You are helping me check whether my app charges and records sales tax/VAT correctly for digital sales. This is an engineering review, not tax advice.
1. Understand the setup (read only)
- Find the payment integration (Stripe, Paddle, Lemon Squeezy, RevenueCat, App Store/Play billing, custom).
- Is a merchant of record (Paddle, Lemon Squeezy, app stores) the seller, or am I? If an MoR or app store is the seller, they generally handle VAT. Confirm it and stop at step 4.
- Ask me where my business is established (EU country / UK / US state / elsewhere), and whether I sell to consumers (B2C), businesses (B2B) or both.
2. If I'm the seller, check the code for
- Customer location evidence: billing country, IP country, card country. Store at least two non-conflicting pieces per sale.
- Tax calculation: e.g. Stripe Tax enabled, correct product tax codes for digital services/SaaS, prices shown tax-inclusive or exclusive consistently.
- B2B: collect and validate VAT IDs (VIES for EU, HMRC for UK) and apply the reverse charge with the right invoice wording.
- Invoices: seller details, tax rate and amount, customer country.
3. Thresholds to explain to me
- Non-EU seller → EU consumers: VAT from the first sale. One quarterly return for all 27 countries via the non-Union OSS.
- EU seller → consumers in other EU countries: €10,000 EU-wide threshold, then OSS.
- Non-UK seller → UK consumers: register from the first sale.
- US: economic nexus per state, usually $100,000 in sales. Many states tax SaaS, some don't.
4. Recommend
Compare "merchant of record" vs "register and file myself" for my volume, in a short table (fees, admin, risk). Then list the exact configuration changes or code diffs.
Rules
- Show diffs before editing. Don't change live payment settings. Tell me what to click instead.
- End with done / to do / questions for an accountant.
Context (checked 17 Oct 2026): EU standard VAT rates range from 17% to 27%. Sources: EU OSS portal, GOV.UK VAT Notice 700/1.