Got our 1st customers! 🙌 Getting paid - Stripe or Paddle to avoid VAT hell 🔥?
Hey Indie Hackers,
we got our first customers for Leadsie Connect (https://connect.leadsie.io). Until we have payment properly integrated, we're just going to send an invoice to get paid. Stripe seemed easiest, however I'm worried about VAT complexity, dealing with quarterly submitting of VAT back etc.
Now I've looked into Paddle, and it seems quite interesting. However, there's the 5% charge + $0.5 that seems quite a lot first . But maybe worth it?
I'd love to know your thoughts and experiences. Is the extra cost worth it? Are there cheaper/better alternatives than Paddle even? For now, we're talking <$500 per month, but hopefully 10X by the end of the year.
FWIW, our business is registered in the UK.
Thanks for your help!
Stripe. Hands down.
Did you know you can just charge the VAT of your home country to customers if you do under 10K Euro/year?
Link here
"Special rules for low annual turnovers
There are some exceptions; these simplified rules mean you can choose to apply the VAT rules of your own EU country (i.e. where you are established, have your permanent address or usually reside) if you meet the following criteria:
you are established, have your permanent address or usually reside in only one EU country
you supply telecommunications, broadcasting or electronic services to non-taxable consumers who are established, have their permanent address or usually reside in another EU country
the total value of your supplies of telecommunications, broadcasting or electronic services does not exceed EUR 10 000 (exclusive of VAT) in the current calendar year, nor did it do so in the preceding calendar year
In this case, you won't need to register, file VAT returns and make payments in each of the EU countries where your customers reside (nor register for the MOSS scheme). Instead, you charge VAT to your customers at the rate in your country, and pay and declare that VAT to the tax authorities in your country."
Thanks Anders - but I guess that would only apply if we exclusively had customers in the EU?
True,
You would still have to figure out which customers are outside the EU and not charge them VAT.
Currently using both Paddle and Stripe for two different products.
I can confirm that handling VAT is a PITA, there are solutions to plug on top of Stripe that do that for you, bu then you end up with fees that are in Paddle territory.
Paddle has the best experience in this regard, you get one check per month and you create one invoice directly to them, not to every single customer.
That being said, their API is nowhere near as nice as Stripe's one, and you probably won't be able to offer as nice an experience as you would if you built on Stripe. Easy upgrades, coupons, customized checkout. Depends a lot on your priorities. Happy to go further into details if you have specific questions.
Great, thanks for your comment Frank. I think Paddle sounds like the right solution for now. I don't think there's a lot we need to do with the API at this stage.
Looks like you're also using NodeJS/React for Mailbrew - any issues to integrate? I'm guessing no, but while I have your attention I thought I might ask :)
Thanks for your help!
Best
Johannes
We are using Paddle for Boxy Suite. No particular problem in integrating, you just need to spin up a backend and handle webhooks. Take your time as they have some quirks.
By using Stripe, you still are in the VAT/TAX hell...
We looked at both and considering the payments/tax is easier with Paddle, we picked Paddle and integration is smooth as well. Yes, Paddle is not as shiny as Stripe but it serves the purpose.