3 ms·

>>Having a startup in the US is a huge mess due to all the states and taxes, In EU you will need to deal with VAT basically from day one (10k EUR of revenue).

>>Having a startup in the US is a huge mess due to all the states and taxes, In EU you will need to deal with VAT basically from day one (10k EUR of revenue). In US you will not deal with it until you can afford it as thresholds are very generous.

niemandhier 9mo ago
At least in Germany, this is not correct. You do not have to pay that unless: You earned more than €100,000 this year or more than €25,000 last year.
- alibarber 9mo ago
  But there is no threshold for cross-border selling in the EU. Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly. (From what I understand - would love this to be wrong)
  - yujzgzc 9mo ago
    Following US sales tax has way more complexity. In my county alone there are many different rates depending on the city in which the sale is made. Even just finding out authoritatively which jurisdiction to pay taxes to is nontrivial, practically impossible to solve without dedicated software.
  - friendzis 9mo ago
    > Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly. Yes. > But there is no threshold for cross-border selling in the EU. Kinda, but misinterprets the VAT itself. Basically, VAT is paid at the point of sale and local thresholds apply.
    - bluecalm 9mo ago
      >>Kinda, but misinterprets the VAT itself. >>Basically, VAT is paid at the point of sale and local thresholds apply. The threshold is 10k EUR (total sales to EU). The point of sale in case of software/electronic services is the country of residence of your customer. You need to collect two pieces evidence of that location, usually billing address and IP. If those don't match (your customer has used a VPN for example) you need a 3rd piece. One Stop Shop helps with it (when I was starting my company it didn't exist and predecessor VAT MOSS was just being introduced and no one knew how to comply with it) but you still need to charge local VAT rates and report quarterly.
- manuelmoreale 9mo ago
  I think they're referring to this https://europa.eu/youreurope/citizens/consumers/shopping/vat/index_en.htm https://europa.eu/youreurope/citizens/consumers/shopping/vat...
embedding-shape 9mo ago
If dealing with VAT is a large problem for your business today, running a business might just not be for you, it's very trivial today to get it right and there are even platforms who basically does all the "hard" work for you. But even without those 3rd party solutions, I think the complexity is vastly oversold, it's relatively easy to get right compared to other regulations. Maybe I'm just EU-damaged already though, YMMV.
- philipallstar 9mo ago
  Dealing with anything from day 1 is harder than doing it later when you have predictable money and growth.
  - embedding-shape 9mo ago
    Hence most countries has a threshold for when you need to charge the country-specific VAT and let you use the local one until you reach there. It differs by the country as far as I know.
- bluecalm 9mo ago
  >>If dealing with VAT is a large problem for your business today It's not a problem for me today. It was a big problem when I had no revenue, needed to do all the paperwork, meet ridiculous local accounting requirements connected to selling software in a different currency than my local one, write code, setup licensing, shipping the software to the clients etc. It was a major source of stress and sleepless nights for me. >>But even without those 3rd party solutions, I think the complexity is vastly oversold, it's relatively easy to get right compared to other regulations. Maybe I'm just EU-damaged already though, YMMV. It's easy when you have done it once and know the process. It's not so easy when you need to understand if your product meets a definition of an electronic service or something else, when accountants you are meeting don't know how to setup VAT-MOSS thing because it's still rare or when you need to add your tax authority about something and their reply is that they don't know so you need to write an official inquire (that requires a lawyer) so you can get your answer in a few months. When I was setting a new company in another country it was easier for me because I already knew how the process work and I could hire a competent accountant before the new company had any revenue. It wasn't so simple when I had 0 capital and just wanted to ship software to see if people want to buy it.
anonzzzies 9mo ago
You can just use a service for that if you find that too much work to do yourself. There are MoR services that do that for you for EU, AU, US states where it is required etc. It is more that most people outside the EU find it bullshit and just don't do it and complain about it anyway.

niemandhier 9mo ago

At least in Germany, this is not correct. You do not have to pay that unless: You earned more than €100,000 this year or more than €25,000 last year.

alibarber 9mo ago
But there is no threshold for cross-border selling in the EU. Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly. (From what I understand - would love this to be wrong)
- yujzgzc 9mo ago
  Following US sales tax has way more complexity. In my county alone there are many different rates depending on the city in which the sale is made. Even just finding out authoritatively which jurisdiction to pay taxes to is nontrivial, practically impossible to solve without dedicated software.
- friendzis 9mo ago
  > Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly. Yes. > But there is no threshold for cross-border selling in the EU. Kinda, but misinterprets the VAT itself. Basically, VAT is paid at the point of sale and local thresholds apply.
  - bluecalm 9mo ago
    >>Kinda, but misinterprets the VAT itself. >>Basically, VAT is paid at the point of sale and local thresholds apply. The threshold is 10k EUR (total sales to EU). The point of sale in case of software/electronic services is the country of residence of your customer. You need to collect two pieces evidence of that location, usually billing address and IP. If those don't match (your customer has used a VPN for example) you need a 3rd piece. One Stop Shop helps with it (when I was starting my company it didn't exist and predecessor VAT MOSS was just being introduced and no one knew how to comply with it) but you still need to charge local VAT rates and report quarterly.
manuelmoreale 9mo ago
I think they're referring to this https://europa.eu/youreurope/citizens/consumers/shopping/vat/index_en.htm https://europa.eu/youreurope/citizens/consumers/shopping/vat...

embedding-shape 9mo ago

If dealing with VAT is a large problem for your business today, running a business might just not be for you, it's very trivial today to get it right and there are even platforms who basically does all the "hard" work for you. But even without those 3rd party solutions, I think the complexity is vastly oversold, it's relatively easy to get right compared to other regulations. Maybe I'm just EU-damaged already though, YMMV.

philipallstar 9mo ago
Dealing with anything from day 1 is harder than doing it later when you have predictable money and growth.
- embedding-shape 9mo ago
  Hence most countries has a threshold for when you need to charge the country-specific VAT and let you use the local one until you reach there. It differs by the country as far as I know.
bluecalm 9mo ago
>>If dealing with VAT is a large problem for your business today It's not a problem for me today. It was a big problem when I had no revenue, needed to do all the paperwork, meet ridiculous local accounting requirements connected to selling software in a different currency than my local one, write code, setup licensing, shipping the software to the clients etc. It was a major source of stress and sleepless nights for me. >>But even without those 3rd party solutions, I think the complexity is vastly oversold, it's relatively easy to get right compared to other regulations. Maybe I'm just EU-damaged already though, YMMV. It's easy when you have done it once and know the process. It's not so easy when you need to understand if your product meets a definition of an electronic service or something else, when accountants you are meeting don't know how to setup VAT-MOSS thing because it's still rare or when you need to add your tax authority about something and their reply is that they don't know so you need to write an official inquire (that requires a lawyer) so you can get your answer in a few months. When I was setting a new company in another country it was easier for me because I already knew how the process work and I could hire a competent accountant before the new company had any revenue. It wasn't so simple when I had 0 capital and just wanted to ship software to see if people want to buy it.

anonzzzies 9mo ago

You can just use a service for that if you find that too much work to do yourself. There are MoR services that do that for you for EU, AU, US states where it is required etc. It is more that most people outside the EU find it bullshit and just don't do it and complain about it anyway.