Ask HN: How can a non-US startup run affiliate program/marketplace globally?

#1

Post by yangustin » Fri, May 22, 2020, 9:33 AM UTC

Hi HN community,

We are a SaaS startup based in EU trying to set up an affiliate program. Since we sell globally, we want to accept affiliates globally as well.

After some investigations, we realized it's extremely complex to sort out tax & compliance due to local law, unlike how straightforward it is in the US. It was quite shocking as I'm sure many non-US startups that have a 'payout' flow(e.g. marketplace) will need to get around this.

What options do we have to make it possible?

Currently, we are looking into: 1. Open a US entity – not sure if accounting/lawyer costs can be justified.

2. Find a US intermediate to handle payout & contractor relationship – not sure whether such service even exists.

Any suggestions?

Re: Ask HN: How can a non-US startup run affiliate program/marketplace globally?

#2

Post by mytailorisrich » Fri, May 22, 2020, 9:50 AM UTC

What is more complicated in the EU generally than if you were in the US? And is EU law the issue or really 'local law'?

For example, you mention tax. An affiliate is a cost to you and in principle you account for that cost in the same way whether that affiliate is next door or on the other side of the world.

There's also potentially VAT. My understanding is that VAT treatment of services received from EU and non-EU service providers is the same. If so there should be no added complexity.

In any case, this is quite a technical topic and if you want to understand your position and your options you should really hire a professional knowledgeable in that very topic.

Re: Ask HN: How can a non-US startup run affiliate program/marketplace globally?

#3

Post by yangustin » Fri, May 22, 2020, 10:21 AM UTC

mytailorisrich wrote: post #2

What is more complicated in the EU generally than if you were in the US? And is EU law the issue or really 'local law'? For example, you mention tax. An affiliate is a cost to you and in principle you account for that cost in the same way whether that affiliate is next door or on the other side of the world. There's also potentially VAT. My understanding is that VAT treatment of services received from EU and non-EU s…

AFAIK in US, you just treat affiliates like independent contractors. You collect W9 or W8-BEN, and there's no tax withholding or extra taxes. Most importantly most software help you automate admin workflow.

>And is EU law the issue or really 'local law'? A little bit of both. Basically different nationalities have different tax calculations and documentation required. Plus, there are extra taxes that'll eat up our margin significantly.

We are consulting professionals of course, just want to get some tips from those who might've dealt with it. (I'm also slightly worried that tax/legal professionals, especially outside of SV, don't always have full grasps of these practices.)

Re: Ask HN: How can a non-US startup run affiliate program/marketplace globally?

#4

Post by mytailorisrich » Fri, May 22, 2020, 10:31 AM UTC

yangustin wrote: post #3

mytailorisrich wrote: post #2

What is more complicated in the EU generally than if you were in the US? And is EU law the issue or really 'local law'? For example, you mention tax. An affiliate is a cost to you and in principle you account for that cost in the same way whether that affiliate is next door or on the other side of the world. There's also potentially VAT. My understanding is that VAT treatment of services received from EU and non-EU s…

AFAIK in US, you just treat affiliates like independent contractors. You collect W9 or W8-BEN, and there's no tax withholding or extra taxes. Most importantly most software help you automate admin workflow. >And is EU law the issue or really 'local law'? A little bit of both. Basically different nationalities have different tax calculations and documentation required. Plus, there are extra taxes that'll eat up our ma…

Hmm, in the EU, at least depending on the country, you treat an affiliate as an independent service provider and have zero paperwork. A bit like hiring a plumber or lawyer. Uber, Deliveroo, and co. tried that one on their drivers.

I think you really need to get professional advice. You will also probably want legal advice on the drafting of you affiliate program's T&Cs.

Edit: Affiliates are a very old practice and one does not need to be in 'SV' to grasp how it works for tax and accounting.