Paddle users, how is their U.S. sales tax support?
As a U.S-based b2c saas, I'm trying to figure out the best way to implement billing while maintaining compliance with U.S. state tax laws and international VAT.
Paddle as merchant-of-record seems like a popular solution. But since they are a UK-based company, I wonder how good their U.S. tax compliance and solutions are.
Does anyone have experience with this?
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Using them in the US, I'm pretty sure (not positive) that they use paypal under the hood, and state taxes are all handled just like international. There are some drawbacks (they don't do timed demos or have a dev environment) but not having to worry at all about collecting sales tax is a win early on.
Thanks for the feedback! I'm trying to figure out this whole sales tax/VAT compliance nightmare. I'm familiar with U.S. state tax implications (i.e. the Wayfair ruling), but it would seem that U.S. saas businesses are on the hook for international VAT as well.
And vice versa – I believe EU and international companies are on the hook for U.S. state sales tax.
I can't for the life of my understand why anyone would use Stripe and be on the hook for tax compliance in 50 states plus countless international countries. Even using tax calculation services like TaxJar or Quaderno, you would still be on the hook for registration and submission.
The only thing I can think of is that most people are probably just focused on complying with sales tax in their country/region and ignoring compliance in foreign countries.
It is kind of suspect that the only articles I found in my research that talk about sales tax/VAT compliance are written by companies that sell you sales tax/VAT services/software.
That couldn't be more true. Also, Stripe is way more developer friendly from what I've seen. But developers can get calls from the IRS too, so I'm not sure that holds up in the long run. I actually think there's a market gap between these solutions, and the first company to make compliance totally pain free on a platform other than paddle is going to do really well. Of course if you launch the app stores then you can just pay their absurd fees to take care of it for you 🙃
I've seen FastSpring also mentioned as an alternative to Paddle, but they seem less popular and also more expensive.