

Ask YC: How do payment gateway users collect VAT? - cattledogit

How do SaaS or software providers using payment gateways such as Braintree, TrustCommerce, or Authorize.net collect VAT from EU consumers?<p>Because they're acting as resellers, Ecommerce vendors like Plimus and Avangate are responsible for collecting VAT for EU consumers who don't have a valid VAT ID for electronically delivered products. Per http://www.avangate.com/articles/software-vat-123.htm : "Private customers (consumers) in EU countries must be charged VAT for electronically supplied services and products, both by EU and non-EU providers."<p>Collecting VAT yourself would be quite a headache: "...non-EU sellers have to ... pay the specific member state tax authorities (all 27 of them) their respective VAT..." (http://tinyurl.com/pgnvpb). The revenue threshold for being required to collect VAT can be quite low: "Denmark, for example, taxes all traders with an annual turnover of $1,600" (annual revenue of $1,600 from Denmark I assume). (http://www.taxpolicycenter.org/taxtopics/encyclopedia/VAT.cfm)
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kierank
You charge the price+vat, then pay your VAT to your home government. But since
it's a "Value-Added" tax you claim back VAT on the goods and services you have
purchased.

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bwd2
Why would you bother to do this if you are a non-EU provider?

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cattledogit
Plimus and other non-EU resellers collect VAT for a reason. See for example
[http://discuss.joelonsoftware.com/default.asp?biz.5.366294.2...](http://discuss.joelonsoftware.com/default.asp?biz.5.366294.21)
, [http://www.eweek.com/c/a/IT-Management/VAT-in-
Europe-7-Steps...](http://www.eweek.com/c/a/IT-Management/VAT-in-
Europe-7-Steps-to-Success/) and <http://www.ez-eu.com/eu-vat-why.html>.

