My Vat-Moss experience so far

Discussions
#52

Those who know me know I have a thing for spreadsheets (cue Alan Partidge - “That’s saaad”). So I made one to compare come EU VAT compliance costings. I thought you may find it useful so here it is.

  1. Copy the whole sheet and save it as your own.
  2. Enter some sensible data in the yellow cells
  3. Note the relationship between the different services changes depending on price, volume etc.
  4. keep in mind I am in Australia and have added forex losses for that. You should adjust accordingly.

If you see any problems please let me know and I’ll update it.

I hope you find it useful, if not a little enlightening on the real costs of SAAS. I did. Whoa.

Hey @polimorfico - you should get onto this sort of comparison, it’s a real eye-opener.

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#53

Interesting spreadsheet! I’d add a couple of points:

  • Stripe forex fee is 2%, I think.
  • Using one of the payment options that acts of “seller of record” is more expensive, but it makes your work life much simpler. For example, with FastSpring I receive one monthly payment, that needs only one line in my bookkeeping software. It is hard to emphasize enough just how much simpler that made running my business than today where I use a home-grown solution built on Stripe.
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#54

Thanks Steve

I did Stripe’s forex at 2% - it’s in B17:B20. There’s a link to Stripe’s page on forex in the note @ B17.

You can nominate weekly or monthly payouts in Stripe too. I also plan on keeping the volumes away from my Xero books and just accounting for them in batches. I’ll apportion the batched income against the different product in one line each. Or maybe not, since something like Quaderno or Fastspring already has reports for that. Otherwise I just need a line for a second tax account for EU VAT, NZ GST. It’s not much harder than my quarterly GST return.

It’s the forex and double-forex that really kills me, money-wise. Stripe has a maximum of one forex at about 2% whereas I can easily get hit twice with hosted solutions based in a first-world currency.

I looked at Quaderno’s blog, registering for VAT & filing a return doesn’t look too difficult if you have all the numbers to type in. I’d
happily burn that hour for times per year to save literally thousands of dollars. Bonus: I get to earn interest on the VAT while I hold it. :smile: Bonus: I get to pay forex on it when I pay it. :frowning:

I have had worse experiences with bookkeeping: https://icanhazdot.net/2009/07/04/what-i-want-from-accounting-software/ & https://icanhazdot.net/2008/09/19/million-dollar-idea-quickbooks-myob-for-humans/

Bonus: Quaderno goes AUS GST too, and NZ GST. I also like how it makes proper invoices so my Xero books won’t get too crowded - I’d hate to individually reconcile all those sales I’m going to have! I hope.

I also like that you can drop a payment button on a WordPress site with ease.

I just heard from Quaderno that they are now supporting multiple Stripe & PayPal accounts on the same Quaderno account.

Yeah, this just got a bit gushy, I know but I think Quaderno is probably the best solution for me. It may not be as lucrative for others unaccustomed to accounting for GST / VAT, don’t get beaten up by forex costs because South Pacific Peso, and don’t make their own web sites and don’t want to use Zapier.

Just fixed some errors on the spreadsheet… for the info of anyone who may have copy-pasted it.

2 Likes
#55

Wow!! Thanks for the comparison, Ewen. I always knew that those middleman apps were quite expensive in the long term but now it’s much clearer with your spreadsheet.

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#56

So the rest of the world has joined the party. Here’s a good roundup: https://www.taxamo.com/support/regions_supported/ Spoiler: there are 11 regions listed. Unrelated: it’s a shame Taxamo haven’t learned the value of a pricing page.

Well, perhaps offloading the responsibility of the fiddly ones to a SAAS service is a good idea to avoid spending most of your money and your life doing tax returns. You could cherry-pick the regions that are cost-effective to handle yourself and hand off the regions that are too cumbersome to contemplate a SAAS that acts as the designated supplier (seller of record, whatever the term is) the like FastSpring, Gumroad or Paddle.

There seems to be some interesting differences in the way some of these handle sales taxes.

I wonder what happens if / when they get busted for not paying tax? Who cops that bill?

This is getting silly.

My highlighting but that’s a highlight, alright.

I hadn’t looked at FastSpring for a while, I didn’t know their new system does on-site popup checkouts.

@SteveMcLeod do you still use FastSpring? I am still leaning towards them for non EU & non AUS transactions and Quaderno for both EU & AUS. Well, that’s my latest whim. It would suck to run more than one CRM / Subscription management system.

#57

Yes, I still use FastSpring on a small scale, as a backup to our home-coded system. I’ve got a lot to write on this topic, way too much for a discussion thread that’s already very long!

In a nutshell, if you are just getting started with a billable product or service, I recommend choosing an option that is quick and easy for you. Don’t waste time implementing a full payment processing system in order to save a few percent per sale. If your product takes off, you can change later to a home-coded system. Until then, any time you spend designing and coding a payment processing is time you are not spending on the core functionality of your product.

I’m no longer an ardent disciple of FastSpring, but they do give you a lot in return for their cut of your sales.

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Norway, Japan, South Africa want you to collect VAT on sales to their residents
#58

Partner with Taxamo and we will assume the entire liability for VAT and GST on your digital sales. We take responsibility and liability for the end to end processing of the tax element on every foreign sale.

https://www.taxamo.com/features-taxamo/

Spoiler alert: it’s GBP1,495 to set up + 5% per transaction, on top of gateway charges. It looks like they binned their existing API service, I can’t find it on their site.

This is Obviously not aimed at startups, you’d have to be earning well already to justify that, and have your own CRM, automated emails, Dunning etc systems in place. So why would you switch away from Paddle, Gumroad, whatever, when you’re at that stage?

Hey @polimorfico - you should landing page the hell out of that, they just handed their market to you.

The way I think this will pan out of me is very similar to @SteveMcLeod’s story: Start with FastSpring, wait & see if there are any major income leaks that I actually have the resource to plug, plug them. I’d imagine it would be AUS, EU & UK sales so Quaderno would solve that nicely. Everything else stays at Fastspring. I also imagine that will be a very, very long time coming, I would have to replace all of the features and integrations that someone like FastSpring offer. That is no small task.

…or building new products. And that’s the hack.

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Norway, Japan, South Africa want you to collect VAT on sales to their residents
#59

Hi,

Can someone please explain how the VAT thing works with Taxamo/Paddle/etc?
I am EU-based.

  1. If I have registered my company (which I am obliged to do because I am getting money without working as a contract employee), and I get payments to my bank account , I am supposed to file VAT returns from that money. But if Taxamo/Paddle pay this for me, I assume they do it never mentioning me. How do tax authorities know that I am paying the VAT through a third company?

  2. Let’s assume that I have registered my company, and selling my products to e.g. Gumroad which is US-based. Then I don’t pay VAT, because I am selling from EU to US. And then Gumroad re-sells my product and pays all the necessary VATs. But since I am constantly selling my products to the US-based company, doesn’t it mean that I have to inform US tax authorities, because my “customer” is always US-based? They have some super complicated nexus-system which brings me to the point where I have to figure this whole nexus thing out instead of VAT…

Please tell me I misunderstand something and it is not that complicated.

#60

Re: 1.
We’re using Paddle — we’re a EU-based company — and also get a monthly payment from them.
To justify that we already paid our EU VAT, we ask Paddle to provide us their reverse-invoice after each payment. Too bad we don’t get that invoice automatically, but well, it works fine for our accountant.

The invoice is basically a list of how many transactions you made in each currency, and how much VAT you owe, minus Paddle’s fees. And the total amount is what you actually get in your account.
To make it clear: we don’t have to pay the VAT afterwards, the invoice just states how much VAT Paddle owes for us.

As a precaution and in addition to this reverse invoice, we also make an export of all the transactions of our sales, where we can see the country of each sale, and the gross + VAT + net amounts. Total of these should match with the totals on the reverse invoice.

#61

Thanks a lot for your answer! It’s really helpful! But if I use Paddle, do I still have to register my company for VAT? I thought that it works so that I will be selling my product to Paddle (which is EU-based company, so it’s B2B transaction between me and Paddle, thus 0% VAT), and then they resell it to the real end customer. So Paddle submits VAT for the sale that they did, from their company’s name. And I sold my product B2B to Paddle, with 0% VAT, so I would assume that I still need to register this in MOSS? Or am I wrong?

And also another question: 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?

I am sorry if my questions look stupid, I haven’t even registered my company yet, just trying to figure out the tax thing. So I am completely new to this.

#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.