I agree it's income, but it's also a tip. Like if I sent $5 to your Paypal account directly. You need to declare that, but does Paypal care whether I owed you $5 or it's income?
Good question actually. What's Paypal doing about VAT?
I can only answer for the UK, but we have to go back to last autumn, when everyone started finding out about VATMOSS at all. HMRC did not communicate anything about EUVAT to anyone but businesses above a certain size which were already VAT registered. Their estimate was that only 34k business would be affected. So part of the outcry was the fact that marketplaces, gateways, and payment processors were not advised or consulted. They found out the same time everyone else did, in the same way everyone else did. One of them was PayPal, who were expected by the EU to be compliant in time for 1/1/15. This was news to them. HMRC were forced to admit they had no idea that gateways like Paypal did not already capture the information required to create the place of supply burden of proof, nor that your average non-technically minded microbusiness knew how to handle the API and the information passing through it.
http://www.clarejosa.com/articles/from-passion-to-purpose/up...
One would hope that by now that it's all been sorted.
Nothing. They're a payment processor, not a marketplace - it's up to the actual vendor to handle tax. Money I make via PayPal is not PayPal's revenue at any point, whereas I believe Patreon takes payment direct and then pays its members through commission.
(HMRC answered the same question that way in an online chat - lost the link to the transcript, but it's out there.)
Good question actually. What's Paypal doing about VAT?