Tax & VAT Requirements

Proper tax compliance is essential for brands selling on The Folklore platform. This guide outlines tax obligations, including U.S. tax requirements, VAT application, and international considerations.

U.S. Tax Obligations

1. 1099-K Tax Form for U.S. Brands
U.S.-registered brands may qualify to receive a 1099-K Tax Form if they meet specific sales thresholds.

The Folklore Connect is required to issue a 1099-K form to both the brand and the IRS if the following conditions are met:

• Sales Volume: You had $20,000 USD in sales through The Folklore Connect during the calendar year.
• Order Volume: You received 200 or more individual orders through The Folklore Connect in the same period.

If you meet these thresholds, The Folklore Connect will send a copy of the 1099-K form to the IRS and/or your state tax authority.

Note: The Folklore cannot provide tax advice. For more information, refer to the IRS guidance on the 1099-K form.

International Brands

1. Tax Requirements

• Non-U.S. brands are not issued a 1099-K form and are not required to provide tax information to The Folklore.
• International brands must adhere to local tax regulations in their respective provinces or countries.

2. VAT (Value-Added Tax)

• For consumer orders, VAT is applied based on the destination country or region and calculated at checkout. The final price includes applicable VAT charges.
• For wholesale orders, any duties or VAT for international shipping are the retailer’s responsibility, not the brand's.

Tax Compliance for Brands

1. Record-Keeping

   • Maintain accurate records of all sales, including tax-related documentation.

2. Consult Professionals

   • Engage a tax professional to ensure compliance with regional tax laws.

3. Stay Updated

   • Monitor updates to tax laws in your operating regions.

4. VAT Considerations for Retailers

   • Clearly communicate to retailers that duties or VAT on wholesale orders will be their responsibility.