It is a mess indeed. You should add here another concern that people in Europe get used to see end prices with tax already included (and it was not cool to pay on top of MeteorToys the 19% of German VAT)
So far I have decided to show and charge end prices and manage all the accounting with an accountant (and in 90% cases it means to pay 19% VAT myself for all the income, including international). It is less stressful for clients and reduces efforts on support…
From what I discussed with local tax-advisers, you have to worry mostly about local regulations of the place where your company is registered and operates. And it gets complicated only when you work with bigger businesses who expect you to charge them without VAT (to avoid double-taxation). But that is the case only if you are big enough (to sell to them) and usually there are no too many of such companies and if that miracle ever happens (that they would like to buy from you), you can make them a special offer and process everything manually etc.
For the others at least in Germany it is advised to pay VAT from all the sales to Germany in most cases, however if you have sales (from a group of customers) from another EU state over a specific cap, you have to pay that part to that specific country. As mentioned before, this all is total mess and unfortunately it is better to give this to a specialist (and pay on top again) otherwise you would spend your time dealing with this bullshit instead of ‘making this world a better place’…
If you figure out how it is done in US, let us know.
I think that’s often not even a choice, your market is a global one so you have to have VAT for all countries you sell to. Can Chargebee do that, automatically add VAT based on the country of your customers?
The link and explanation is great, but there is a catch in this phrase:
Your buyer’s member states’ VAT rates applies (destination based)
…as this applies only after a certain cap, like 10K EUR per year sales to the specified country (don’t remember exactly), which by the way may never happen at all. And if the cap is not reached, you pay VAT to the country where you are domiciled (which can be lower than in the buyer’s member state).
This collecting tax thing is worth discussing again. It is no joke.
Since 2018, when this thread last reared its ugly head, the laws have changed significantly, everywhere, thanks to everyone realizing all those Amazon purchases were leaving tax money on the table that could be scooped up.
It’s a whole new ball game (based on what I understand).
I am running a market place solution for events and the rules for when you collect vs do not collect sales tax depends on where you have “nexus”.