Ask HN: Small EU SaaS providers, how do you deal with VAT compliance? | Hacker News Reader

Ask HN: Small EU SaaS providers, how do you deal with VAT compliance?

18 pointsmbrock15 comments

It would be nice to hear some stories about how it's not that bad, because at the moment it's one of the things that make me a bit anxious about doing small scale SaaS business in the EU.

(I have a limited liability company in Sweden.)

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Hi Mikael! I built Quaderno (https://quaderno.io) to deal with this issue. Most of your customers are EU SaaS. Let me know if you have any questions. Happy to help :)

We are currently looking into this question as well, it does not seem that complex as we first expected. But would be great to compare notes, our current understanding below.

My current understanding for selling services if company located within EU (we are in Sweden)

- If customer is outside EU: No VAT charged ("reverse charge")

- If customer is inside EU and has VATID: Verify VATID, no VAT charged ("reverse charge")

- If customer is inside EU and do NOT have VATID: Apply VAT % for country where customer is located, charge VAT, pay VAT through MOSS system in country where your company is located

Aren't you supposed to get a second confirmation of location, such as the customers IP address?

Not from my experience. Many stores allow to set a different country as shipping address too (e.g. Amazon UK).

Good point, I had missed this previously.

It seems that there exist a number of categories of services and each has its own rules for determining where the customer is located. If the service do not fall within on of predefined the categories the below rule apply, meaning that billing address is not enough and secondary verification is needed. It seems that most Saas service fall under the below rule. [0]

Where the digital services are supplied other than in the circumstances listed above, the business making the supply must obtain and keep 2 pieces of non-contradictory information to support and evidence the member state where the customer is normally located.

[0] https://www.gov.uk/government/publications/vat-supplying-dig...

I don't have to handle VATMOSS (yet), but here is a list of providers/libraries that I found most interesting for my use cases:

https://pinboard.in/u:rsto/t:vatmoss

I don't expect to make enough money with my side business that a 3rd party provider would be affordable, at least not one with a fixed rate. The more I research, it seems OK to build your own solution at least for the beginning.

I've built my own system to handle it in Austria - its actually not that bad, once you automate it well enough.

Feel free to shoot me an email at lukas@fittl.com - happy to share notes and code.

I am from Denmark and currently I use cleverbridge to handle my downloadable software (http://www.watermark-image.com) and my SaaS app (http://timeblock.com)

The reason is that a) they handle VAT and b) I get a single invoice a month not 200+

Previously i used ShareIT and Avangate - they all have different pros and cons.

email me if you want to know more about experiences using those.

Both Gumroad (http://blog.gumroad.com/post/110080508463/vat) and Paddle (https://www.paddle.com/support/how-does-paddle-handle-vat-on...) are payment providers who will handle EU VAT for you. Paddle is probably more suited for a SAAS.

They are not payment providers but resellers. You are their provider and your customers are, in fact, their customers.

https://blog.ghost.org/moving-to-singapore/ one of ways how to solve it

i'm invoicing EU customers / clients using my US or new zealand company, while i use my UK company for UK only

Why not invoice your UK customers from the US or New Zealand and save them from having to pay VAT too?

that's what i also do more often than not

Oh okay I was wondering if there were any commercial or regulatory reasons for not.

nahhh... not really

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