Stripe Tax

I imagine that most businesses have bigger risks to deal with than this, especially in early to mid stages (where Stripe seems to target).

The thing is, if you didn't integrate Stripe, you'd either be:

1. integrating someone else who does roughly the same thing as Stripe 2. integrating with and maintaining 100's of individual payment methods and countries, and dealing with tons of entities and managing relationships with them.

You might be able to cheat if you just do visa cards and only in the US, or something. But that is dramatically less than what you're getting when you integrate Stripe.

We are currently using ChargeBee that has great connectivity with Stripe and offers a lot of the functionality that Stripe Tax is now offering. Wondering if it is worth the change. I have nothing but good things to say about ChargeBee so I don't think I will be making the move unless pricing becomes an issue. They also have a really good starting package for startups.

I use Paddle, they do file 99% of your taxes for you.

In effect, they sell the product to customers, and handle all the tax on that side, for every tax regime in the world.

Meanwhile you act as a company with a single B2B client and one invoice a month (covering Paddle's net sales minus 5%) instead of N invoices. They send you an email every month with your 'reverse invoice'. As accountancy goes it's extremely easy, but you do need to do the basic tax filing in your local jurisdiction.

That 5% includes all the processing fees, they also have a bunch of useful subscription infrastructure, and they handle customer support for billing issues, which tends to be a substantial percentage of issues as you get larger.

So far they've been great, and doing nearly zero accountancy is worth a lot of money to me as an indie dev with a digital product (where you need to know a lot about local digital taxes nowadays). That said, would I do the same at the beginning if this existed a few years ago? Hard to know, but this doesn't look so compelling that I'm likely to switch now.

Here's some current Stripe UK pricing, confirmed on their site today.

Baseline of 2.9% + £0.20 for international card payments. (It's reduced to 1.4% + 20p for European cards.)

Add 2% for currency conversion. The exchange rate used is stated as "the daily mid-market rate provided by our service providers".

Add 0.5% for Billing if you're using subscriptions.

Add 0.5% more if you're using this new Stripe Tax functionality.

That is significantly over 5% for a typical SaaS or merchant selling digital content online, making international sales in multiple currencies.

Given that merchant of record services like Paddle are providing functionality far more comprehensive than Stripe Tax appears to be, they're still going to be attractive for smaller merchants compared to the more traditional PSPs like Stripe.

It's probably worth pointing out that while the EU has a long track record of making VAT difficult for everyone, plenty of other countries around the world and even some smaller regions seem to be jumping on the bandwagon lately. If all of these governments start attempting to enforce their local laws extra-territorially (leaving aside any questions about the legality and/or morality of doing so for this discussion) without also introducing reasonable de minimis thresholds to avoid grossly disproportionate compliance costs for negligible extra tax revenues in low volume situations, the situation could get very messy.

If that does happen and businesses are forced to comply with all rules globally regardless of actual sales volumes, I don't see how the model uses by traditional PSPs like Stripe has any chance of surviving. Every small business will have to sell via intermediaries like Paddle to shift the tax responsibilities to a larger business with the resources to deal with it, and pay whatever premium the market decides that justifies on all affected international sales.