Question about Paddle!
So I'm planning to make Paddle.com our primarily billing solution for my start-up, and love the idea of their simple worldwide tax compliance.
They act as a "Merchant Of Record" (MoR) meaning they take all tax-compliance responsibilities. Meaning companies like us can focus on the fun building part of operations.
My question is, has anyone from the UK (here on Indie Hackers) joined Paddle?
I'd like to know how you handle the NET amount Paddle send you as the vendor with your accountants.
My accountant said the following:
"you would need to be VAT registered in order to reclaim any UK VAT charged by the supplier (Paddle). Reverse charge would not be applicable to you as you are a UK company and Paddle are also a UK company."
In your experience, did you (as a UK company owner) have to register or pay VAT for the amount Paddle sends you monthly?
Thanks!
The major difference between a Seller of Record, a Payment Service Provider and a Merchant of Record is that the MoR handles the entire transaction process from start to finish, taking care of everything related to the sale and any payment, tax, or compliance issues.
Read our article to learn what Merchant of Record (MoR) is and how it impacts your business: https://bit.ly/3r4eTFS
If you got any MoR or tax-related questions, schedule a free consultation with us at https://payproglobal.com/
Not sure if I'm too late to answer this, but no - you don't have to pay VAT for the amount Paddle sends you, as Paddle has already taken care of that for you. However, if you input your VAT number in Paddle (which means you'll have to file for VAT manually yourself), Paddle will exempt any VAT from your sales price.
Here's Paddle's official documentation on that: https://help.paddle.com/hc/en-us/articles/115002257665-I-need-a-VAT-Refund
That link provides no evidence at all to support your statement.
Don't get me wrong -- I'd love it if someone, somewhere, could provide an actual official source for this claim that's made by literally everybody. But nobody ever has, notably including every single MoR service provider.