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Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

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Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#31

Post by foxylad »

We rolled our own VAT/GST handling. We use Stripe to bill the total amount, and generate our own invoices so we can break out the tax as an item. Doing our own tax and invoices means we're not locked in to Stripe, which is pretty good but will enshittify when they have enough of us in thrall. It also means you can do bank transfers which many customers prefer.

VAT/GST handling is not that complicated*, and our system spits out the numbers to fill in UK, AU, NZ and CA tax returns, which can all be done online.

*Except Canada... HERE BE DRAGONS! Each of the 13 provinces/territories has different rates and rules, despite the optimistically named "harmonised sales tax" (HST).

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#32

Post by mingabunga »

senordevnyc wrote: post #11

What if you just…did nothing. What would happen?

Exactly! Nothing if you don't ship physical goods. I've been doing this for 24 years and only collecting sales tax for users in my home country. All other countries I just say on my invoice that any sales tax is included in the price. What are the going to do about me not charging sales tax in their country and remitting it? Come and get it?

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#33

Post by senordevnyc »

mingabunga wrote: post #32
senordevnyc wrote: post #11

What if you just…did nothing. What would happen?

Exactly! Nothing if you don't ship physical goods. I've been doing this for 24 years and only collecting sales tax for users in my home country. All other countries I just say on my invoice that any sales tax is included in the price. What are the going to do about me not charging sales tax in their country and remitting it? Come and get it?

I mean, I do understand if you’re big enough to be a target, but seriously, how is Germany or Taiwan or Argentina or wherever the fuck else going to 1) even know that I (a little US-based SaaS app doing under 8 figures in revenue) exist, 2) know that their citizens are paying me, 3) know how much, and 4) be able to do absolutely anything about it?

I’m genuinely asking.

For the pearl-clutchers here, I don’t do anything for GDPR for the same reason. Pass whatever laws you want in your county. Not my problem.

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#34

Post by rglover »

jongjong wrote: post #16

One of the most horrible aspect of the tax system is that individuals are held responsible for ensuring that they calculate and pay the correct amounts. It's kind of messed up that not only we have to pay tax, but the government doesn't even have the responsibility of telling us how much we owe it or what specific work which it did is covered by the payment. Every other entity on this planet who wants to obtain money…

You're not on a tangent at all, you're 100% correct.

It's shameful (in the most absolute sense of the term) that an entire class of people who contribute nothing to the world get to dictate—at the barrel of a gun or threat of imprisonment no less—that we owe them money that they then go and spend carelessly and without accountability (and this is independent of political beliefs—every single politician and bureaucrat is guilty). It's made even worse that they can't be bothered to make it easy to pay them (which is in their best interest). They exist solely to waste time and give otherwise unskilled people something to do.

I sincerely hope that the younger generations see all of this for what it is and aggressively work to remove it. "Oppressive" is exactly the right term. It hurts the prosperity of the majority in favor of a helpless minority (and no, I don't mean the people who actually need our help like the disabled—I explicitly mean government employees).

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#35

Post by matthewtse »

I recently acquired a SaaS that does business with people in the EU (we bill with stripe), so I decided to continue paying VAT. I do it all by a combination of code, scripts, and by-hand.

We have custom code that determines the VAT rate to charge, and also looks up a customer's VAT number to see if they qualify for VAT exclusion. At the end of each quarter I have a script that calculates the amount of VAT to be paid to each country in the EU, then visit the Ireland VAT OSS site, input the values for each country manually (they don't allow CSV!!!!), then send them a wire using wise.com.

The current scheme is an evolution of what the former founders did. It was a nightmare to get things onto good footing after the acquisition. But once I did it for the first time, the subsequent times are pretty straightforward, and I probably won't touch it again for a long while.

I could probably move towards stripe tax, or paddle/lemonsqueezy, but the migration would be a nightmare. And it's not a good business decision to do a lot of work including risky migrations to move onto a new provider that will charge a larger percentage as a service fee, just to better handle taxes, which I've now largely figured out.

The one advantage to doing all this, is that I actually understand this stuff pretty well now, rather than it being a black box where I just pay a company a lot of money so I don't have to think about it. Open question on if that's actually worth my time. It seems like it is for now.

One opinion I'll offer, is that all these foreign tax agencies are far less organized than you might think. You could probably get away by not paying VAT, for far longer/more revenue than you'd think, and if you do want to be a proper foreign business and pay, there's basically zero verification on if you're paying the right amount, so just try your best??

Feel free to ask me for any advice around VAT/etc. matthew@improvmx.com

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#36

Post by notpushkin »

jwr wrote: post #21
andsoitis wrote: post #2

Sounds like you need an accountant.

An accountant that will quickly determine the VAT/sales-tax to charge on each transaction presented to the customer? :-) Accounting is important, but it's not the solution to the OP's problem. There are also questions of costs and efficiency, especially since we are talking about low-margin B2C sales.

An accountant plus Stripe Tax? Or just a CSV with tax rates imported into Stripe, if you don’t feel like paying additional % per transaction.

MoR are great if you want absolutely no liability whatsoever, but especially considering there is no way for other countries to check you’re paying the right amount, I think doing it yourself isn’t too risky. (Not doing it is also a possibility.)

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#37

Post by notpushkin »

jongjong wrote: post #16

One of the most horrible aspect of the tax system is that individuals are held responsible for ensuring that they calculate and pay the correct amounts. It's kind of messed up that not only we have to pay tax, but the government doesn't even have the responsibility of telling us how much we owe it or what specific work which it did is covered by the payment. Every other entity on this planet who wants to obtain money…

The reason for that is two-fold. Firstly, there’s a tax accounting lobby in some countries (ahem, TurboTax). Then there’s the fact that when people are afraid they could make a mistake, they tend to pay more, and generally might not even think about what they are paying for in the first place.

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#38

Post by notpushkin »

matthewtse wrote: post #35

I recently acquired a SaaS that does business with people in the EU (we bill with stripe), so I decided to continue paying VAT. I do it all by a combination of code, scripts, and by-hand. We have custom code that determines the VAT rate to charge, and also looks up a customer's VAT number to see if they qualify for VAT exclusion. At the end of each quarter I have a script that calculates the amount of VAT to be paid…

ImprovMX – now that’s a name I haven’t heard in a while!

Could I ask you why Ireland specifically?

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#39

Post by nocoiner »

rglover wrote: post #34
jongjong wrote: post #16

One of the most horrible aspect of the tax system is that individuals are held responsible for ensuring that they calculate and pay the correct amounts. It's kind of messed up that not only we have to pay tax, but the government doesn't even have the responsibility of telling us how much we owe it or what specific work which it did is covered by the payment. Every other entity on this planet who wants to obtain money…

You're not on a tangent at all, you're 100% correct. It's shameful (in the most absolute sense of the term) that an entire class of people who contribute nothing to the world get to dictate—at the barrel of a gun or threat of imprisonment no less—that we owe them money that they then go and spend carelessly and without accountability (and this is independent of political beliefs—every single politician and bureaucrat…

Love how the person who did a “AI-powered code snippets manager and generator and … Mod CSS framework” just casually dismisses millions of people around the globe who ensure safe drinking water, distribution of vaccines, maintenance of nuclear warheads, provision of public health, etc., et fucking cetera, as a class of people who “contribute nothing to the world.”

Very cool - good luck with Mod. Can’t wait until it changes my life as much as living in a functional, stable society (well, at least until a couple months ago, in my case, lol).

Re: Ask HN: How do you handle VAT / Sales Tax accounting as B2C SaaS?

#40

Post by pqvst »

I run a B2C SaaS business. We're an EU company. We use Stripe for all billing, and we use Stripe Checkout and Stripe Tax for all of our tax calculations. We've built our own tools to generate monthly/quarterly tax summary reports from our Stripe payments data.

Luckily most of our business is in the EU, so as an EU company, filing our EU VAT is easy.

We used Avalara for 1 year in order to setup VAT registration in Norway. We chose Avalara because they do in fact provide full service solutions for VAT (registration, filing, and remittance). However, they are expensive and were AWFUL to work with: poor communication/support, no integration with Stripe, and we had to manually generate carefully structured Excel files in order to import our sales data. We cancelled our contract with them after 1 year, but were able to take over the filing account from them and now our in-house accountant does the filing and remittance (which is quick, easy, and MUCH cheaper).

We have considered something like Paddle, but it is difficult to justify the increased fees as our business grows. For the amount of money we'd be spending on Paddle in extra fees vs Stripe, we may as well just use a service provider or hire our own staff.

With Stripe Tax we can easily monitor our thresholds in other countries. There are some countries that technically require registration for even a single transaction in that country, which is ridiculous. I imagine for most companies it is definitely not feasible to register, file, and remit in all of those countries.

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