How to handle Tax worldwide for digital services

[GrahamV]

Hello all,

We are considering opening a Delaware company but before we do we would like to gather some more information regarding tax and what needs
to be visible on an invoice hence what to collect from customers. Of course, we will engage lawyers and accountants when the time is near, however, I like to learn prior to this time
how other business owners are handling VAT/Tax when you sell digital services worldwide (subscriptions and advertisement on the platform).

The following questIons I would like to know more about:
1. Our business will be on US territory for 90% and as I saw every state regulates their own tax percentage for digital services and some have 0% - Where can we obtain a list that is acquired?
2. We will do business with B2B and B2C - any tax difference?
3. Do we need to ask for a VAT ID from companies that purchase our services?

----
EU countries
1. I have read on some pages that the VAT will need to be calculated per country you are doing business in. On other websites, they state that outside the US you do not calculate tax for digital services (B2B or B2C)
2. How do you control this? what is the best practice?

---
Non-EU Country
1. What do we need to take into account?
2. What are the best practices?

I hope you can give me some good insights and a starting point on how to handle VAT for the sales of digital services in US/EU/NON-EU countries.

Thank you,
Graham

 

[avalanche]

Hello all,

We are considering opening a Delaware company but before we do we would like to gather some more information regarding tax and what needs
to be visible on an invoice hence what to collect from customers. Of course, we will engage lawyers and accountants when the time is near, however, I like to learn prior to this time
how other business owners are handling VAT/Tax when you sell digital services worldwide (subscriptions and advertisement on the platform).

The following questIons I would like to know more about:
1. Our business will be on US territory for 90% and as I saw every state regulates their own tax percentage for digital services and some have 0% - Where can we obtain a list that is acquired?
2. We will do business with B2B and B2C - any tax difference?
3. Do we need to ask for a VAT ID from companies that purchase our services?

----
EU countries
1. I have read on some pages that the VAT will need to be calculated per country you are doing business in. On other websites, they state that outside the US you do not calculate tax for digital services (B2B or B2C)
2. How do you control this? what is the best practice?

---
Non-EU Country
1. What do we need to take into account?
2. What are the best practices?

I hope you can give me some good insights and a starting point on how to handle VAT for the sales of digital services in US/EU/NON-EU countries.

Thank you,
Graham

For EU based clients (doesnt matter if legal entity or natural person) you have to pay VAT at the rate of the customer's country. If EU legal entity has VAT ID number then you don't need to charge VAT.

For automated tax calculations you can try using Paddle - Revenue Delivery Platform for SaaS
Check taxes here: SaaS Sales Tax Agony Index - Top #27 Most Painful Jurisdictions

 

[GrahamV]

For EU based clients (doesnt matter if legal entity or natural person) you have to pay VAT at the rate of the customer's country. If EU legal entity has VAT ID number then you don't need to charge VAT.

For automated tax calculations you can try using Paddle - Revenue Delivery Platform for SaaS
Check taxes here: SaaS Sales Tax Agony Index - Top #27 Most Painful Jurisdictions

Thank you so much for this information. I really appreciate the useful insights and will check out the links you have provided me.