_lhermann’s Twitter Archive—№ 537

Thread about sales tax in Europe I am creating a SaaS project from Germany. Here's what I figured out so far about taxes when selling my subscriptions ... 🧵💰
Permalink On twitter.com 2021 Mar 30 Mood 0

…in reply to @_lhermann
1. Countries generally have a rule for small private companies. If you are below a specified amount of yearly revenue you don't have to pay sales tax at all, no matter where your customer is. In Germany, this limit is about 18,000 EUR.
Permalink On twitter.com 2021 Mar 30 Mood -1 🙁

…in reply to @_lhermann
2. Otherwise, you have to add a tax to your service. In Europe, it is called VAT (Value Added Tax). You need to collect the tax from your customers and then return it to the tax authorities.
Permalink On twitter.com 2021 Mar 30 Mood 0

…in reply to @_lhermann
3. The tax rate is based on your client's country and must be returned to that country. Fortunately, you DON'T need to worry about that when starting out. Countries have a yearly revenue threshold here. In Canada this threshold CAD 30,000 for example.
Permalink On twitter.com 2021 Mar 30 Mood -1 🙁

…in reply to @_lhermann
4. European VAT distinguishes between B2C and B2B. And if your customer is in the same country, another EU country, or a country outside the EU.
Permalink On twitter.com 2021 Mar 30 Mood 0

…in reply to @_lhermann
5. Customer is in your country: - B2C: apply the VAT rate of your country, that's 19% in Germany - B2B: same as B2C when the customer is in the same country
Permalink On twitter.com 2021 Mar 30 Mood 0

…in reply to @_lhermann
6. Customer is in another EU country: - B2C: This is the most complicated case, see below - B2B: Get your customer's VAT ID and address, then label the invoice as 'reverse charge' with 0% VAT
Permalink On twitter.com 2021 Mar 30 Mood 0

…in reply to @_lhermann
(Reverse charge means your customer is responsible to take care of VAT, but you still need to report those sales. You need the customer's VAT ID for that.)
Permalink On twitter.com 2021 Mar 30 Mood +4 🙂

…in reply to @_lhermann
7. Customer is a country outside the EU: - B2C and B2B are identical here, simply label the invoice with 0% tax* (*That is until you reach those revenue thresholds. But by then you should have enough money to get someone who knows more than you about it.)
Permalink On twitter.com 2021 Mar 30 Mood +1 🙂

…in reply to @_lhermann
8. Lastly, the most complex, selling B2C inside the EU: If your revenue inside Europe is below 10,000 EUR / year, then you don't need to worry about where your customer is, you can just apply the tax rate of your country.
Permalink On twitter.com 2021 Mar 30 Mood -3 🙁

…in reply to @_lhermann
(Example: If I sell to France I just write Germany's 19% on my invoice even though their tax rate is 20%)
Permalink On twitter.com 2021 Mar 30 Mood 0

…in reply to @_lhermann
9. If you are above 10k, then you need to apply the tax rate of your client's country and return those taxes to said country. Meaning registering with all those tax authorities. Fortunately, Europe realized that this is a bit wild and created the Mini-One-Stop-Shop (MOSS) rule.
Permalink On twitter.com 2021 Mar 30 Mood +2 🙂

…in reply to @_lhermann
10. Under MOSS you still need to charge taxes based on client location, but you can return all those taxes to your tax authorities and they figure out the rest. (Example: I sell to France and put 20% VAT on my invoice. With MOSS I can return the money to the German authorities)
Permalink On twitter.com 2021 Mar 30 Mood 0

…in reply to @_lhermann
11. There are probably a million more rules. And I'm no expert, so some info may be wrong here. But that's all I've learned so far and it should give you a good starting point also.
On twitter.com 2021 Mar 30 Mood 0