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i think this matter is confused because it contains two distinct things: a.) accounting for the VAT owned to dozens different countries and b.) "remitting": a
by dinkblam 2y ago
i think this matter is confused because it contains two distinct things:
a.) accounting for the VAT owned to dozens different countries and
b.) "remitting": actually paying the VAT to the tax agencies of dozens different countries
many services help with part a.), but i haven't found a single one that helps with part b.) - you can only circumvent the issue by selling on a platform (like the different app stores or "FastSpring" or awful awful "Paddle") that do it for you because they are the merchant-of-record
our solution is to defer all payments for countries that collect VAT (EU plus UK plus like a dozen evil ones [1]) to FastSpring (which collects AND remits VAT), while selling to countries that don't collect VAT via Stripe.
this works well if you are a small company and you fall below the "VAT thresholds" in place by most countries, but if you are big and breach most thresholds this solution is less effective.
[1] AE, AL, AO, BH, BY, CH, CL, CO, CR, DZ, EC, GE, IN, KE, KR, MD, MX, RS, RU, SA, TJ, UG, VN
- jwr 2y agoIn case someone thinks this stuff is simple and you can go with country codes for VAT: have you heard about countries like AX (Åland Islands, part of Finland)? Do you remember that GB used to be within the EU VAT zone, but now isn't? How about handling XI (Northern Ireland) and the migration of customers from GB to XI? Or (one of my favorites) — do you realize that parts of ES are not within the EU VAT zone (for example, Canary Islands)? This stuff is crazy. B2B sales are relatively simple, but B2C is a nightmare.
- rnewme 2y agoWhat makes B2B simpler? Let's say the product was at same price point
- jwr 2y agoYou basically don't deal with VAT at all: charge the net amount, mention reverse charge on the invoice and you're done.
- fhd2 2y agoExcept when selling to your own country. But there, VAT is easy. To expand a bit on the reverse charge procedure: It means the _buyer_ pays VAT. Which makes a lot of sense in B2B, since companies need to look into what local VAT they owe anyway. Adding the reverse charge invoices to that is easy. Not to mention that if they also sell goods or services, they'll end up paying little to no VAT anyway.
- jflessau 2y agoCan you elaborate on your bad experiences with Paddle?
- dinkblam 2y agothe possibility of just blocking your account without warning or reason - if you only have the single payment provider you are fucked. after they did obviously the #1 priority was replacing them and making sure to have multiple providers. did you also notice how they just deleted their github project because it contained so many comments by their angry customers?
- CER10TY 2y agoThis happened to plenty of people with Stripe as well. Doesn't mean Paddle isn't a good place to start - but as you get bigger, you should probably look at other solutions as well, to de-risk your payments infra. It's just that at the start it's too expensive, even in B2B, to think about multiple payment providers to spread risk.
- matt-p 2y agoWhat are your issues with paddle? I found them perfectly fine fwiw. Why is this related to thresholds if you're using a merchant of record? You can't do this on country codes, if you're going to do this I would suggest whitelisting country's you know not to charge vat anywhere inside the country rather than vice versa.
- looping__lui 2y agoFastspring was amazing for exactly that. We loved em for most part.