How does your Europe based SaaS collect payments? Taxes are hard!

Hi all!

I could use some advice from fellow EU hackers ...

Short version: If you're based in the EU and simply use Stripe, you might well be violating the law regarding taxes. There are solutions, but they are far from perfect.

I am currently implementing the payment system for TimeTurtle. I had it about working with Mollie (a kind of Stripe, based in the EU), but when I got to creating invoices it hit me: what tax rate should I apply?

Then I ran into this article by Stefan Bauer, which was a big eye-opener, and somewhat depressing. It turns out that if your business is located in the EU, the tax that you should apply is really hard to determine, since it depends on different things. And even if you'd get it right, there are several countries that require you to pay taxes THERE when a resident of that country buys your product, which is madness for a small company.

After some more digging, I found that the "solution" is to use a payment provider that acts as a "Merchant of Record" (MOR). In short, they re-sell your stuff and take full responsibly for taxes, invoices, etc. Then each week/month there is just one transaction (in terms of accounting) to pay you. Pretty nice.

The MOR services that I found are FastSpring, Paddle, and GumRoad. I've tried all three, but to my surprise, for recurring payments, your clients are limited to credit-card and freakin' PayPal. It's unfortunate that SEPA is not available, since it's common in Europe and (at least in The Netherlands) not everyone owns a credit-card.

I am curious how other EU-based hackers work with this situation. Do you ignore it? Am I missing something? Are there other services I could use?


  1. 4

    I went with Gumroad, it's "funny" that in order to run a start-up in the EU I'm bound to using a US service to handle EU VAT.

    Also inspected Paddle but choose Gumroad because they also handle customer accounts etc. As far as I could tell I had to code a custom customer portal that would then interact with Paddle. It's on the todo list to eventually switch over but for now Gumroad offers enough flexibility and allows me to focus on my products instead of being worried about taxes.

    1. 1

      Thanks for sharing! I actually do not like Gumroad's customer account , because I don't want my users to have to create yet another account.

      Yeah, with Paddle you need to do some coding, but the API seems pretty good, and the subscription object has links where you can direct the user to edit or cancel the subscription.

      1. 1

        If I had the time to write a customer portal I'd do it. So if you're deciding between Gumroad and Paddle I'd go with Paddle.

  2. 2

    Hi Almar,

    We have just launched Abowire, to solve exactly what you posted. Abowire is an all-in-one Subscription Management software for European Businesses. We handle payments, banking integration (through Open banking), recurring billing, Taxes (VAT Compliance & Moss Reports), Invoicing, customized checkout and some basic analytics.

    I am one of the Co-founders of the startup and we are looking for early adopters to work together through this phase, especially startups with SEPA or banking payments.

    Let me know if you are interested, I'd be more than happy to share our product. Just drop me an email to [email protected]. We are based in Berlin.

    1. 1

      Hi @Andres_c1 I've been looking at this post again, and realize I haven't tried AboWire out yet. I realize that what's holding me back is the cost. My app (still) does not generate a lot of income, so I try to keep it lean. If there was a tier without fixed costs but an additional fee/percentage per transaction, I would be much more inclined. I imagine that this applies to others who are bootstrapping an app.

      1. 1

        Hi Almar, thanks for your interest in Abowire and honest feedback. We are discussing with the team to give a life time discount for Indie Hackers users. Please write me an email to [email protected] and we follow-up from there. Looking forward to hearing from you.

    2. 1

      Thanks for the heads up. I will definitely try this out!

      BTW: when viewing your website with an ad blocker (Privacy Badger) the images are not shown.

      1. 1

        Thanks for the tip! Looking forward to hearing from and show you the product 😛

  3. 2

    It's really difficult, until it 'clicks'. Then it's just annoying.

    This is a good explanation.

    1. Customer is from your country? Use your local VAT.
    2. Customer is from outside of EU? Don't charge VAT.
    3. EU and B2B? Reverse charge, so 0%.
    4. EU and B2C? Use the local VAT of your customer's country.

    If you're using Laravel (Cashier) this package really helps.

    1. 1

      I don't think this is fully correct:

      • For a customer outside of the EU, you need to charge the VAT of the customer's country. Which may depend on whether its B2B or B2C, and also the total amount of sales in that country (this is what the Dutch tax office says, at least).
      • Stefan mentioned that there's also special rules for customers in Europe but outside of the EU.
      • Maybe details like the above depend on the country where you're in?
      • EU and B2C, when using MOSS -> use your local VAT.
  4. 2

    In a very weird way, I'm really excited to read this!

    I’ve been developing a SaaS tool called Abowire to handle exactly this for a few months now... This post is really useful to me :)

    Abowire helps you manage your subscriptions, handles recurring payments (through Adyen, Stripe and Paypal for now), EU VAT calculations, invoicing and doesn’t require any code to get started (although an SDK and REST APIs are available).

    I haven’t officially launched yet, but if anybody is interested in beta testing, you can sign up here: https://abowire.com

    I’m also really interested in any input of things missing on existing platforms. If you have any, shoot!

    1. 2

      Cool! First thing that pops to mind, how does Abowire differentiate itself from ChargeBee, Quaderno, Stripe Billing, etc.?

      I was going to suggest that a Paddle-like service, but more aimed at EU companies (e.g. more EU-like payments, like IDeal, Sofort, etc) would be interesting. Though I suspect "being a Paddle" might require more people, as you take on quite some responsibilities.

      1. 2

        Exactly that! I want to make a more EU-centric tool with a light integration footprint. Most tools require you to code somewhere.

        As of now, I have the Checkout and Plan comparison components that you can integrate to any landing page (or even just link to a hosted version).

        I'd love to take the whole tax filing burden out of customers like Paddle does, but it requires a lot of compliance, making it more expensive and risky than I can handle for now. Maybe at some point though! :D

  5. 2

    I'm not sure what's the case in the Netherlands, but in Sweden it has been surprisingly straightforward to register for MOSS and handle declarations.

    If I were you, I would check if the Dutch tax authorities have any guidance and resources on MOSS. It might also be worth checking if you are eligible for the simplified rules: https://europa.eu/youreurope/business/selling-in-eu/selling-goods-services/provide-services-abroad/index_en.htm#rules-annual-turnovers

    1. 1

      Thanks for the tip! Yeah I learned about these options just today. This will certainly make it easier to handle taxes yourself. Though I still find the Paddle approach very appealing :)

  6. 2

    With some more insight, I think we can more or less break the options down like this:

    • Use a pure payment gateway like Stripe, Mollie, etc.: They will handle the payment, and that's it. You have to generate invoices, make sure the taxes are correct, depending on the customer, and return taxes in the appropriate countries.

    • Use a service like Stripe Billing, ChargeBee, Quaderno: They will handle the invoices and make sure the tax is correct. Then they provide you with reports about the total tax that you are due in various countries, which you will have to handle/pay yourself.

    • Use a MOR service like FastSpring, GumRoad or Paddle: They handle the payment, invoices, tax, and handling of the tax. There is one periodic payout transaction between you and them.

    Makes sense? This is all quite new for me, so any help to get this more clear would be great!

    1. 2

      Sounds about right - option 1 & 2 are just a pain if you are not making large amounts. When starting up 3 is just better in my opinion - get someone else to do all the annoying admin and just get paid in lump sums regularly.

      I have used Fastspring for subscription products, it removes a lot of headache and is quite simple to integrate fulfilment using simple webhooks and automated emails.

      1. 1

        I agree; I'm more a hacker than an entrepreneur. Though I can imagine that someone with more business affinities would favor 1 or 2.

        I made an account with Fastspring to try it out, but it feels overly convoluted to me. And I have not been able to find what their pricing is.

        1. 1

          I have been using Fastspring for about 10 years. But actually looking at them now, I agree that it seems convoluted, complex and difficult to find pricing info. Basically the UI looks the same now as when I started. Given the choice today I probably wouldn't choose Fastspring either. What are the other options today - is it only Gumroad and Paddle if you want VAT managed?

          1. 1

            Those are the only three that I am aware of.

  7. 2

    We do use Paddle.com since 2+ years for CashNotify, and are quite happy about it.
    It's nowhere as flexible as Stripe, but the basics (checkout, basic API) are well done.

    Also, and biggest advantage: we don't have to manage VAT at all. No invoice, na VAT rate. That's killer.

    We do have an issue with them lately about lots of fraudulent PayPal transactions — but we're working on it.

    1. 1

      Thanks for sharing. Any thoughts on GumRoad, which is cheaper, but less slick?

      1. 2

        Not really, we didn't use them.
        I feel it seems great for simple purchase flow (like one-time app purchase, ebook, videos, design resources, etc.), but as we need a bit more advanced stuff (multiple plans, extending license, upgrade options), it felt too limited.

  8. 2

    I've recently had to redo my invoices because of requirements on French law.

    Turns out, they can charge you 15€ per missing item PER invoices.

    As a SaaS owner, you can quickly have hundreds, even thousands of invoices (imagine 100 customers paying a monthly subscription).

    Taking a look at my invoice, I was lacking several items. A control from the state would have killed my business. Of course, this went into top priority and has been resolved, all the invoices are clear now.

    But you need to be aware of this!! ... I wasn't!

    For information, here's the list of required items that must be present on an invoice for French companies (in French):


    1. 1

      Thanks for sharing, that sounds like a painful experience! So how are you determining the tax rate for your invoices right now?

      1. 2

        It depends on MOSS in fact. If you are using it, you need to apply the vat tax of your user's country when the user is in the UE. Otherwise you need to apply the vat tax of your country (again, for a user that lives in the UE).

        If they provide a VAT number, the tax is 0%.

        For France: if the seller and the buyer is French, regardless of if they are company or individual, you need to apply the vat tax (20%), even if they provide their VAT number.


        1. 1

          Thanks, I had seen the term MOSS but never knew what it was. Using it would make it considerably easier to handle taxes yourself.

          1. 2

            The main challenge with MOSS is that you need to apply the correct VAT at the time of billing. So while MOSS helps with reporting VAT across all EU states (instead of having to report to each countries tax office individually) you still get no help with making sure you are charging the correct VAT. If you just charge a flat product fee across all countries irrespective of VAT you will actually be charging customers with low VAT a higher product fee and those with lower VAT a higher product fee. That might be ok if you charge low cost items at €5 across the board but if you charge €2000 per sale then the difference is significant (about €60 highest to lowest VAT)! Then you also need to provide the receipt with a specification of the VAT at the time of sale, doing this manually is doable but not fun...

  9. 1

    I do my in-game payments through a US company. They collect the payments, take a cut and they pay me monthly. Unfortunately it would be impossible for me to do proper accounting of tiny amounts of money.

    1. 1

      Could you share the name of that company, or is it targeted at games only?

      1. 1


        they handle virtual credit payments - can be used for anything, not just games

        Please let me know of any alternatives you know

  10. 1

    I've used Quaderno in the past without any friction:


  11. 1

    I heard Paddle.com handles taxes, check it out.

    1. 1

      Yeah, I am quite impressed with Paddle. If it would support SEPA payments I would go for it. Or maybe I should just forget about it, maybe card + Paypal is enough ...

      Also looking at Stripe Billing now. Also very smooth, but the idea of Paddle handling everything and having one invoice per month instead of some-hundred is very tempting...

      1. 2

        SEPA is nice to have, but not a killer argument. 80% of my Customers (B2C/B2B) come from Germany and most pay with Paypal, because they have already linked their Bank Account in PayPal. PS: I'm using Paddle ;-)

        1. 2

          Yeah, linking your bank account with PayPal should be a pretty good alternative to SEPA. I'm getting closer to just going with Paddle :)

            1. 1

              Nice catch! Now how to activate it? Because my checkout does not have that option and I have not seen a checkbox for it ... I'll contact support.

  12. 1

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