How are you handling EU VAT and GST?
Hey!
How are you are currently handling EU VAT/GST compliance for digital sales?
I'm looking to potentially launch an API / drop-in integration to solve my main pain points with EU VAT but I'm not sure how much of a problem this is for everyone else.
Everyone I've seen seems to be building their own custom solution or relying on open source libraries - but they all seem to use country code tables with an associated tax rate (which isn't 100% compliant). Even companies like Recurly seem to use a country code approach, which is surprising.
Would appreciate your input, and whether this is something that is already solved really well. Thanks in advance :)
I have also looked into this and found the TaxJar API, which calculates the tax rate based on the seller location and buyer location. If you are running a marketplace and only taking fees, it might be too expensive, but it's worth taking a look: https://developers.taxjar.com/demo/
If you're using stripe and have one-off payments, you can also directly integrate with a number of services: https://stripe.com/works-with/categories/tax-calculation
Do you have any info on why a table lookup of rates isn't compliant? That comes as a surprise!
Hey Jonathan,
It's a bit weird but there are actually quite a few territories (of the UK, among others) where tax rates are applied differently from the governing country, because they're sovereign territories of another state.
The chances of people having a significant number of customers in the areas are slim but still technically charging the wrong VAT rate and even if it was the correct VAT rate, the evidence for deciding the VAT rate would be invalid.
Some examples:
There is a pretty unhelpful but from-the-source definition on the EU commission website
https://ec.europa.eu/taxation_customs/business/vat/eu-vat-rules-topic/territorial-status-eu-countries-certain-territories_en
Just to expand on this with a particularly good example - Mittelberg is in Austria but is only accessible by road from Germany. As a result the VAT rate is charged at the German VAT rate, despite the country code being Austria.
Thanks for the detailed follow up Connor, that's super useful.
There is a big thread on this over at http://discuss.bootstrapped.fm/t/my-vat-moss-experience-so-far/2497/76 There are a few more threads there to on it.
Have a look at Quaderno, they have an API. Taxamo was another one but they went upmarket in a big way.
Thanks - I'll take a (long) read over that this evening!
I'm looking to provide a small API / drop-in checkout without touching your payment flow so that people can self-publish things like digital courses and ebooks without paying high % fees for tax evaluation on each transaction. Would be interested in finding out if there are any services that already fill that particular gap.
I think paddle collects EU VAT automatically. But I don't know what method they use. I am also interested in this topic.