What is Steady from a tax and legal perspective?

What Steady is:

Simply put, publishers sell their memberships to Steady, and Steady sells them to members under its own name and own invoice. Steady is the buyer or distributor, and publishers are the supplier, for taxation purposes.

For that reason, Steady includes Value-Added Tax (VAT) in the amount it charges members. In Germany VAT is 19% (as of April 2017). Therefore, a €10 plan contains €1.60 VAT.

What Steady is not:

1. Steady is not a payment provider through which publishers can sell their memberships directly to customers. Publishers that wish to use such a platform must undertake much more work themselves, such as handling all customer invoices.

2. Steady is not an agent that sells memberships for publishers under another name and invoice. Such activity is considered a financial service and involves handling money similar to a bank, which Steady does not do. This would require a difficult and expensive process of applying for approval from the German financial regulator BaFin. And it would create more work for publishers to deal with their customers.

3. Steady is not a service that publishers purchase and receive an invoice for. Steady does not include service charges for publishers on its invoices, and therefore does not add VAT. Steady's revenue comes indirectly from the reduced amount received by publishers.

How does the sale of memberships via Steady work from a tax and legal perspective?

In order to reduce the publisher's hassle with invoices, correct taxation and other details, Steady on-sells memberships from publishers.

To be able to sell memberships, Steady first buys a license from the publishers. In exchange for this license, publishers receive a membership payment from Steady (after the deduction necessary costs). These payments are sent via PayPal and are detailed in a monthly income statement.

An income statement is - for taxation purposes - similar to an invoice that publishers would otherwise send. The difference is that Steady prepares the income statement for the publisher (because Steady has the payment data). The income statement includes the net revenue owed to the publisher, and the publisher's VAT rate - either 0%, 7% or 19%.

(Please note that for publishers based outside of Germany and especially those that are based in the EU the revers-charge-mechanism applies. Please consult with your tax advisore for more information.)

Example Calculation (for publishers based in Germany):

Steady sells 10 memberships for €10 each.