Xenforo user upgrades and EU VAT MOSS / USA sales tax

[Edman]

I have an EU company (just registered, I have one website changing legal owners). I'm currently selling user upgrades via my website (through PayPal and Stripe), and I need to calculate VAT depending on the country of the buyer. But with these upgrades, there is no billing address, how do I know the country?

Does Xenforo have some kind of an add-on for this?

Also, I'm intrigued, how does this work in USA? As far as I understand, if you have a US company, you have to collect sales tax in any state that requires you to do so if you are above a minimum threshold. However, that threshold appears to be pretty low in about 25 states - only 200 transactions per year, or around 17 per month. If you're selling upgrades for $5 a piece, that's just $85 in sales per month, per state. Given how low the sales tax rates are, this doesn't come out to a whole lot of money, in most cases just a few dollars a month. I'm wondering, do people who own small websites actually follow these laws, and submit these sales taxes of a few dollars?

How does this work? How do you tell which state the buyer is in? And how do you file these taxes, I'm guessing there is an automated app of some sort that people use?

 

[Edman]

So... looking at the multitude and spectrum of replies here, does everyone just completely ignore these problems and hope they're small enough to fly under the radar?

Or is everyone using a different shopping cart system that updates users on forums?

 

[HWS]

As far as I know Paypal and Stripe are able to add the correct tax to any sale. As there is no support within XF for sales tax, this has to be handled externally.

You may open a suggestion for sales tax handling within XF, if there is no such suggestion.

 

[Joe Kuhn]

I don't sell much of anything, but when I buy here in Illinois I pay state of IL sales tax and a local tax based on the city of the seller. If I buy from a seller in another state, I pay tax in their state, I believe, just like local sales tax.

Turns out states can be different:

Origin-based and Destination-based Sales

 

[Mr Lucky]

I'm wondering, do people who own small websites actually follow these laws, and submit these sales taxes of a few dollars?

How does this work? How do you tell which state the buyer is in? And how do you file these taxes, I'm guessing there is an automated app of some sort that people use?

I used to submit VAT on EU upgrades but the law on that changed recently so that businesses under the UK vat threshold no longer had to so most small forums won’t need to any more.

I did two things though

there is a template edit you can do that makes PayPal record the country and I will look it up for later. I’m not sure about stripe.

after paying the upgrade I had a message to users directing them to a form so they would manually inform me of their country. (They all did this ) hence I had those two pieces of evidence plus their up in the database.

I also did sales via Wordpress woocommerce and gif that I used the taxamo plugin

can’t help with us taxes though.

 

[Mr Lucky]

Just found Chris’s response to my query about this, so in xf2 when configuring PayPal there is a built in option to capture the user’s address

Fixed - Require shipping address with account upgrade paypal button

In xenforo 1 I have edited account_upgrades template so that the Paypal button requires an address, change value to 2: Can someone please tell me how to do this in xenforo 2? Thanks As it is an EU requirement to collect addresses for VAT MOSS, this is quite important.

xenforo.com

 

[Edman]

Just found Chris’s response to my query about this, so in xf2 when configuring PayPal there is a built in option to capture the user’s address

Fixed - Require shipping address with account upgrade paypal button

In xenforo 1 I have edited account_upgrades template so that the Paypal button requires an address, change value to 2: Can someone please tell me how to do this in xenforo 2? Thanks As it is an EU requirement to collect addresses for VAT MOSS, this is quite important.

xenforo.com

Ah, I see it now.

But I discovered something other than that - even without address required enabled, if you look at the payment details in Xenforo database, in xf_payment_provider_log under log_details for each payment for Paypal, there is a "residence_country" field populated by Paypal automatically.

BTW, under €100,000 euros per year, you only need 1 proof of location.

I don't sell much of anything, but when I buy here in Illinois I pay state of IL sales tax and a local tax based on the city of the seller. If I buy from a seller in another state, I pay tax in their state, I believe, just like local sales tax.

Turns out states can be different:

Origin-based and Destination-based Sales

If you're a buyer in some 20+ states, the state assumes the transaction happened at the location of the buyer, and the seller has to calculate the sales tax according to the buyer's location, and then supposedly pass than on to that state.

The article you posted is old - "new" rules out in 2018, specifically for digital items.

 

[Vladislavik36]

Hello @Edman,
I currently got the same issue. Were you able to find a solution for xf or via paypal/stripe? If yes i would be glad if you could tell me. If not I know that dragonbyte ecommerce has an option build in their shop where you can set the VAT for every EU country. I am also registered at MiniOneStopShop and need to pay the VAT via them to all EU member states.

Regards

 

[Edman]

My overturn is under €100,000 so I require only 1 proof of residence. And my accountant said, even if it goes over €100k, it does not appear that the revenue service realistically has the capacity to check these type of things, and even if they did, what exactly would they do. You can always match up a transaction with someone's IP address for the 2nd proof. (Note, I did try this, and IP addresses are actually all over the place. And nobody is capable of clarifying what happens when you have two conflicting "proofs")

So, your proof of residence is simply provided by your payment provider. In Stripe, you select the country under Payments and then Export, and then Custom. In Paypal, you select Activity, All Transactions, Download, Customize Report Fields, Transaction Details and select "Transaction Buyer Country Code". The thing about using reports straight from payment providers is, well, if you ever get audited for this, there is no reason for the revenue service not to trust these reports. If you print out something from your site, well... you can print out anything, can't you.

You then import these into an excel spreadsheet, make a sheet that arranges GROSS revenue by country, look up VAT for each country in the spreadsheet, and submit the corresponding amounts to the revenue service. I did not have a full year in 2020 so my income was pretty low, and for 2021 UK is out of the EU. This means my EU revenue is actually a fraction of what it was, so I'm actually going to be under the €10,000 limit from which VAT registration is required.