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My Vat-Moss experience so far


#62

Many of the answers are all on their site.

A key component of this is what EU country will you incorporate in?

“when I submit my income information to the tax office, do I need to show only what Paddle has paid me (like those monthly payments you get), or all the transactions that have been made to the end customer?”

Paddle is a reseller - you sell to them. They sell on to end customer. The only transactions you need to account for are the sales you make to them.

And a warning to get prepared - if this is B2B then for anything thats not trivial you eventually will also be dealing with direct sales and sales via Invoices.


#63

@Amina

You still have to register for VAT, but you are not responsible for collecting VAT. If you sell to paddle, they will use the EU reverse charge system. However, if you use fastspring, you don’t have to do any VAT with them, because they are outside of the EU.

You are not selling with 0% VAT, you are selling without VAT to paddle and they are responsible for VAT. So you also don’t need to do MOSS.

I’d advice to compare paddle, fastspring and avangate for your country and situation. Just ask them.


#64

Thanks a lot for your response! Actually, I just got an answer from my local tax office and they said they would classify my business as “consulting”, but not e-service. And Paddle just confirmed that I can’t use their services. Do you have any Paddle and Fastspring alternatives in mind that can handle selling regular services and dealing with all kinds of sales taxes? I am looking into Avangate now, but I haven’t got any response from them yet. Now it seems to be easy to file VAT returns for EU clients, but I have no idea what to do when it comes to some international clients and all those extra GSTs. I’d rather use some kind of service than digging into all the regulations myself.


#65

Thanks for your response! What do you mean “for anything that’s not trivial”? Do you mean if I sell to the customer myself?


#66

@Amina If you do consulting, different rules apply. Paddle, fastspring and avangagte offer help for e-service. You can’t use them for consulting.

Normally (I’m not a tax advisor, so check) as a consultant you don’t charge VAT for your EU clients. You put their VAT number on your invoice and the clients themselves have to do a reverse charge. This also means you don’t have to do VAT MOSS.


#67

“for anything that’s not trivial” - I mean for anything that’s not a really simple app (e.g. billed in hundreds or thousands of $ £ € rather than tens) you eventually will come across a customer who can’t/won’t use a credit card and payment processor and instead insists on dealing directly with you.


#68

This is some great work, big thanks !!! from down under

Those who know me know I have a thing for spreadsheets

Same here, I even do my flow charts in spreadsheets !

Glad I found your XL .
Cheers !


#69

So in the end did you go with Quaderno + Stripe option with 7.09 % annual fees ?
Thanks


#70

Still haven’t launched. I plan on launching 2 products in the next few months, one at less than $100 which I will almost-definitely sell through FastSpring, particularly the subscription side of things. I’d rather pay them to manage all that than maintain an eCommerce site with subscription management, dunning etc. Ain’t nobody got time for that.

The other product, which is well north of $1k/yr, I will manage manually because the market isn’t huge, less than a hundred, probably. Well ,if it is more than that then that would be a good problem to have.

In both cases I will manage the license authentication myself. I bought Infralution and will tweak it because I have a few things I want to add to it.

from down under

We’re probably neighbours - I’m in Sydney


#71

I was wondering what kind of pain point is Fast Spring going to solve that Quaderno or something similar does not ?

Per your sample annual sales spreadsheet FS is 200% times more expensive ,so for example $ 3500 more than Q.
But even if Q is selected and if at all there need be an reasonable European accountant is hired to file the Vat Moss 4 times a year , it will still work out cheaper than paying 200% times more ( ie. reducing your total profit margin by 11% !) .

I am just thinking out loud, I have yet to begin the online selling journey .

I would like to brainstorm the option of ’ Non % charging VAT tracking system + EU Accountant ’ here with all of ya , who been doing this for a while , while I am just a newbie. So something like Q can do 90% of VAT job and the rest 10 % that falls through crack + final due diligence could be done by accountant . Quickly did search on Gumtree UK and found some reasonable accountancy firm ads.

Is the convenience of letting FS/ ( % based system) handle everything about VAT worth a sacrifice of 11% of profit margin ?

Side conversation : Taxamo is another option I came across , but they don’t have pricing on their website , so I am assuming they must be expensive .They have some overlay on your payment page or something and they pay VAT on your behalf.

I am here on the west coast mate.


#72

The spreadsheet costs for e.g. Fastspring vs Stripe/Quaderno hinge on the currency conversion costs.
You can substantially lower these costs by using a transferwise account. Basically the payout from Fastspring to you won’t incur conversion costs.

For me reducing the hassle of VATMOSS has quite some worth.


#73

Dunning, credit fraud, subscription management, PCI-DSS, VAT, VAT, VAT, VAT, NZ GST, VAT, VAT, webhooks for licensing etc although you can do that with Quaderno & Zapier, purchase orders (they manage that)

Yup, I was just going to chime in with that. Currency conversion is a big factor. I have also done the sums without currency conversion (try it) and, especially with subscription management (dunning etc.), it just wasn’t worth my time to try and figure all that out and then maintain a whole system. Even if it is WooCommerce or something like that, time is money so don’t let the lower price-tag fool you (more on this in a moment). On the low-volume, big-ticket items, sure - they will be manual most of the time anyway. If I get more than a handful of EU sales that I have to collect VAT on then I’ll probably follow the Quaderno route. My stuff is B2B so most of my prospects will have a VAT number.

And this reason. This is the big one, the slap we all need from time to time. I’d rather pay more to make more sales than make a higher margin on the smaller returns of a half-baked effort.

Well, that’s the theory.


#74

Where you able to actually do this ?

I had similar idea of using TransferWise account with Stripe to avoid forex costs, BUT per my research found 2 things -

  1. TransferWise charges ‘Mid-Market’ rate ( which IMO is best in the market), it is ~ 0.35 to 1% which is less than next best , Stripe which last I checked charges 2%. So effectively you will save some % on forex. Whether 1 % to 1.35 % saving is worth the hassle of having to deal with 2 different financial entities I guess will be based on individual use case.

  2. ( deal breaker) TransferWise does not accept money if the sender is not you ? I might be totally off on this one but it would be helpful if someone with experience could provide input. I am assuming TransferWise will treat FastSpring similar to Stripe.

Source :
https://transferwise.com/help/article/2200390/creating-a-transfer/incompatible-accounts-and-currencies
"When sending money to TransferWise, there are unfortunately a few types of bank accounts that we cannot receive from, as they do not include your name as the sender. These include, but are not limited to:

  • Brokerage accounts
  • Estate accounts
  • Stripe Accounts <<
  • PayPal Accounts "

#75

True that :facepunch:


#76

It seems @SteveMcLeod got this working:

and Daniel:


#77

Borderless is not Transferwise, they are different products. I asked their support about this. The “no” page is the Transferwise page you are referring to. Their reply…

You are correct that the ‘No’ page is not related to Borderless. This is for our regular transfers that are made from one currency to another.

Payments from third parties are only allowed if our customer has a Borderless account with us. With Borderless, you can receive third party payments from wherever you would like using your Borderless account details. You can have a bank account in four currencies: AUD, USD, EUR and GBP.

However, payments from Stripe, Paypal, Amazon, eBay, UpWork and other payment service providers will depend broadly upon how the transfers are sent. In order to see if you can receive payments from Fast Spring, please consult with them to find this out.

Basically, anyone can pay into your bank account as long as they meet the criteria at https://transferwise.com/help/article/2811598/borderless-account/what-type-of-payments-can-i-receive-into-my-borderless-account. In most cases they can’t do international transfers into the Borderless account - only domestic.

https://docs.fastspring.com/getting-started-with-fastspring/ways-to-get-paid-by-fastspring seems to be compatibile with Borderless.


#78

@unboot nice , thanks for the links


#79

Thanks for checking with TransferWise.
If someone is based in Australia , and uses FastSpring for payment processing , then I am assuming they will use TW to convert USD ( FS’s base currency) to AUD while remitting payouts to their bank account ?


#80

I’m in Australia and that’s the way I plan to use it.


#81

So, at the end of 2017 I looked into the conversion costs from Fastspring to my EUR account.
Basically, by using direct deposit I pay about 1.3% to 1.4% conversion cost (~i.e. for 100 USD I receive 98.7 USD converted to EUR at interbank rate)

If I would switch to transferwise borderless, then I had to pay the USD - EUR fee of 1% + a withdrawal fee of EUR 0.60.

Given this, at least for me, it is not worth the hassle to switch.