Two providers can look identical from outside. Same checkout, similar fee, both send you money. Then one of them quietly leaves you owing VAT in eleven countries and the other does not.
That is the merchant of record question. It is the least interesting decision you will make while building a paid Ghost publication, and one of the more expensive to get wrong, because the cost arrives late.
The distinction
A payment processor moves money between your customer and you. Legally you sold the thing. If the tax rules of your buyer’s country say somebody owes VAT on that sale, that somebody is you.
A merchant of record buys from you and sells to your customer. Legally they sold it. They charge the right rate for the buyer’s country, file the returns, and send you a payout with all of that settled.
You are still running the business. You set the price, own the content, own the reader relationship. What changes is whose name is on the transaction for tax purposes.
Why this got harder
For most of the internet’s history you paid tax where you were. For digital goods sold to consumers, that flipped: tax is increasingly owed where the buyer is.
The EU changed this for digital services. The UK has its own version. Other countries have followed, each with its own rules.
For a Ghost publication with readers in twenty countries, the theoretical worst case is registering, collecting the correct local rate, and filing periodic returns in each. In practice most small publishers do none of this and never hear anything, which is the kind of risk that is fine right up until it is not.
The detail that catches people: for digital services to EU consumers, a seller established outside the EU has no registration threshold. There is no “under this much revenue you are fine”. The obligation can begin with the first sale.
I am not your accountant and this is not tax advice. The point is narrower: the obligation is real, it does not scale with how small you are, and one of your provider choices makes it somebody else’s problem.
What it looks like in practice
The same sale, two arrangements.
| Payment processor | Merchant of record | |
|---|---|---|
| Who is the seller | You | The provider |
| Who charges the right rate | You | The provider |
| Who files returns | You, per jurisdiction | The provider |
| What you receive | The payment, tax not handled | One payout, tax settled |
| Invoice to the customer | From you | From the provider |
| Fee | Lower | Higher |
| Your bookkeeping | A line per country per period | A line per payout |
The fee difference is real and it is the wrong number to optimise on its own. The comparison that matters is that fee against registering in several jurisdictions, filing in each, and the hours it takes.
For most people selling a few thousand a year across many countries, a merchant of record is straightforwardly cheaper once your own time counts for anything.
Which is which
Of the providers PayGlue connects to Ghost:
| Provider | Merchant of record | Practical effect |
|---|---|---|
| Polar | Yes | EU VAT handled, one payout |
| Paddle | Yes | Broadest tax coverage of the set |
| Lemon Squeezy | Yes | Simple store model, tax settled |
| Creem | Yes | Merchant-of-record billing |
| Gumroad | Yes | Handled, least configurable |
| PayPal | No | You are the seller |
| Ko-fi | No | You are the seller |
| Patreon | No | You are the seller |
The three at the bottom are not worse providers. They are a different kind of thing, and they are on this list for good reasons: PayPal reaches countries the others cannot pay out to, and Ko-fi comes with a supporter audience that already exists.
If your buyers are mostly domestic and you already handle your own tax, this column may not matter to you at all. It becomes decisive when you sell across borders.
The trade nobody mentions
Merchant-of-record providers take on real liability, so they care who they work with. Expect more scrutiny at signup, more rules about what you may sell, and occasionally a rejection that a plain processor would not have given you.
You also give up some of the customer relationship. The invoice comes from them. The refund policy tends to be theirs. If a customer disputes a charge, it goes through their process.
For a publication selling access to writing, none of this is usually a problem. It is worth knowing before you discover it during a refund request.
How to decide
Three questions, in order.
Do you sell across borders? If essentially all your buyers are in your own country, this article is optional. Handle it the way you handle local sales already.
Would you rather not think about tax? If yes, and you sell internationally, pick a merchant of record and treat the higher fee as the price of not having the problem.
Can it pay you? This one overrides both. A merchant of record that cannot send money to your country is not an option, however clean its tax handling is. That is precisely the situation PayPal exists for on this list. Check payout availability before anything else.
What this has to do with Ghost
Directly, nothing. Ghost has no opinion about tax.
Indirectly, quite a lot, because Ghost’s native billing runs on Stripe, and Stripe is a payment processor. Using Ghost the way it ships means you are the merchant of record whether or not you decided to be.
Once payments run through a provider you chose, and something translates the result into a Ghost membership, the tax arrangement becomes a decision rather than something you inherited. That is a smaller-sounding feature than “accept payments without Stripe” and, over a few years, possibly a more valuable one.
The full comparison of ways to take payments on Ghost is here, and the setup guides for the merchant-of-record providers: Polar, Lemon Squeezy and Paddle.