Alva Courses is a Shopify app for building and selling online courses inside your store. Every paid course is sold through a Shopify product, so the tax on a course is calculated by Shopify's checkout from your store's tax settings, not by Alva Courses.
That turns course tax into two questions: what the rules in each market say about your kind of course, and whether your Shopify settings match them.
This page summarises how tax authorities and Shopify describe the rules, as checked on 9 October 2026. It is not tax or legal advice, and it cannot tell you whether you must register anywhere. Rules and rates change, so confirm your position with a tax adviser or the official sources listed at the end.
What decides how an online course is taxed?
Four facts decide the tax on an online course: where the buyer lives, whether the buyer is a consumer or a business, how the course is delivered, and where you are based. A self-paced video course and a live weekly class can be taxed differently, even when both sell through the same kind of Shopify product.
- Where the buyer lives. Tax on a consumer sale is generally due in the buyer's country or state, once any threshold that applies to you is passed.
- Consumer or business. This guide covers consumer sales; sales to VAT-registered businesses follow separate rules.
- How the course is delivered. Recorded and automated, or taught live by a person.
- Where you are based. A threshold for small local sellers often does not apply to sellers based abroad.
Is an online course a digital service or a live class?
In the EU and UK, a course that runs largely on its own, such as pre-recorded videos, PDFs and automatically marked exercises, is usually an electronically supplied (digital) service. Teaching delivered by a person over the internet is not. The line matters because each side has its own rules for where tax is due.
EU law defines electronically supplied services as services delivered over the internet that are essentially automated, with minimal human intervention. Its examples include automated distance teaching and online workbooks marked automatically, and it excludes teaching where a teacher delivers the course content over a remote link.
How the EU and UK classify common course formats
| Course format | EU, sales to consumers | UK, sales to consumers |
|---|---|---|
| Self-paced: pre-recorded video, PDFs, automatically marked exercises | EUElectronically supplied service; VAT where the customer lives, subject to the €10,000 threshold below | UKDigital service in HMRC's examples |
| Pre-recorded course plus a live tutor | EUTeaching delivered by a teacher over a remote link is not an electronically supplied service; the mix decides | UKNot a digital service in HMRC's examples |
| Live-streamed class or webinar | EUSince 1 January 2025, educational events streamed to consumers are taxed where the consumer lives; a series of coaching sessions is not an event | UKNot a digital service in HMRC's examples |
An Alva Courses lesson can hold recorded video and PDFs alongside a button that links to a live call, as cohort courses often do. If one product sells both kinds of teaching, ask your adviser whether it counts as one supply or two.
How does EU VAT apply to online courses?
VAT on a pre-recorded course sold to an EU consumer is due in the customer's country. The one exception: a seller established in a single EU country can charge its home VAT until its cross-border sales to EU consumers pass €10,000 a year. Sellers outside the EU have no threshold. The One Stop Shop (OSS) reports it in one place.
EU sellers: the €10,000 threshold
The European Commission sets three conditions for the threshold. You are established in only one EU country. You sell electronically supplied services, or ship goods, to consumers in other EU countries. Those sales stay at or below €10,000, excluding VAT, in both the current and previous calendar year.
Once you pass it, the customer's country rules apply from that point, without exception. The Union OSS scheme lets you declare and pay that VAT through one registration instead of registering in each EU country.
Sellers outside the EU, including the UK and US
The €10,000 threshold does not apply to a seller established outside the EU, so VAT on pre-recorded courses sold to EU consumers is due from the first sale. The non-Union OSS scheme lets a business outside the EU register in one EU country and declare its consumer sales of services there.
This is easy to miss for UK sellers. A course business below the UK's own £90,000 VAT registration threshold can still owe French VAT on its first pre-recorded course sold to a consumer in France.
Live and streamed classes since 1 January 2025
Directive (EU) 2022/542 changed the rule for educational and similar events that are streamed or otherwise made virtually available. Since 1 January 2025, when the buyer is a consumer, the place of supply is where that consumer lives, and the seller registers there or uses OSS.
Ireland's Revenue guidance adds that a recording of an event, watched later, is an electronically supplied service, and that a series of coaching sessions is not an event at all. Many EU countries also exempt some education.
The European Commission says the €10,000 threshold applies only to telecoms, broadcasting and electronically supplied services and to distance sales of goods, so don't assume it covers a live class. Ask your adviser whether an exemption applies.
Worked example, rates checked October 2026
A course seller based in the Netherlands has passed the €10,000 threshold this year and sells a pre-recorded course for €100 before VAT. Using the standard rates on the EU's Your Europe site, and assuming no exemption or reduced rate applies, consumers pay:
- Netherlands · 21% VAT€121.00
- Germany · 19% VAT€119.00
- France · 20% VAT€120.00
- Ireland · 23% VAT€123.00
Below the threshold, all four buyers would pay Dutch VAT at 21%. If the store shows prices including VAT and uses Shopify's dynamic tax display, a €121 Dutch price behaves the same way: Shopify keeps the €100 product portion and adds each country's VAT, so a German buyer sees €119.
Shopify also notes that some tax authorities want two pieces of evidence of a buyer's location. Each order records the billing address and the customer's IP address; if they point to different countries, collect another piece of evidence.
How does UK VAT apply to online courses?
HMRC counts a pre-recorded course sold to UK consumers as a digital service, so UK VAT applies; the UK standard rate is 20%. A business based outside the UK must register for UK VAT if its sales are liable, regardless of turnover. A business based in the UK registers once its taxable turnover passes £90,000 over 12 months.
HMRC's guidance puts live webinars, remote tutors and teaching delivered by a person over the internet outside the digital-service rules. If your course mixes recorded lessons with live tutoring, that distinction decides which rules you start from.
Selling into the EU, a UK business is a seller outside the EU, as described above. HMRC points it to the EU's non-Union scheme or to registration in each EU country.
How does US sales tax apply to online courses?
The US has no national sales tax. Each state decides whether online courses are taxable and when a seller from another state must collect. Since South Dakota v. Wayfair in 2018, states can require collection once your sales into the state pass an economic nexus threshold, and both thresholds and taxability rules vary.
Economic nexus thresholds differ by state
Shopify's US tax reference lists thresholds state by state. As of October 2026 it shows $100,000 in sales for Arizona and $250,000 for Alabama, for example. The same reference shows that some states, including California and New York, leave sales of digital goods out of the nexus calculation, while others do not.
Shopify Tax tracks this in Tax liability insights, previewed under Settings → Taxes and duties → United States. Action required marks states with potential liability; Monitoring marks states where you have no location and sales have reached at least 80% of the threshold.
Live and recorded courses can be taxed differently
Taxability is decided state by state. Wisconsin's Department of Revenue, in guidance published in November 2020, says live digital online educational services are not taxable, while pre-recorded webinars are taxable digital goods unless an exception applies. Shopify notes that some places do not tax digital products at all.
What about Canada, Australia and other markets?
Canada and Australia both tax digital products and services that foreign sellers sell to their consumers, and each has a registration threshold for those sellers. Other countries run similar regimes for foreign digital sellers, so check every market you actively sell into rather than assuming a sale abroad carries no tax.
Canada. Canada's digital-economy GST/HST measures took effect on 1 July 2021. According to the Canada Revenue Agency, a non-resident vendor selling digital products or services to Canadian consumers generally must register for GST/HST once those sales exceed CAD 30,000 over any 12-month period, and can use the simplified regime.
Australia. Since 1 July 2017, Australia's 10% GST has applied to imported services and digital products sold to Australian consumers. The ATO lists webinars and distance learning courses among its examples, and an overseas seller must register once its GST turnover reaches A$75,000.
What does Alva Courses set on a course's Shopify product?
When Alva Courses creates a product for a course, it sets the title, description, image and price, and turns shipping off so Shopify treats the course as a digital product. It does not set Charge tax, the product category, the product type or any tax override. Those stay under your control in Shopify.
That applies when you choose Create new product while creating a course. With Select existing product, Alva Courses leaves the product's tax and shipping settings as they are and only marks it as a course product. Products you add later under Linked Products are not changed either.
The course price you set in Pricing & access is the Primary product's price, as the help article on linking a course to a Shopify product explains. Whether that price includes tax depends on your Shopify tax settings, not on Alva Courses.
A course can also ride along with a physical product, such as a starter kit that comes with video lessons. The order line is then the physical product, so Shopify taxes it under that product's settings. Whether part of the price should count as a digital service is a question for your adviser. Courses for product brands covers that setup.
How do you set up tax for course products in Shopify?
Set up course tax in Shopify in five steps: choose a tax service, check each course product's Charge tax and Physical product settings, give it a category, register and turn on collection where you need to, then decide whether prices include tax. Then place a test order before launch.
Choose your tax service
Go to Settings → Taxes and duties. Shopify Tax covers the US, EU, UK and Canada and uses product categories to set product-specific rates. In Canada, the UK and the EU, Basic Tax is available only in regions a store collected tax in before 13 May 2026. Shopify lists Basic Tax for places such as Australia.
As of October 2026, Shopify Tax is free until a store's sales reach US$100,000, counted each calendar year for stores created before 13 May 2026 and in total for newer stores. After that it charges a percentage of each order with calculated tax, capped at US$0.99 per order.
Check Charge tax and Physical product
Open the course product. In the Price section, unticking Charge tax on this product stops any tax applying to that product. Shopify's help uses it to exempt individual digital products. If a course is taxable anywhere you collect, leave it ticked and handle any regional exemption with a tax override.
In the Shipping section, keep Physical product off. When nothing in the cart requires shipping, checkout skips the shipping address step and collects billing information only.
Set the product category
In Product organization, set Category to the closest match; as of October 2026, Shopify's published taxonomy includes Media > Online Courses. An uncategorized product gets general rates that may not match the law. Shopify says its category suggestions are not tax advice, and a tax override always takes precedence over the category.
Register, then turn on collection
Register with the tax authority first; a Shopify setting is not a registration. For a US state, open United States, choose Add new state, enter your Sales tax ID and select Collect taxes. For an OSS registration, open European Union under Regional settings, click Collect VAT and choose the One Stop Shop (OSS) option.
Shopify's EU reference says its OSS settings don't apply when your fulfilment location is outside the EU; to charge VAT on digital products from there, it tells you to add a VAT registration for each EU country you sell to.
If your tax settings offer Charge VAT on digital goods, turning it on creates a Digital Goods VAT Tax collection that charges each EU country's rate from the billing address. Add course products to that collection.
Decide whether prices include tax
Include sales tax in product price and shipping rate makes your listed prices tax-inclusive, and Dynamic tax display in a market's tax settings adjusts them per country. Shopify notes that UK customers expect prices including VAT, while US customers expect tax added at checkout. Dynamic tax display uses standard rates only and ignores tax overrides.
Before launch, send yourself a test enrolment through Shopify's Bogus Gateway, not a 100%-off discount that leaves nothing to tax. Use billing addresses in the places you sell to, and check the tax lines on each order. Pricing itself is covered in how to price an online course and online course pricing models.
What do Shopify and Alva Courses not do for you?
Neither Shopify nor Alva Courses decides whether you owe tax. Shopify calculates and shows tax from your settings, and files or remits it only if you use Shopify Tax with automated filing. Alva Courses enrols the student once the order is paid and has no part in the tax on the order.
- Registration. You register with each tax authority yourself.
- Classification. Whether a course is a digital service, education or an event is your judgement, so record your reasons.
- Returns. OSS, UK VAT and state returns are yours to file unless automated filing covers them.
- Managed Markets. Shopify's help says that if an order contains only digital products, you are automatically the merchant of record, so a course-only order stays your tax responsibility.
Tax is one of several compliance jobs a course store carries. Student data is another: student data exports and GDPR covers that side.
Where can you check the rules yourself?
Check the rules at the source before you register or change a setting. The official pages below are the ones this article was checked against on 9 October 2026. Tax authorities update them, so read the current version, and take advice on anything that turns on how your course is delivered.
- European Commission: One Stop Shop (OSS) and the €10,000 threshold
- Your Europe: VAT rates in EU countries
- Irish Revenue: VAT treatment of admission to events, including virtual events (PDF)
- GOV.UK: VAT rules for digital services supplied to private consumers
- GOV.UK: when to register for VAT
- Wisconsin Department of Revenue: educational products and services
- Canada Revenue Agency: GST/HST threshold for cross-border digital products and services
- Australian Taxation Office: GST on imported services and digital products
- Shopify Help Center: digital product taxes
Frequently asked questions
Usually, when the buyer is a consumer and the course is pre-recorded or automated. A seller established in one EU country can charge its home VAT until its sales of electronically supplied services and goods to consumers in other EU countries pass €10,000 a year. A seller outside the EU owes VAT in the customer's country from the first sale. Live classes and education exemptions follow other rules, so check with a tax adviser.
It depends on the state. Each state decides whether online courses are taxable and sets its own economic nexus threshold for sellers based elsewhere. Wisconsin, for example, does not tax live online educational services but generally treats pre-recorded webinars as taxable digital goods. Check every state where you may have nexus, and use Shopify's tax liability insights to see where you are close to a threshold.
No. Courses are sold through Shopify products, so Shopify's checkout calculates tax from your store's tax settings. When Alva Courses creates a course product it turns shipping off, so Shopify treats the course as a digital product, but it does not set Charge tax, the product category or any tax override. Check those on each course product in Shopify.
Not for a course sold on its own. Shopify treats a product that isn't marked as physical as a digital product, and when nothing in the cart requires shipping, checkout skips the shipping address step and collects billing information only. Alva Courses creates course products with the Physical product setting off.
Not always. HMRC treats a course of pre-recorded videos and PDFs as a digital service, but not a live webinar or live tutor support. In the EU, teaching delivered by a teacher over a remote link is not an electronically supplied service, while live-streamed educational events sold to consumers have been taxed where the consumer lives since 1 January 2025. Some US states also treat live and recorded courses differently.
If your sales are liable to UK VAT, GOV.UK says a business based outside the UK must register regardless of its taxable turnover. HMRC's guidance counts a course of pre-recorded videos and PDFs sold to UK consumers as a digital service, but not a live webinar. A business based in the UK only has to register once its taxable turnover passes £90,000 over 12 months.