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I’m trying to get handle on what sales taxes a US-based SaaS needs to collect.
We’ve enabled Stripe tax, and see all the regions where we’re supposed to remit.
But when I look at my own bills (I live in 🇨🇦), it looks like many companies aren’t collecting and remitting GST/PST?
31 replies and sub-replies as of Apr 21 2022
cc @_vltn this is up your alley no?
They definitely are required to, and most definitely don't.
The thinking goes: What's Canada gonna do about it? Revoke my maple syrup privileges?
Not an expert by any means, but, at least from a Canadian point of view, you'd collect the tax from the jurisdiction where the client is based. So if you are in BC but the client is in Ontario, then you'd charge HST.
Oh, and you definitely won't collect HST/GST for any US based companies.
Oh baby....... This is a bear.
You'll first need to understand if you have nexus in US States. helpspot.com/blog/nexus-and…
Oh wow, I think I stick with European VAT and don’t complain about in anymore. That reads like a different and even worse hell
When I previously talked with a tax advisor years ago about that, they laughed and said I dont live in country X so it's not applicable. However I've heard of larger revenue orgs getting hit. It's one of the reasons ghost blog moved.
Sales taxes vary by state, county, and city levels, and (usually) require that the company has nexus in that locale. That could be physical or economic (say above a certain $ amt). For instance, in WA state, an economic nexus exists when the annual gross is +$100k to WA consumers
The easiest way to handle this for SaaS is to outsource it all to @PaddleHQ.
I'd be curious how existing SaaS apps are handling that migration without imposing too much pain on existing subscribers who are already set up with Stripe.
Guessing there's not really a nice way of handling the transition?
I think Paddle has a method to migrate Stripe subscriptions.
More than happy to talk through how we can help :)
I know lots of SaaS companies have these same questions, but won't talk about it.
Trying to figure this out in public so we can all benefit.
Use @lmsqueezy to handle it all for you.
Why would a US-based company collect GST/PST? 🤔
I thought the same thing. Until I talked to an accountant (for an unrelated matter).
But apparently… things have changed.
Some U.S. SaaS Companies now Subject to new Canadian “Economic Nexus” Sales Tax Compliance - GAGNONtax
A cooling wind from the North Country may have been the fervent wish of many as relief from the heat waves blasting much of the U.S. this summer. Alas, only the cold, hard fact of yet another sales tax compliance burden has blown in to chill the bones of certain U.S. software companies selling to
gagnontax.com
I haven't had to look into it but yes, things are changing. Starting with the bigger guys e.g. Netflix remitting taxes for services performed in Canada and working our way down. As marketplaces increasingly become digital without borders, governments are establishing borders.
Just because you are based in the US, it doesn't mean you don't have to collect and file local sales taxes/VAT/GST where your buyers are located. Buyer location is all the matters, 100% of the time for B2C, and a lot of the time for B2B.
You need to track your own PST (self assess) and remit PST to BC Gov for software purchases when they don’t charge you PST. Just for you though since you live and work in BC. Fun stuff.
semrush just notified us that they're going to start collecting GST/HST from us. The email they sent today linked to this for more info: canada.ca/en/revenue-age…
Back in July, Canada began to levy a 5% Goods and Services Tax on digital or electronic services provided by non-residents. Here's a resource that may be helpful:
Global VAT and GST on digital services
Countries across the world are extending Value Added Tax (VAT) and Goods and Services Tax (GST) indirect taxes to the sale of electronic/digital services by online providers/platforms to consumers. A summary of the principle countries which levy VAT or GST on e-services on non-resident providers selling to consumers.
avalara.com
CRA is backed waaaaay up on issuing GST numbers to foreign corp's. The acquirers for my previous biz applied for one back in May 2021, and I'm still not sure if they've actually gotten it yet.
That, and I'm sure a ton of US based companies don't even think about Canadian tax. 🤣
This has been a huge headscratcher for @AdventureBeard and I. Really glad you asked in public!
Global Taxes is a massive can of worms. Huge thread from 2015: discuss.bootstrapped.fm/t/my-vat-moss-…
The tldr answer then was to outsource it via things like Paddle, FastSpring etc. I would still do that unless I have an accounts dept. Probable exception: low-volume, high $$$ sales.
My Vat-Moss experience so far
Till now, I sold my book via Gumroad. They had told me they’d add support for VATMOSS. So I was very disappointed when I got an email saying that their support was, basically, don’t sell to Europeans(seriously), or get an Excel file with country of sales, leaving you to do all the tax calculations yourself. This is very disappointing, and it means I’ll have to dump Gumroad (as I just can’t sit there doing VAT for 200 countries). I liked Gumroad because of how easy they were to setup, but now h...
discuss.bootstrapped.fm
Oh yeh, loads of companies operate illegally and are ignorant to this. It's really common for companies to only bother with sales tax when they coming up for an IPO, and many states have non-compliance arrangements to help companies start to pay without back-tax recking them.
Paddle is a merchant of record that tries to simplify tax for SaaS companies. As I understand from their website tax should be paid where each of your customers are.
SaaS Sales Tax Agony Index 😩 - Top #98 Most Painful Jurisdictions
You owe sales tax on software and digital products wherever your customers are. Here are the most painful tax jurisdictions to prioritize based on registration & filing, tax rates & penalties.
tax-agony.paddle.com
Wondering the exact same thing. For B2B transactions that might be a different story (tax exempt, reverse charge, etc.), but it’s crazy that when I’m buying as an EU consumer from a US SaaS, hardly anyone ever charges VAT. That can’t be right.
twitter.com/benedictbartsc…
I honestly don’t understand how the rest of the SaaS world deals with VAT/sales tax. Eg any non EU business must charge VAT to an EU consumer from day 1 and the first €.
Most apps don’t care if I’m a consumer, don’t ask me for VAT ids, don’t charge taxes. How?
#buildinpublic