How do you manage international sales tax?
I run a saas business that currently operates and is based in New Zealand, but we're wanting to make the product available to all countries.
I'm having trouble finding any information about how to handle paying sales taxes in other countries and I can't seem to find anyone talking about it.
Stripe has features to detect which country a user is in and apply the correct tax, but how do you go about paying it? Is there a third-party service that makes this easy?
Quaderno wrote a nice guide on paying EU VAT tax in other countries. You might find what you need in Step 5.
Also, I've heard of another service called Paddle that is supposed to handle all of your taxes for you. A lot of indie hackers seem to use it.
Hey Jack, I am also from NZ. I am not an accountant, but here is my understanding.
If you make more than $60k NZD per year you need to be GST registered in NZ. You will pay GST for every invoice sent to NZ users. For overseas users, the GST is 0%. However, you'll need to be able to prove their location. (https://www.ird.govt.nz/gst/additional-calcs/calc-spec-supplies/calc-zero/calc-zero.html#internet)
This is similar to the UK, you will need to pay VAT for your UK users if your company is making more than £85k per year (https://www.gov.uk/guidance/vat-overseas-businesses-using-an-online-marketplace-to-sell-goods-in-the-uk)
Most countries have a minimum threshold before having to pay your VAT / GST.
In my opinion, make sure to pay your taxes in your country and pay the GST for NZ based users (if > $60k). Do not worry about international taxes until your business generates the minimum threshold only from customers located in the country.
If you do reach the minimum, you will need to register in each country and pay the taxes. At this stage, you will easily be able to hire an accountant to take care of filling your GST / VAT periodically.
Let me know if you found information that invalidates my understanding. I am also trying to figure it out :)
(If you are in Wellington, we should go get a coffee 👍🏻)
Hey Wal! In the UK at the moment (hence the interest in international sales). Back in Welly around March/April, I'll flick you a message later in the year :)
We are currently registered for GST despite being far from the threshold and my partner is managing the accounting side of things at the moment.
Paddle seems to be the simple solution I'm looking for. I'll continue using Stripe for my NZ customers and I'm going to look into setting up Paddle for international sales.
Awesome. I am going to Europe during that time too, I'll be back at end of April. I've setup a reminder.
I use Paddle for Bodo, their support is quite slow (~2/3 days to respond) but the rest is great.
This comment was deleted 7 years ago
Correct, thanks Thomas.
This page explains pretty well the situation depending on what service you use to charge your customers https://paddle.com/taxes-fraud-compliance/ (cc @jackcruden)
I just have it in the too hard basket, GDPR was exhausting enough.
But I have been looking at using https://fastspring.com to handle it.
[also a kiwi .. I had no idea there were so many here ...]
This comment was deleted 7 years ago