collecting tax. You can complete these updates in the Dashboard or by setting automatic_tax[enabled]=false in the respective APIs:

• Subscriptions Dashboard or API
• Payment links Dashboard or API
• Invoices Dashboard or API

After you add your registrations and start collecting tax, you can set up filing to automatically submit returns and remit tax in the regions where you’re registered. Stripe partners with Taxually, a third-party filing provider, to offer this service.

Stripe Tax collects and tracks the tax you owe based on your registrations and transactions. Taxually uses this data to prepare and submit your tax returns to local tax authorities and helps ensure timely remittance.

With Taxually, you can:

• View upcoming filing deadlines in your Taxually Dashboard
• Receive email notifications and review return drafts
• Approve returns before submission or enable auto-approval
• Track the status of each filing and payment

Learn more about how to file with Taxually.