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All OECD countries have a broadly based consumption tax of varying rates:

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They go under different names, for example, in Australia it's the 'Goods and Services Tax (GST)', and in Denmark it's the 'Value Added Tax (VAT)', but in each country, it essentially means that if you sell something (whether it be a good or service), then you must give part of the sale price to the government as tax.

Complexities

Despite the existence of these taxes appearing to be relatively simple, it's levied in different ways, with some exceptions, and the way it can be paid differs by country. For example, the UK doesn't even require it to be paid by the seller, it can instead be reverse-charged by the buyer.

Someone freelancing, a consultant, or a small business owner (e.g. online store) who sells to many (e.g. ~30) of these countries each year, would endure very large administrative burden having to research each country's tax arrangements to ensure that they meet their tax obligations when selling to residents of that country. And then similar burden again making the actual lodgements, which could easily take days or weeks.

Question

Is there any resource, software tool, reference (e.g. website) that clearly show's what a seller must pay in consumption tax in each country? Note: even a summary table of the tax rate, minimum sales before rate applies, where and how to pay it would be a huge improvement on having to manually look up 20+ different countries tax rules and make 20+ individual tax lodgements.

Example

To show how common this would be, consider a freelancer getting clients from any of the global freelancing sites, who may do hundreds of jobs per year for clients all around the world. Or consider Airbnb experience hosts, who may conduct online experiences to guests from all around the world. In both cases, they're selling to residents of other countries, and so must meet their obligations to each of those countries. But this seems incredibly burdensome. How do they do it?

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    @TomTom that's great if it's correct. I haven't used any such accounting software, so I cannot verify. Can you link to some examples so I can inspect the documentation/source code? (anything open source would be superb, because that's freely accessible to all, but paid is also useful). Does the software automate the tax returns in each country? (I doubt this, but will be glad to be shown to be wrong)
    – stevec
    Jan 19 at 9:42
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    No? Not doing your homework to find non-low-end accounting software. OPEN YOURCE OBVIOUSLY WOULD BE STUPID - closed source has contracts which often stipulate responsibility. Heck, in most jurisdictions open source accounting software iS HIGHLY problematic because it destroys the trail of correctness and evidence. My tax office would run circles around open source - invalidates the full electronic audit of my records because the software may be manipulated.
    – TomTom
    Jan 19 at 9:45
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    Yeah, but then they also can use any of a plethora of services. Also - that person in MY countries (germany, poland) would still have to use legally certified accounting software (or, as my operation does, hire an accountant doing the accounting). Why? Because the government expects to come and do a fully automated book audit, and somehow my small 3 people operation here gets audited twice per year. Probably because we run a VAT deficit permanently (due to not selling to local businesses and end users and all charges are out of EU or reverse charge).
    – TomTom
    Jan 19 at 10:15
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    The idea that tax agencies would care about open source tax preparation seems bizarre. As is the idea that the software company would cover you for errors in the software - I'd need to see evidence of that, as the indemnity would be huge.
    – pjc50
    Jan 19 at 12:13
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    the idea of "open source accounting software" is nonsensical, meaningless. it would be like saying "an open source lawyer". accounting "sofware" is utterly trivial, like using a pocket calculator. accountants exist to take liability.
    – Fattie
    Jan 19 at 13:31
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For cross-country trade between EU countries, as a facilitation for smaller merchants the EU countries agreed to have a threshold, where below a certain yearly revenue, you are allowed to simply use the VAT rate of your country (the country of origin) totally ignoring the VAT rules of the destination country.

There are two major pitfalls however:

  1. Because agreeing to something is hard, they agreed on the general mechanism, but couldn't agree on an exact sum. In the end, every country choose a treshold by themself, so the treshold is different for each of them (between 35 000 € and 100 000€), here is a nice table for all EU countries.

  2. If you happen to unanticipatedly surpass the treshold for a particular country midyear, you have to retroactively adjust all the already written invoices for that year to reflect the VAT rules of the destination country.

If we are going fully international it gets even more complex, there is no way to even start giving an overview over the various regulations by providing a simple table. That's because to many factors besides the destination country enter into such an equation, for example:

  • any tax treaty the destination has with the source country,
  • the kind of trade you do (sector, service, etc.),
  • various exemption and special rules for all kinds of stuff.

So to answer your question, most small shops I know handle intra EU trade by themself (I don't know were you are located). If they only have sales relations with a small number of international countries, but those form a significant amount of their revenue, they may also choose to hire an tax accountant familiar with the rules for those countries.

Doing trade with every possible country, you can really only do that by beeing super-large, or finding a service provider handling all tax issues for you (I won't recommend a specific one, but those are super easy to find by searching for 'international vat handling service'). Unfortunately in most of the cases that option is still to expansive to be economically sensible for a freelancer or small business owner.

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This a complex and easy question at the same time.

Complex: the GST VAT and other taxes are valued added taxes and are not forced to be payed on international transactions on multiple countries. When your business start you can sale on this countries first and serve to more countries later, you will need to evaluate the troubles on each new country you're interested on. Ex UK has especific rules for overseas sellers

Use Avalara, they offers manage this kind of complexity

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Many small companies just don't bother to comply with tax requirements of other countries.

There is at least a good argument that you are not subject to another countries laws if you have no presence in that country. Especially if you operate a website and never even ship a physical product to other countries.

Even if the above argument fails, any country tax authority would be very unlikely to go after small companies in other countries. It is just too much work to make it worthwhile.

That said, there are companies out there who handle this for you. FastSpring, Paddle and Quaderno come to mind.

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