How do I know if my product has special taxation?

When expanding your business to international markets, it is essential to ensure that your company complies with the tax laws and regulations of the countries where sales occur. It is important to understand that when selling your product in countries where local taxes must be collected and remitted, some types of products may lead to special taxation.

In certain locations, details such as the format, type, and category of your product have different taxation than normally applied. This includes, for example, products with educational content, which may have special taxation in certain countries.

Below, learn about the characteristics of products that can impact taxation in different locations and remember, it is the creator's responsibility to correctly define the characteristics of their products that impact taxation. For this, consult an accountant and seek specialized guidance.

❯ Special taxation for educational content

In certain locations, products whose content has educational value may have special taxation. This characteristic is defined by the creator themselves. Currently, the country with differentiated taxation for educational content in which we operate is Chile. To learn more about taxes on digital products in Chile, click here.

❯ Special taxation by type of interaction

There are two types of product interactions that impact sales tax collection:

• Products Electronically supplied (ESS): includes digital products that can be delivered without the need for direct human intervention, such as pre-recorded video classes, ebooks, and PDFs. In these cases, the responsibility for tax collection falls on Hotmart.
• Products Supplied non-electronically (Non-ESS): includes products that involve some type of direct contact or interaction with people, such as webinars, live classes, mentoring sessions, and in-person events. In these cases, the responsibility for tax collection falls on the creator.

These rules only apply if the product is sold to European buyers.

❯ How to define a product's category on the platform?

By default, the platform categorizes registered products as without human interaction (ESS). However, it is also possible to define the category of your product from the moment it is registered, or when it is already available for sale, by following these steps:

1. Access your account at https://app.hotmart.com/login.
2. Click on the Products option, located in the left menu.
3. Then click on My Products and select the product for which you want to define the category.
4. In the product editing, click on Tax Collection, in the left menu.
5. In the Interaction Type section, the Electronically supplied (ESS) option will be selected by default. If it applies to your product, you can change it to With Supplied non-electronically (Non-ESS).
6. In the Content Type section, the Without Educational Content option will be selected by default. If it applies to your product, you can change it to With Educational Content.

Attention! The definitions about the nature of the product are the total and exclusive responsibility of the creator. The creator may be required to provide proof at any time and must present it within 48 hours, according to the format specified in the official request. Failure to comply with this request may result in the suspension of the Platform usage license and the termination of our services to the creator, leading to the creator's removal from the Platform. Hotmart may seek compensation for any damages, material or otherwise, that may occur as a result of the lack of proof. Additionally, Hotmart is not responsible for the provision of incorrect information by the creator nor for the resulting tax consequences.