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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?

#71

Post by gamblor956 »

notpushkin wrote: post #38
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?

Most countries in the EU have a VATOSS/VATMOSS filing system. They're all relatively straightforward, but Ireleand's system is generally the easiest to use...and also the only one in English. (This matters because it means that they'll correspond with you in English, and any tax authorities in other EU countries are on notice to correspond with the taxpayer in English.)

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

#72

Post by gamblor956 »

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…

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.

This is wrong. The IRS isn't allowed to tell us how much we owe, because a certain party currently in power has spent several decades preventing it from doing so. The IRS would love to have a system like they do in other countries, because it's way simpler than what we currently have, and for most taxpayers they already have all of the information they need to do it. For the remainder of taxpayers (including especially gig workers and other independent contractors): the IRS doesn't have all the information it would need to calculate income tax correctly; so these taxpayers would have to stick with the current self-calculation system even if the IRS were allowed to switch to the IRS-calculated system.

And on that second note: if the IRS disagrees with how much you claim to owe, they tell you how much you owe based on the information they have. It's then the taxpayers' responsibility to correct them by providing additional information. If it comes to an audit, the IRS will tell you in exacting detail exactly how they determined your tax liability, even citing the specific laws and regulations for any items in conflict.

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

#73

Post by disgruntledphd2 »

encoderer wrote: post #65
omnimus wrote: post #56

Earlier quoted context omitted.

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.

Comparatively, EU VAT is less complex than the US thing, as it's on a country rather than a county basis, so I'm not sure how the EU is messing up here. That being said the rules for rates are complex but unless you're selling lots of different products that's unlikely to be an issue.

I do agree with you on the keep growing advice but if you're getting a bunch of EU sales, it's worth complying to some extent.

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

#74

Post by omnimus »

senordevnyc wrote: post #68
omnimus wrote: post #56

Earlier quoted context omitted.

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…

So you would rather have internet where countries can block websites?

Its not the visit thats the issue but by accepting their cards you actively get into contract with them. You are doing business in that country. As a bussines owner i am sure you know that.

You do you but it would be quite sily defense. Playing dumb claiming its the peoples fault instead of changing that supported countries list in Stripe.

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

#75

Post by omnimus »

disgruntledphd2 wrote: post #73
encoderer wrote: post #65

Earlier quoted context omitted.

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.

Comparatively, EU VAT is less complex than the US thing, as it's on a country rather than a county basis, so I'm not sure how the EU is messing up here. That being said the rules for rates are complex but unless you're selling lots of different products that's unlikely to be an issue. I do agree with you on the keep growing advice but if you're getting a bunch of EU sales, it's worth complying to some extent.

Also lets not forget this is special case with digital products where using something like Paddle completely solves it.

The systems are way crazier with physical products and there is no easy merchant of record solution.

This seems more like arrogance that for some people some nations are beneath them (even though they gladly take their money).

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

#76

Post by omnimus »

encoderer wrote: post #65
omnimus wrote: post #56

Earlier quoted context omitted.

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.

Its not Europes fault Americans want to sell there without respecting local laws.

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

#77

Post by senordevnyc »

omnimus wrote: post #74
senordevnyc wrote: post #68

Earlier quoted context omitted.

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…

So you would rather have internet where countries can block websites? Its not the visit thats the issue but by accepting their cards you actively get into contract with them. You are doing business in that country. As a bussines owner i am sure you know that. You do you but it would be quite sily defense. Playing dumb claiming its the peoples fault instead of changing that supported countries list in Stripe.

I’ve entered into no contract with the German government just because Hans decides to punch in his credit card number into my website.

What I'm saying might be a silly defense to you or an EU attorney, but again, I don’t need to care unless you have some way of enforcing your inane ideas that declaring jurisdiction over me makes it so.

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

#78

Post by rnewme »

alexanderchr wrote: post #60
rnewme wrote: post #45

Earlier quoted context omitted.

Ta wire looks interesting. Let me pick your brain here for a moment, my wife is looking to start SaaS soon, she is based in EU but intends to open both EU and Wyoming llc. Wyoming llc would sell B2C, EU llc would then invoice Wyoming llc monthly so she and her future employees can get paid. Since the eu country doesn't have tax agreement with USA the anon llc would be practically invisible to EU, and additionally as…

Be really careful with this unless you know what you’re doing. Setting up a foreign entity that only collects revenue and pays royalties is a known trick and will be looked at very closely by tax inspectors. Worst case they will consider the foreign entity artificial and tax it as if it was a local company. My recommendation would be to keep things simple with a local company, and start worrying about complex structu…

But the local bureaucracy is the problem, not the tax. I would actually pay more tax in my scheme, but not have to deal with complex tax tracking, remitting etc..

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

#79

Post by matthewtse »

notpushkin wrote: post #38
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?

A few blogs mentioned that as an external US entity, you probably want to do VAT with Ireland (basically you deal only with Ireland for paying VAT, and what you pay gets forwarded through the system to all the other EU countries).

The reasons they cited were that it's in English, they have among the shortest initial application times (a few weeks vs. a few months for others), and that they're generally the most business friendly (which you can guess given how they attracted all the US tech companies as as tax haven).

In practice I've found this to be the case. I've had a few email chains with the Ireland tax authority, and they were responsive within a few days. And I got things done. Though I was surprised to find that the "best" EU tax authority was still worse than the IRS.

Things I was surprised by: 1) It takes an extremely long and complicated application form (and several weeks) to get an EU VAT number to pay VAT taxes. By comparison the IRS lets you get an EIN instantly, and you only need to fill out a few fields 2) Setting up a login to the Ireland Tax system is the worst thing in the world. I expected a simple username/password type system. Instead: you apply, then you have to remember a code, they don't give you any confirmation email, then 3 weeks later they send you an email giving you another code, and you have to hold onto that code, because you need to wait 72 hours for the database to update, before you can enter that code to create a certificate (but you don't know to use the first code or the second code), and you then need to save that certificate to your local machine, and re-upload it whenever you want to login. It's actually even worse than I describe, but I honestly cannot even remember all the steps 3) When filling in how much VAT you owe each country, you need to fill out every country and every amount manually, no way to upload a CSV or anything

If this is how bad Ireland is, I imagine other EU countries are even worse.

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

#80

Post by clementmas »

pqvst wrote: post #40

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 Nor…

Same here but I was surprised to see that Stripe tax didn’t provide these monthly summary reports. Or did I miss something?
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