4 ms·

I considered it for my SaaS business. But at the moment my business is based in Poland, so moving to Estonia doesn't change things much (I still can't economica

by jwr 8y ago

I considered it for my SaaS business. But at the moment my business is based in Poland, so moving to Estonia doesn't change things much (I still can't economically sell to individuals within the EU because of idiotic VAT regulations). I chose to remain in Poland for the time being. On the plus side: low taxes, EU law, first patent troll doesn't bankrupt my business. On the minus side: Stripe continues to ignore Poland, so I have to deal with Braintree and this is a pain in oh so many ways, VAT MOSS is a disaster, and we have the Cult of the Invoice.

p49k 8y ago
What VAT regulations are keeping you from selling to other EU customers?
- linohh 8y ago
  Recently VAT collection was changed for electronic services. Before you simply charged your countries applicable tax rate, unless a VAT ID was provided. Now you have to charge the VAT rate applicable to your customers country of residence, forcing every vendor to care for and implement correct VAT rates and regulations for all your products and every of the 28 countries in the EU - possibly even more due to bilateral free market agreements with Norway, Switzerland and the like. This is way more complicated than you might think, as improper tax collection may constitute felony charges and fines, leaving small businesses and startups in an awkward spot where not selling to other eu countries is easier than selling to them in a compliant way, putting the idea of a single market ad absurdum. The last thing you would want is pointless market entry barriers affecting every entity offering cross border sales.
  - p49k 8y ago
    Seems like something that could be greatly simplified to the point of being a non-issue by software (either standalone or a service), and if one doesn’t already exist, seems like a good opportunity. This is similar to how state taxes work in the US and many small businesses manage.
    - ramraj07 8y ago
      Isn't it just as simple as tax it if you have an actual store in-state and don't if not?
      - deleted 8y ago
        [deleted]
    - pawodpzz 8y ago
      Gumroad handles VAT-EU for you[0] but I didn't tried it. If anyone worked with them, here are some questions I have: - do they send one monthly payment? If so, from which country? - is VAT-EU number needed? - if I don't register for VAT (don't reach yearly selling threshold), do I get full payout? Are clients charged for VAT in such scenario? - what documents do I get from them, in case of tax office review? - is 3.5% + $0.30 fee applicable to EU customers or is there some additional cost (I assume not, but I ask just to be sure)? - if I sell digital product, what should I do about e.g. Canadian/Indian/Japanese/whatever sell taxes? [0] http://blog.gumroad.com/post/110080508463/vat http://blog.gumroad.com/post/110080508463/vat
  - tluyben2 8y ago
    Fines yes but felony charges? Any references to that for the weird EU VAT of that actually happening unless it was deliberate, large scale avoidance? I messed up with it a lot but (obviously) accidentally and on a small scale; I get a slap on the wrist and some back taxes when audited. Not even fines.
    - jwr 8y ago
      I don't know about other countries, but in Poland the tax authorities are pretty strict, especially where VAT is concerned. It's good, because things are becoming clean and predictable, but you really do not want to get things wrong. You won't go to jail of course (unless you've defrauded bajillions), but fines and regular inspections will hurt your business pretty quickly. Doing VAT wrong is really not an option.
    - linohh 8y ago
      Yep. Of course you’ll have to be negligent if not willfully wrong in your returns. But VAT ain’t nuthin’ to fuck with. It will come back to you.
      - tluyben2 8y ago
        Well, I know a lot of small companies in NL from friends and people I met who are simply sloppy and negligent with VAT and taxes in general but not willfully wrong and nothing at all happens. Slap on the wrist and fines. Same in Spain (much higher fines). So ok, I see in theory it can happen but is there any case where this actually happened in the EU unless it was willfully wrong or fraud in some huge company with an accountants scandal?
        linohh 8y ago
        At least in Germany this highly depends on your responsible internal revenue office (Finanzamt) which May Even vary within city limits. And of course there have been trials for seemingly trivial amounts of money never justifying the cost of persecution or tax auditing. While it may not put you on top of the most wanted list, there still is a risk and it’s not to be underestimated. Even though cum ex etc show ridiculously failing the checks and balances are
  - jdietrich 8y ago
    I found the VAT place of supply rules to be inconvenient but reasonably straightforward to comply with. Several billing platforms will collect VAT across the EU on your behalf, or there are third-party solutions that will integrate with your own payment gateway. I have no idea what the situation is in Poland, but there's no such thing as a "felony" in my country; an honest mistake on my tax return is an honest mistake, not a criminal offence. I'd only be criminally liable if I was unreasonably negligent or acted with the deliberate intent to deceive. As long as I a) record the customer's country for each transaction and b) fill out my VAT MOSS return accordingly every quarter, the tax authorities (HMRC) are perfectly happy. https://quaderno.io/resources/eu-vat-guide/ https://quaderno.io/resources/eu-vat-guide/
- jwr 8y ago
  The need to keep track of all VAT rates across the EU, charge all individual customers their respective VAT, gather everything into VAT MOSS reports, pay everything with appropriate conversion rates chosen. It's not impossible, just complex, and in general not worth the effort if you're charging several dollars a month. If you think this is easy, tell me how much VAT (and in which currency) you will charge a customer from AX today, and what you'll do about a customer from GB in March. None of this is obvious, and it all changes quickly. As others have pointed out, there are services that supposedly help with this. I looked at everything that was available a couple of years ago and none of the available solutions did this easily and correctly. It's not an easily outsourceable problem, either, as it has to integrate closely with your billing. For B2B customers this is not an issue: you don't charge VAT (reverse charge) and you're done.
jurghnaut 8y ago
Can you elaborate on how does being in Poland protect you from patent trolls?
- rjst01 8y ago
  I'm not the OP, but a company I worked for once had reason to set up a US presence, but decided against it because once you have a US entity, patent trolls have someone to sue in their jurisdiction.
  - jwr 8y ago
    Exactly. This is also one of the big reasons why Stripe Atlas is not necessarily a good idea for companies from outside the US.
- jwr 8y ago
  It's not being in Poland that helps, it's being outside the US that matters. USA is the only country I know where you can successfully run small companies into the ground just by suing them (for pretty much anything, but patents are a good vehicle for this). The legal system is such that small companies are at a distinct disadvantage (because of complex precedent-based law and legal fees).

by jwr 8y ago

p49k 8y ago

What VAT regulations are keeping you from selling to other EU customers?

linohh 8y ago
Recently VAT collection was changed for electronic services. Before you simply charged your countries applicable tax rate, unless a VAT ID was provided. Now you have to charge the VAT rate applicable to your customers country of residence, forcing every vendor to care for and implement correct VAT rates and regulations for all your products and every of the 28 countries in the EU - possibly even more due to bilateral free market agreements with Norway, Switzerland and the like. This is way more complicated than you might think, as improper tax collection may constitute felony charges and fines, leaving small businesses and startups in an awkward spot where not selling to other eu countries is easier than selling to them in a compliant way, putting the idea of a single market ad absurdum. The last thing you would want is pointless market entry barriers affecting every entity offering cross border sales.
- p49k 8y ago
  Seems like something that could be greatly simplified to the point of being a non-issue by software (either standalone or a service), and if one doesn’t already exist, seems like a good opportunity. This is similar to how state taxes work in the US and many small businesses manage.
  - ramraj07 8y ago
    Isn't it just as simple as tax it if you have an actual store in-state and don't if not?
    - deleted 8y ago
      [deleted]
  - pawodpzz 8y ago
    Gumroad handles VAT-EU for you[0] but I didn't tried it. If anyone worked with them, here are some questions I have: - do they send one monthly payment? If so, from which country? - is VAT-EU number needed? - if I don't register for VAT (don't reach yearly selling threshold), do I get full payout? Are clients charged for VAT in such scenario? - what documents do I get from them, in case of tax office review? - is 3.5% + $0.30 fee applicable to EU customers or is there some additional cost (I assume not, but I ask just to be sure)? - if I sell digital product, what should I do about e.g. Canadian/Indian/Japanese/whatever sell taxes? [0] http://blog.gumroad.com/post/110080508463/vat http://blog.gumroad.com/post/110080508463/vat
- tluyben2 8y ago
  Fines yes but felony charges? Any references to that for the weird EU VAT of that actually happening unless it was deliberate, large scale avoidance? I messed up with it a lot but (obviously) accidentally and on a small scale; I get a slap on the wrist and some back taxes when audited. Not even fines.
  - jwr 8y ago
    I don't know about other countries, but in Poland the tax authorities are pretty strict, especially where VAT is concerned. It's good, because things are becoming clean and predictable, but you really do not want to get things wrong. You won't go to jail of course (unless you've defrauded bajillions), but fines and regular inspections will hurt your business pretty quickly. Doing VAT wrong is really not an option.
  - linohh 8y ago
    Yep. Of course you’ll have to be negligent if not willfully wrong in your returns. But VAT ain’t nuthin’ to fuck with. It will come back to you.
    - tluyben2 8y ago
      Well, I know a lot of small companies in NL from friends and people I met who are simply sloppy and negligent with VAT and taxes in general but not willfully wrong and nothing at all happens. Slap on the wrist and fines. Same in Spain (much higher fines). So ok, I see in theory it can happen but is there any case where this actually happened in the EU unless it was willfully wrong or fraud in some huge company with an accountants scandal?
      - linohh 8y ago
        At least in Germany this highly depends on your responsible internal revenue office (Finanzamt) which May Even vary within city limits. And of course there have been trials for seemingly trivial amounts of money never justifying the cost of persecution or tax auditing. While it may not put you on top of the most wanted list, there still is a risk and it’s not to be underestimated. Even though cum ex etc show ridiculously failing the checks and balances are
- jdietrich 8y ago
  I found the VAT place of supply rules to be inconvenient but reasonably straightforward to comply with. Several billing platforms will collect VAT across the EU on your behalf, or there are third-party solutions that will integrate with your own payment gateway. I have no idea what the situation is in Poland, but there's no such thing as a "felony" in my country; an honest mistake on my tax return is an honest mistake, not a criminal offence. I'd only be criminally liable if I was unreasonably negligent or acted with the deliberate intent to deceive. As long as I a) record the customer's country for each transaction and b) fill out my VAT MOSS return accordingly every quarter, the tax authorities (HMRC) are perfectly happy. https://quaderno.io/resources/eu-vat-guide/ https://quaderno.io/resources/eu-vat-guide/
jwr 8y ago
The need to keep track of all VAT rates across the EU, charge all individual customers their respective VAT, gather everything into VAT MOSS reports, pay everything with appropriate conversion rates chosen. It's not impossible, just complex, and in general not worth the effort if you're charging several dollars a month. If you think this is easy, tell me how much VAT (and in which currency) you will charge a customer from AX today, and what you'll do about a customer from GB in March. None of this is obvious, and it all changes quickly. As others have pointed out, there are services that supposedly help with this. I looked at everything that was available a couple of years ago and none of the available solutions did this easily and correctly. It's not an easily outsourceable problem, either, as it has to integrate closely with your billing. For B2B customers this is not an issue: you don't charge VAT (reverse charge) and you're done.

jurghnaut 8y ago

Can you elaborate on how does being in Poland protect you from patent trolls?

rjst01 8y ago
I'm not the OP, but a company I worked for once had reason to set up a US presence, but decided against it because once you have a US entity, patent trolls have someone to sue in their jurisdiction.
- jwr 8y ago
  Exactly. This is also one of the big reasons why Stripe Atlas is not necessarily a good idea for companies from outside the US.
jwr 8y ago
It's not being in Poland that helps, it's being outside the US that matters. USA is the only country I know where you can successfully run small companies into the ground just by suing them (for pretty much anything, but patents are a good vehicle for this). The legal system is such that small companies are at a distinct disadvantage (because of complex precedent-based law and legal fees).