top | item 27459712

Stripe Tax

939 points| sirodoht | 4 years ago |stripe.com | reply

367 comments

order
[+] tzs|4 years ago|reply
Note that if you are just interested in US sales taxes, and only need to collect tax in the ~1/2 of the states that are part of the Streamlines Sales Tax (SST) project, you can have your tax rate calculation, registration, reporting, and filing all done for free.

The member states of SST have agreed to pay for those services from several tax SaaS companies. (There is one catch: to avail yourself of this, you must collect tax for all SST states, even though you might be below the threshold in some of them).

The companies participating are Avalara, TaxCloud, Sovos, and Accurate Tax.

For small online businesses I suspect that a lot more can take advantage of this than you might expect. Here's a map showing the SST member states [1]. Although it is missing some big states that you probably do a lot of business in (California for instance), a lot of those big states have quite high thresholds for sales or number of transactions before tax kicks in.

Some of the companies that provide the fee SST service will also add non-SST states for a fee. If you only need one or two non-SST states, it will still probably come out cheaper than using Stripe (and will include reporting and filing).

[1] https://www.streamlinedsalestax.org/

[+] vvoyer|4 years ago|reply
I was lucky to be part of the beta for my SaaS (https://turnshift.app) and I must say this new feature simplifies things A LOT.

Especially as a EU business owner, I previously had to sync every VAT tax rate possible, use a complex workflow to know if a customer needed to pay taxes or not, link tax rates to customers, and create taxes reports for my accountant. Stripe tax does all of that automatically, based on the customer full address and VAT numbers.

Here's a twitter thread of everything you had to do previously: https://twitter.com/vvoyer/status/1347488977738149888

PS: Yes there were other services (Paddle) providing this (and much more to be honest), but the Stripe API and customization options makes it my go-to solution for integrating payments.

[+] ttoinou|4 years ago|reply

    report taxes. Stripe tax does all of that
It doesn't say they file the taxes for you. "Speed up filing and remittance with comprehensive reports" means they will help you with it, but not do it for you. Later on the website : "Stripe reports surface all the information you need for each filing location, so you can easily file and remit taxes on your own, with your accountant, or with a preferred partner.

US filing partner TaxJar EU filing partners Taxually Marosa"

[+] revorad|4 years ago|reply
I was part of the beta too for my education site (https://learnetto.com) and I couldn't agree more - Stripe has done a stellar job.
[+] mytailorisrich|4 years ago|reply
The downside is of course that Stripe takes over more and more of your important infrastructure. A question should always be how to include several suppliers and/or how to change supplier in order not to put all in your eggs in a single basket.
[+] toomuchtodo|4 years ago|reply
Do you feel like the value is worth with the fee Stripe is charging?
[+] nickpp|4 years ago|reply
Honest question: can somebody enlighten me about Stripe's appeal? I am not an user (until recently they weren't even available in my country) but I used ShareIt (now Digital River) 20 years ago and Avangate (now 2checkout soon Verifone) in the past 15 years and they both:

- had a much larger international presence, with localizations and everything

- had sales taxes, VATs etc computed from day one

- had cart (not sure about ShareIt though) & API

- integrated countless payment gateways: from credit cards to purchase orders, wire transfers and even PayPal

How comes Stripe won even if they arrived much later on the market? I believe their pricing structure was not very far from the competition. What did they offer to attract users even though they lacked such important features?

I want to learn.

[+] franciscop|4 years ago|reply
This is so on point. About a year ago I was thinking of opening a company and selling digital products with Stripe in Japan (where I live). They offered a quick free call to answer my questions, and I did so. I am not fluent in Japanese so any help I'm offered I take it, and I wanted to know how many other troubles I could face at this endeavor.

All my questions were answered promptly and greatly by them, and I was getting more and more convinced to do it. Until I asked, "Stripe handles sales taxes, right?" and the answer was "no". They gave me a brief overview of how that works though. Let me tell you I know why you don't see an "Amazon of Japan", apparently in here I'd have to calculate the sales taxes for every country where my products are sold through agreements of Japan-{said country}. Some countries don't even have agreements like Brazil so they are in a gray area.

It seems like Stripe Tax might be a game changer for this specific situation! I'm not ready right now personally/professionally to try to do the company, but let's see in 6 months - 1 year. I am so jubilant!

PS, this is from a quick conversation I had ~1 year ago, so some small details might be fuzzy/outdated/incorrect. Ofc this is no legal or accountant or any kind of advice, just my experience.

[+] eloisant|4 years ago|reply
> Let me tell you I know why you don't see an "Amazon of Japan", apparently in here I'd have to calculate the sales taxes for every country where my products are sold through agreements of Japan-{said country}. Some countries don't even have agreements like Brazil so they are in a gray area.

AFAIK this is true for any other country, not just Japan. If you're in US, and you want to sell and ship products outside of US, you need to take care of the sales taxes and customs for each of the countries you ship.

Or you leave the burden to your customers, but they might not be happy to have to pay expensive custom to the mailman to get their package.

[+] Ndymium|4 years ago|reply
I have a nano sized business to cover some server costs in Finland. Here are the EU rules as I understand them:

* Selling goods

  - If selling to private persons in European Union fiscal territory (EUFT), add 24% (Finnish VAT).

  - If selling to businesses in EUFT, no VAT.

  - If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.

  - Note that there are separate customs rules!
* Selling electronic services

  - If selling to private persons in EUFT, you need to register to the customer's country's tax authorities and add the customer's country's VAT, and then pay it later to the customer's country's tax authorities. EXCEPT if you only have an office in one country and you are selling to another EUFT country, and you only sell <= 10,000 € worth of services, then you can use your own country's VAT like normal.

    o Or you can register to so called VAT MOSS (Value Added Tax Mini One Stop Shop) where you use the customer's country's VAT but you don't need to register or pay to their tax authorities, instead you send a quarterly report to your own country's tax authorities about all the sales you have done, then you pay them a calculated sum, and they will divide the paid VAT to all the countries based on the sales. Of course there is now a new VAT OSS that is somehow different from MOSS.

  - If selling to businesses in EUFT, use reverse VAT (buyer is liable for VAT).

  - If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.
Now I'm not a tax lawyer, so this is all just my best understanding based on our tax authority's website. I just wanted to get some money back to pay for my ~20 €/mo server costs, and I had to learn all of this. I will be very interested in what this Stripe Tax can do to remove my headaches. :) Of course, since my revenue is so tiny (and thus the money I bring to Stripe), I can't access all of their services AFAIK. And I'm mostly one chargeback away from losing major revenue due to the 15 € penalty. :D

EDIT: Turns out I have no idea how to format lists on HN.

[+] ArkanExplorer|4 years ago|reply
You don't need to charge VAT unless you hit these thresholds:

https://www.avalara.com/vatlive/en/eu-vat-rules/distance-sel...

Which at the lowest end is € 35,000 per country.

Countries like the UK for example have a VAT threshold of £85,000 for businesses located inside that country.

This is one of the problems of online marketplaces - they have VAT added to them, even when the individual (small) business doesn't need to pay it.

VAT is a big compliance burden for small businesses which is why every country has revenue thresholds under which you don't need to charge it.

[+] kmoriarty|4 years ago|reply
I just wanted to mention, our invite-only starts today, but we're working on making Stripe Tax available to all very very soon!

Either way, we will be reviewing and onboarding users as quickly as possible after you submit your interest!

[+] scoot|4 years ago|reply
Good summary. It's easy enough for EU VAT/MOSS, but this is the killer right here:

> you may be liable to collect and pay VAT to the customer's country's tax authorities

[+] alibarber|4 years ago|reply
I understand that from the 1st of July, the electronic services section will expand to all goods, potentially with some thresholds, so you should charge the VAT rate for that particular item at the customer's home country and submit that to the Finnish tax authority (under the OSS scheme).
[+] sdevonoes|4 years ago|reply
> - If selling to anyone outside EUFT, no VAT, but you may be liable to collect and pay VAT to the customer's country's tax authorities.

I thought selling to businesses outside EUFT was the same as selling to businesses inside the EUTF.

[+] jerrre|4 years ago|reply
There are also a lot of thresholds that might apply to your situation. More rules to look up, but could simplify it to having less administration if your revenue is under a couple K's
[+] bsears|4 years ago|reply
Co-founder of Billflow here.

We were lucky enough to be able to integrate the Stripe Tax beta with Billflow. In my opinion this is the coolest thing Stripe is launched (For SaaS) since they came out with subscriptions. It just works™.

Implementing Stripe Tax was dead-easy, to get it working we essentially just had to switch a boolean to true on our subscription creation code.

Also, the new functionality of the upcoming invoice API is something we've been wanting for a while - being able to estimate the first invoice for a subscription _without_ the customer existing beforehand makes life so much easier when checkout is concerned.

Huge props to the Stripe team, love this product!

[+] theflyinghorse|4 years ago|reply
The feature is of course very nice, but the pricing is steep at 0.5% of your transactions. So I'm giving away 0.5% of my revenue (provided all of my revenue comes from sales) for the privilege of having my taxes calculated? That's on top of the 2.9%+30c per transaction that I already pay stripe?
[+] xchaotic|4 years ago|reply
Ben Evans once described Stripe as tax on Internet SaaS. For a moment I’d thought it was Stripe admitting the same.
[+] ceejayoz|4 years ago|reply
The same "tax" existed before Stripe, and it was higher, in both overall costs and development complexity.
[+] kybernetikos|4 years ago|reply
Credit card fees in general are like an extra tax. And credit card companies have so much power they have pushed the cost onto all transactions, even those that use cash (by forcing merchants to eat the cost difference, they push all prices with that merchant up).
[+] vincentmarle|4 years ago|reply
Ha I thought exactly the same thing. 2.9% + $0.30 tax to be exact.
[+] swyx|4 years ago|reply
i think that is generally a compliment though, not an accusation
[+] Naga|4 years ago|reply
That looks great, but that's a ridiculous pricing scheme. If you invoice $100k in a year, you're paying $4000 to Stripe to manage your sales tax.

A lot of the issues with sales tax are not knowing your regulatory requirements and set up. I'd say that's probably worth $4k, but then going forward you still have to pay them that amount. I'd say it would be more worthwhile to pay an accountant to do that for you, and save the ongoing fee. You will have to pay an accountant anyways to do your tax returns. I'm an accountant and my firm often does sales tax returns for our clients. Now, if you're making $1 million a year, that's $40k you need to pay Stripe for the privilege of not worrying about sales tax, compared to a few thousand you'll pay your accounting firm to do it.

The API and integration options are great and I hope Stripe is successful. Really, if they are, it means I can just charge more for my services.

Edit: As others have pointed out, I'm bad at math. I'm going to leave my shame up here but I realize it's $400, not $4000. Just goes to show you that accountants are just like regular people, and that you shouldn't rely on your accountant doing things off the top of their head not using Excel. The order of magnitude difference really shifts my opinion of it.

[+] vvoyer|4 years ago|reply
Nope, if you have $100k transactions in a year, it will be $100,000 * 0.005 = $500 not $4,000 (And 0.4% is when you make more than $50,000 in a month)

I too made the mistake of doing amount*0.05 when they provided me the pricing in beta.

This is why I went with them, if I can't do a simple percentage computation I'd rather not do the taxes myself.

And if you're making $1M a year, it will then be $4,000. And I guess that's still cheaper than having your accountant going through all your Stripe documents, computing taxes while also, on your side, having to make sure you're 100% tax compliant. Maybe at $10,000,000 it will start being a bit pricey, but at that point you'll most probably discuss with Stripe to reduce that fee.

[+] maccard|4 years ago|reply
> If you invoice $100k in a year, you're paying $4000 to Stripe to manage your sales tax.

The pricing on the page says 0.4% - that's $400/year not $4,000

> Now, if you're making $1 million a year, that's $40k It's $4,000 by the above.

> compared to a few thousand you'll pay your accounting firm to do it.

It's not _just_ the money you pay the accountant to do it once, you need to get all of the data about where the customer is purchasing from to your accountant in a format they can use. Also, depending on your accountant, international sales tax is unlikely to be their forté - they might handle different states, but can they handle the varying rules in EU countries?

[+] wly_cdgr|4 years ago|reply
The replit guy needs to study your post so he can learn how to handle mistakes the right way
[+] tnorthcutt|4 years ago|reply
1. Kudos for handling your mistake gracefully.

2. As of this writing, almost everyone responding to you is using 0.4% as the pricing, when their page shows it's actually 0.5% for the scenario you described ($100k in a year). The lower rate only kicks in if you process over $100k in a _month_.

Unless they've changed their pricing details in the last hour, that's another great reason to let them handle this! Clearly we, collectively, don't have the attention to detail required for this ;)

[+] invisible|4 years ago|reply
I'm not sure if I'm missing your comparison, but an accountant doesn't calculate how much/which tax should be paid in real-time based on the business and the user's location and then automatically account for that.

I don't know how much it's worth, but properly supporting tax takes a lot of effort to do correctly in real-time.

[+] jnsie|4 years ago|reply
> I'm going to leave my shame up here but I realize it's $400, not $4000. Just goes to show you that accountants are just like regular people, and that you shouldn't rely on your accountant doing things off the top of their head not using Excel. The order of magnitude difference really shifts my opinion of it.

Fair play to you!

[+] hmoy|4 years ago|reply
$4k? Isn't $0.4k as it's 0.4%?
[+] jerrre|4 years ago|reply
Your accountant is not going to build a system for you that verifies VAT IDs and can automatically calculate the tax % on check out I think?
[+] snemvalts|4 years ago|reply
Please double check your math before doing a hot take paragraph.
[+] beilabs|4 years ago|reply
Wouldn't most online businesses just need to collect the taxes for the customers that their business operates in?

Posting this on the basis that there should be no stupid questions when it comes to tax.

For example; an Australian business needs to collect GST for Australian customers only. Americans accessing the Australian service would not be obligated to pay GST and as the Australian business doesn't have a US entity wouldn't have to collect US state taxes.

[+] jokethrowaway|4 years ago|reply
This is great! ATM I'm banning all EU end users from purchasing my SaaS unless they're a business because the cost of handling VATMOSS is just not worth it.

It also definitely played a role in choosing to do a B2B service over a B2C one.

So now the choice is:

- File VAT yourself, pay 3.5% + some pennies to Stripe - Pay 5% to Paddle and they file VAT for you

Definitely glad to see more competition in this area.

[+] blntechie|4 years ago|reply
Stripe makes such complex products appear so simple. Their product pages are art of work. Amazing company.
[+] MichaelApproved|4 years ago|reply
Like, every single time. Their execution is amazing.

Serious question, have any of their products had a poor rollout?

I’m not asking about a feature you’d prefer that’s missing. I’m asking about something being buggy, poorly documented, or having a confusing marketing page.

[+] jitbit|4 years ago|reply
So. After 10 years in business and THOUSANDS of customer requests (I even made one myself, in-person when I met Patrick Colison at a conference) Stripe has introduced... a calculator. And you still have to do everything yourself - filing the papers and wiring money.

Thanks, but no thanks. I'll stick with my current payment provider that handles _everything_.

I do admire Stripe and wish I could move some day :(

[+] vfc1|4 years ago|reply
So they will charge 0.5% of my business to do my taxes? That makes sense until 350k per year more or less, but after that Quaderno has a 45 to 99 usd per month fixed price to do that.

It sounded outrageous the first time I saw it, but it actually makes a lot of sense for most small businesses.

I'm glad they rolled out this feature, too bad that they never announce what they are working on and it's a big bang overnight.

I was looking into integrating my app with a tax provider, I wouldn't even have started if I knew this was in the pipeline.

But now that it's here, it sounds great and just another reason for choosing Stripe. I haven't integrated with Paypal and I don't think I'm going to.

[+] lbearl|4 years ago|reply
From the docs (https://stripe.com/docs/tax/checkout) it looks like Apple/Google Pay is disabled when Tax is enabled. I wonder if there is a technical limitation there or if that is something that will be supported soon?
[+] jackerman|4 years ago|reply
Confirmed this is a technical limitation that we're working on as swiftly as possible. Drop me a note at [email protected] and I'll let you know as soon as we've resolved this limitation!
[+] sireat|4 years ago|reply
So how does one pay tax with this?

Let's say you and your server are in Singapore.

You are selling a digital product - PDF book on dynamically typed Rust...

You have customers from all 50 US states and all European countries.

You have 100k USD sales total.

At the end of the year are you obliged to send the correct amount of tax to EACH US state and each EU country?

[+] legitster|4 years ago|reply
When we implemented Stripe, our team was flatly frustrated that this wasn't already included in Stripe. It spawned a lot of arguments as to why we were even using Stripe over just a normal payment gateway. Having to calculate sales tax was a much harder problem for us than what Stripe was solving.

Although paying .5% on every transaction just to do a lookup on a table of what should be public information is still frankly absurd. For all of the lip service given to ease of doing business, governments still enable a lot of rent seeking in the process.

[+] Taek|4 years ago|reply
We started using Stripe recently for a worldwide base of customers and I was a bit flabbergasted that Stripe didn't have a tax solution already built in.

Taxes are a PITA, and in my opinion this product from stripe makes enormous sense. If it's as good as everything else they do, it'll simply our lives enormously. Super happy to see this being released.

[+] ldd|4 years ago|reply
Really interesting!

I have a very small video game business (emphasis on small) and I already use Stripe to handle non-EU digital purchases. I specifically avoid taking money from EU customers because I briefly looked into the tax requirements and it seemed onerous. The registration process for really small businesses that did online sales was very weird, and unlike Canada or the US, the threshold question seems to be hard to answer (I think you have to pay taxes from day 1 even if you sell 50 euro per year?)

Anyways, I am glad stripe is adding this product, and I've signed up to join, but I am still wondering how complicated and expensive the whole process of registration for vat OSS was. I doubt I'd get more than 50 euro total per year in sales (yes, I mean 50 euro. not kidding).