From 9dde5c9e66b024c2e0cd14aecda8d5e143c6c41e Mon Sep 17 00:00:00 2001
From: Thibault Le Ouay Ducasse <thibaultleouay@gmail.com>
Date: Sun, 11 Oct 2026 14:04:42 +0200
Subject: [PATCH] stripe: fix tax

---
 packages/api/src/router/stripe/index.ts       |  9 +++++
 packages/api/src/router/stripe/shared.ts      | 12 ++++++
 .../src/router/stripe/trial-lifecycle.test.ts | 38 +++++++++++++++++++
 packages/api/src/router/stripe/webhook.ts     |  5 +++
 4 files changed, 64 insertions(+)

diff --git a/packages/api/src/router/stripe/index.ts b/packages/api/src/router/stripe/index.ts
index e9c34e430..c09b23b19 100644
--- a/packages/api/src/router/stripe/index.ts
+++ b/packages/api/src/router/stripe/index.ts
@@ -28,6 +28,7 @@ import { z } from "zod";
 import { createTRPCRouter, protectedProcedure } from "../../trpc";
 import {
   buildFromSubscriptionOrThrow,
+  canAutomateTax,
   getCurrentPeriodEnd,
   getCurrentSubscription,
   hasPaymentMethod,
@@ -104,6 +105,9 @@ async function createPaymentMethodSetupSession(args: {
     mode: "setup",
     payment_method_types: ["card"],
     customer: args.customer,
+    // The address lets Stripe Tax place the customer once the trial converts.
+    billing_address_collection: "required",
+    customer_update: { name: "auto", address: "auto" },
     setup_intent_data: { metadata: { subscriptionId: args.subscriptionId } },
     success_url: args.successUrl,
     cancel_url: args.cancelUrl,
@@ -262,6 +266,9 @@ export const stripeRouter = createTRPCRouter({
           items,
           proration_behavior: "create_prorations",
           cancel_at_period_end: false,
+          ...((await canAutomateTax(stripeId)) && {
+            automatic_tax: { enabled: true },
+          }),
           ...(isTrialing && {
             trial_end: "now",
             payment_behavior: "error_if_incomplete",
@@ -305,6 +312,8 @@ export const stripeRouter = createTRPCRouter({
           name: "auto",
           address: "auto",
         },
+        billing_address_collection: "required",
+        automatic_tax: { enabled: true },
         line_items: [
           {
             price: priceId,
diff --git a/packages/api/src/router/stripe/shared.ts b/packages/api/src/router/stripe/shared.ts
index fe325152e..e6ccf88bf 100644
--- a/packages/api/src/router/stripe/shared.ts
+++ b/packages/api/src/router/stripe/shared.ts
@@ -194,6 +194,18 @@ export async function hasPaymentMethod(subscription: Stripe.Subscription) {
   );
 }
 
+// Stripe rejects automatic tax on a subscription whose customer it cannot
+// place (no address yet, e.g. a card-less trial), so only opt in once it can.
+// `not_collecting` is a valid location where we are not registered: no tax.
+export async function canAutomateTax(customerId: string) {
+  const customer = await stripe.customers.retrieve(customerId, {
+    expand: ["tax"],
+  });
+  if (customer.deleted) return false;
+  const status = customer.tax?.automatic_tax;
+  return status === "supported" || status === "not_collecting";
+}
+
 export function trialEndsAtOf(subscription: Stripe.Subscription) {
   return subscription.status === "trialing" && subscription.trial_end
     ? new Date(subscription.trial_end * 1000)
diff --git a/packages/api/src/router/stripe/trial-lifecycle.test.ts b/packages/api/src/router/stripe/trial-lifecycle.test.ts
index e919d2fbf..9841f8c53 100644
--- a/packages/api/src/router/stripe/trial-lifecycle.test.ts
+++ b/packages/api/src/router/stripe/trial-lifecycle.test.ts
@@ -454,6 +454,44 @@ describe("trial lifecycle", () => {
       ]);
     });
 
+    test("setup checkout with a taxable address → automatic tax on", async () => {
+      customer = {
+        ...customer,
+        tax: { automatic_tax: "supported" },
+      } as Stripe.Customer;
+      stubs.push(
+        stub(stripe.setupIntents, "retrieve", () =>
+          Promise.resolve({
+            payment_method: "pm_new",
+            metadata: { subscriptionId: "sub_setup" },
+          } as unknown as Stripe.Response<Stripe.SetupIntent>),
+        ),
+        stub(stripe.subscriptions, "retrieve", () =>
+          Promise.resolve(
+            subscription("cus_setup", {
+              id: "sub_setup",
+            }) as Stripe.Response<Stripe.Subscription>,
+          ),
+        ),
+        stub(stripe.customers, "update", () =>
+          Promise.resolve({} as Stripe.Response<Stripe.Customer>),
+        ),
+      );
+
+      await caller().sessionCompleted(
+        event("checkout.session.completed", {
+          mode: "setup",
+          customer: "cus_setup",
+          setup_intent: "seti_1",
+        } as Stripe.Checkout.Session),
+      );
+
+      expect(updateSubscription.calls[0]?.args).toEqual([
+        "sub_setup",
+        { default_payment_method: "pm_new", automatic_tax: { enabled: true } },
+      ]);
+    });
+
     test("trialing → active clears trialEndsAt", async () => {
       const s = await seedTrial();
       const sub = subscription(s.stripeId, { status: "active" });
diff --git a/packages/api/src/router/stripe/webhook.ts b/packages/api/src/router/stripe/webhook.ts
index 7ffe3b095..2760177eb 100644
--- a/packages/api/src/router/stripe/webhook.ts
+++ b/packages/api/src/router/stripe/webhook.ts
@@ -26,6 +26,7 @@ import { removeDomainFromVercelIfUnused } from "../../lib/vercel";
 import { createTRPCRouter, publicProcedure } from "../../trpc";
 import {
   buildFromSubscriptionOrThrow,
+  canAutomateTax,
   cancelSupersededSubscriptions,
   customerIdOf,
   getCurrentPeriodEnd,
@@ -221,8 +222,12 @@ async function attachSetupPaymentMethod(session: Stripe.Checkout.Session) {
   const subscription = await stripe.subscriptions.retrieve(subscriptionId);
   if (customerIdOf(subscription) !== customerId) return;
 
+  // The setup session collected the billing address, so tax can start here.
   await stripe.subscriptions.update(subscriptionId, {
     default_payment_method: paymentMethod,
+    ...((await canAutomateTax(customerId)) && {
+      automatic_tax: { enabled: true },
+    }),
   });
   return subscription;
 }
-- 
2.51.2