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Wouldn't most online businesses just need to collect the taxes for the customers that their business operates in? Posting this on the basis that there should b

Wouldn't most online businesses just need to collect the taxes for the customers that their business operates in? Posting this on the basis that there should be no stupid questions when it comes to tax. For example; an Australian business needs to collect GST for Australian customers only. Americans accessing the Australian service would not be obligated to pay GST and as the Australian business doesn't have a US entity wouldn't have to collect US state taxes.

stevoski 5y ago
No, that’s not correct at all. Each country has their own laws about how tax works for online sales, and who is expected to pay it. You can choose to ignore what governments in other countries expect. But that’s your decision.
andylynch 5y ago
You would hope so, but no. A good example is that the UK now requires online business to collect UK VAT on sales to UK customers, even when the seller is abroad - there are many similar rules and this will really help people, especially smaller businesses who really face big barriers in dealing with these rules.
gardaani 5y ago
Paddle has a good article about this: "..the taxes apply not only to where your company has a physical presence (an office or employees) but to where your customers are based." https://paddle.com/blog/global-sales-taxes-for-software-companies-what-you-need-to-know-to-sell-internationally/ https://paddle.com/blog/global-sales-taxes-for-software-comp... It seems to be a huge mess. Even if you know how much to pay for different countries, registration for paying taxes can be painful.
- andylynch 5y ago
  Even domestically - US interstate sales tax rules are a mess too.
fuzzylama 5y ago
That's not how it works within Europe. You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries. There are exceptions, for example up to some total revenue you may be allowed to collect local sales tax instead. This is what I've understood, but it probably gets more complicated in real.
- raverbashing 5y ago
  > You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries Correct for the 1st part, on the 2nd part there is a VAT MOSS (One Stop Shop) where you report it in one place your sales/VAT for all the EU countries
brk 5y ago
That kind of used to be the way it worked, but not for the last several years. Now you are generally expected to know about the tax laws and requirements for the customers region and collect and submit tax accordingly. Avalara (https://www.avalara.com/us/en/products/sales-and-use-tax/avatax.html https://www.avalara.com/us/en/products/sales-and-use-tax/ava...) has been one of the go-to software platforms for this purpose. At least according to my wife, who is a CFO, and generally has to manage this stuff.

stevoski 5y ago

No, that’s not correct at all. Each country has their own laws about how tax works for online sales, and who is expected to pay it. You can choose to ignore what governments in other countries expect. But that’s your decision.

andylynch 5y ago

You would hope so, but no. A good example is that the UK now requires online business to collect UK VAT on sales to UK customers, even when the seller is abroad - there are many similar rules and this will really help people, especially smaller businesses who really face big barriers in dealing with these rules.

gardaani 5y ago

Paddle has a good article about this: "..the taxes apply not only to where your company has a physical presence (an office or employees) but to where your customers are based." https://paddle.com/blog/global-sales-taxes-for-software-companies-what-you-need-to-know-to-sell-internationally/ https://paddle.com/blog/global-sales-taxes-for-software-comp... It seems to be a huge mess. Even if you know how much to pay for different countries, registration for paying taxes can be painful.

andylynch 5y ago
Even domestically - US interstate sales tax rules are a mess too.

fuzzylama 5y ago

That's not how it works within Europe. You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries. There are exceptions, for example up to some total revenue you may be allowed to collect local sales tax instead. This is what I've understood, but it probably gets more complicated in real.

raverbashing 5y ago
> You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries Correct for the 1st part, on the 2nd part there is a VAT MOSS (One Stop Shop) where you report it in one place your sales/VAT for all the EU countries

brk 5y ago

That kind of used to be the way it worked, but not for the last several years. Now you are generally expected to know about the tax laws and requirements for the customers region and collect and submit tax accordingly. Avalara (https://www.avalara.com/us/en/products/sales-and-use-tax/avatax.html https://www.avalara.com/us/en/products/sales-and-use-tax/ava...) has been one of the go-to software platforms for this purpose. At least according to my wife, who is a CFO, and generally has to manage this stuff.