With all the enthusiasm about alternative funding for open source such as GitHub Sponsors, which I generally share, you should be aware that most counties require you to charge 'their' VAT for providing digital services to end users in their country. GitHub does not handle that.

Digital services describe a fairly broad range of services which already starts by 'adding your name to a list of supporters' which often is interpreted as digital advertisement. Consulting services such as giving support fall into the same category, in most places.

In effect, many counties around the world require the payment of VAT if you are selling such services to customers in their country. The rules are overwhelming and really tailored to fight tax evasion of big cooperations which you (and I) do not stand a chance to comprehend.

The safest option with GitHub Sponsors is therefore to not offer rewards to non-commercial clients or clients in your VAT space. That's why I have that fun disclaimer. And given the thin paper trail that GitHub provides to those being sponsored, even that might be insufficient.

On top of VAT, you must almost always pay income taxes on your sponsorships, always remember to self declare those taxes if you're not in the US where GitHub reports them. Tax evasion is serious business, you might get charged with prison time even for a few thousand dollars.

Not trying to be a bummer, I just see sponsor profiles popping up at an increasing rate where it might not be obvious to everybody that GitHub Sponsors is (for obvious reasons) moving all tax liabilities to those being sponsored. I wish developers got educated more about taxes.

This includes myself. I learned taxation laws over time, I was super naive when I started freelancing at 19 in my college times and wrote my first bills in an open office document. It's really not that easy. I hope that doing such digital work in a compliant way will get easier.

VAT is a pre-digital tax that ruins international trade for the small. For instance, the MOSS system (or Norway's VOEC) are not intuitive and push people to big VAT-handling platforms that often take major cuts. We can only evolve from here but until then, keep your sheets clean.

Happy tax declaration for your 2020 income year, the first to include GitHub sponsor incomes for many of us! Still grateful for the service. It won't make you rich but it certainly bears potential to keep some people's hobbies alive.