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Comment by beilabs | Hacker News Reader

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.

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You would hope so, but no. A good example is that the UK now requires online business to collect UK VAT on sales to UK customers, even when the seller is abroad - there are many similar rules and this will really help people, especially smaller businesses who really face big barriers in dealing with these rules.

Paddle has a good article about this: "..the taxes apply not only to where your company has a physical presence (an office or employees) but to where your customers are based." https://paddle.com/blog/global-sales-taxes-for-software-comp...

It seems to be a huge mess. Even if you know how much to pay for different countries, registration for paying taxes can be painful.

Even domestically - US interstate sales tax rules are a mess too.

That's not how it works within Europe. You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries. There are exceptions, for example up to some total revenue you may be allowed to collect local sales tax instead. This is what I've understood, but it probably gets more complicated in real.

> You need to collect taxes in the country where your customer is located, you need to register with VAT instances in those countries

Correct for the 1st part, on the 2nd part there is a VAT MOSS (One Stop Shop) where you report it in one place your sales/VAT for all the EU countries

No, that’s not correct at all.

Each country has their own laws about how tax works for online sales, and who is expected to pay it.

You can choose to ignore what governments in other countries expect. But that’s your decision.

That kind of used to be the way it worked, but not for the last several years. Now you are generally expected to know about the tax laws and requirements for the customers region and collect and submit tax accordingly.

Avalara (https://www.avalara.com/us/en/products/sales-and-use-tax/ava...) has been one of the go-to software platforms for this purpose. At least according to my wife, who is a CFO, and generally has to manage this stuff.

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