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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?

#61

Post by dinkblam »

jflessau wrote: post #13
dinkblam wrote: post #10

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 "F…

Can you elaborate on your bad experiences with Paddle?

the 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?

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

#62

Post by mixmastamyk »

senordevnyc wrote: post #59
omnimus wrote: post #57

Earlier quoted context omitted.

Are some of your customers buying the product as their business? Because if they put it in their expenses the record is there. If then for some reason somebody starts to dig you would be liable for all those taxes going back. Sorry but these are laws those customers countries set and its not just EU. Every other country is now considering similar system because digital products is huge outflow of unpayed taxes. Btw “…

It’s not my problem because I don’t live in those countries, and their citizens are coming to me and purchasing something. It’s analogous to a citizen from Germany coming into my restaurant in Chicago, and then the German government declaring that I owe them taxes. Ridiculous. I’m not going to incur any extra work or cost just because some random other country decides that they deserve a cut. Ultimately though, it’s…

Not likely I guess, but not unheard of to nab you while traveling: https://news.ycombinator.com/item?id=41341353

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

#63

Post by senordevnyc »

mixmastamyk wrote: post #62
senordevnyc wrote: post #59

Earlier quoted context omitted.

It’s not my problem because I don’t live in those countries, and their citizens are coming to me and purchasing something. It’s analogous to a citizen from Germany coming into my restaurant in Chicago, and then the German government declaring that I owe them taxes. Ridiculous. I’m not going to incur any extra work or cost just because some random other country decides that they deserve a cut. Ultimately though, it’s…

Not likely I guess, but not unheard of to nab you while traveling: https://news.ycombinator.com/item?id=41341353

Come on, that has literally nothing to do with a relatively tiny software company failing to collect VAT at another country's whims.

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

#64

Post by mixmastamyk »

senordevnyc wrote: post #63
mixmastamyk wrote: post #62

Earlier quoted context omitted.

Not likely I guess, but not unheard of to nab you while traveling: https://news.ycombinator.com/item?id=41341353

Come on, that has literally nothing to do with a relatively tiny software company failing to collect VAT at another country's whims.

It has everything to do with breaking laws conspicuously enough to get noticed. I’m sure the guy providing encrypted messaging thought he was doing nothing wrong, and I’d tend to agree with him.

Let’s not pretend govts have no tools. A friend once had their bank account seized by the state of California due to a moderate balance after six months.

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

#65

Post by encoderer »

omnimus wrote: post #56
encoderer wrote: post #26

If you’re not making at least $1 million a year — don’t worry about this yet. I know that sounds glib but I firmly believe that the rise of “merchant of record” startups like Paddle with large outbound sales teams has scared the bejeezus out of a whole generation of founders.

Oh the US way… just break the other countries laws who cares. This is highly dangerous. Like you made 500k in sales you are still liable for those 100k taxes it doesnt matter if you didnt get it from your customers. In EU this is pretty automated check - if you sell to any bussiness they will have to have it in their tax return.

It’s not America’s fault that Europe strangles their companies with red tape.

The main thing is to just get started, start growing, and then you can figure all of this stuff out.

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

#66

Post by AlchemistCamp »

andsoitis wrote: post #2

Sounds like you need an accountant.

Sounds like bad news for new entrepreneurs building a business on the side or for anyone who wants economic dynamism.

You shouldn't need to hire a high-priced professional just to sell a thing on the internet. That kind of friction just makes everyone poorer.

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

#67

Post by senordevnyc »

mixmastamyk wrote: post #64
senordevnyc wrote: post #63

Earlier quoted context omitted.

Come on, that has literally nothing to do with a relatively tiny software company failing to collect VAT at another country's whims.

It has everything to do with breaking laws conspicuously enough to get noticed. I’m sure the guy providing encrypted messaging thought he was doing nothing wrong, and I’d tend to agree with him. Let’s not pretend govts have no tools. A friend once had their bank account seized by the state of California due to a moderate balance after six months.

Again, if you're big enough to end up on their radar AND they have some method of enforcement, then yeah, better be compliant.

Even in that case, it's not like you're going to get suddenly arrested on holiday in the EU with zero advance warning.

I'll just continue to ignore VAT and GDPR, and I expect that there's a 99.999% chance nothing will ever happen.

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

#68

Post by senordevnyc »

omnimus wrote: post #56
encoderer wrote: post #26

If you’re not making at least $1 million a year — don’t worry about this yet. I know that sounds glib but I firmly believe that the rise of “merchant of record” startups like Paddle with large outbound sales teams has scared the bejeezus out of a whole generation of founders.

Oh the US way… just break the other countries laws who cares. This is highly dangerous. Like you made 500k in sales you are still liable for those 100k taxes it doesnt matter if you didnt get it from your customers. In EU this is pretty automated check - if you sell to any bussiness they will have to have it in their tax return.

If China passes a law that if one of their citizens visits your site, it's illegal to say anything the Chinese government disagrees with, are you going to comply?

I do not give a single fuck that some foreign jurisdiction decided to pass some law that insists I collect and remit money on their behalf, just because one of their citizens decided to come to my server, in my country, and give me money. If the EU doesn't want its citizens coming to my website and buying things, they can take it up with their citizens. Or they can block my website, or come up with some kind of trade agreement with my country to enforce it. Until then, it has fuck all to do with me, despite your protestations to the contrary.

I'm going to continue ignoring random laws from random countries that have no enforceable jurisdiction over me, and it's incredibly wishful thinking to imagine anyone will (or even can) do anything about it.

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

#69

Post by looping__lui »

dinkblam wrote: post #10

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 "F…

Fastspring was amazing for exactly that. We loved em for most part.

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

#70

Post by gamblor956 »

I lead an internal tax department at a publicly traded company.

We do sales tax, VAT, and other indirect taxes in-house. At our scale, external providers are too expensive.

At my last job, we handled worldwide VAT and GST compliance in-house, and left sales compliance tax to Avalara. Most countries insist that you begin to file as soon as you have any sales to their country. As a practical matter, you don't need to register unless (a) you're doing at least $1000 in taxable sales quarterly or (b) the tax authority reaches out to you and tells you that you need to register.

VAT and GST compliance is very straightforward in most countries: it's a 1 screen form. Payment is also easy, but can be pricey: wire transfers. Best to have your accountant do them, but if he's terrified of the VATMOSS, you need a new accountant. The VATMOSS is an extremely simple form (and the VATOSS, for larger companies, isn't much more complex).

Sales tax compliance is hard, because the U.S. has over 10000 different sales tax districts and more than a hundred sales tax jurisdictions (but you probably won't have to file in most of them). Avalara is a bit pricey for the returns ($50/each) so you may want to do those in-house or have your accountant do them.

NOTE: I DO NOT RECOMMEND AVALARA. They were purchased by a PE company and the quality of service plummeted off a cliff even as prices tripled. Use literally any of their competitors instead.

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