For EU sellers, a SaaS business comes with complex taxation regulations. The value-added tax (VAT) is intended to support European businesses, but it also adds a layer of financial management that’s a headache for business owners.
Many of these EU sellers are solving these issues with FastSpring, a robust ecommerce platform that manages everything from VAT calculations to converting global currencies. Here’s how a FastSpring partnership benefits SaaS sellers based in the EU.
Fail to comply, and you’re in big trouble. That’s the main message EU sellers get from tax regulators. SaaS sellers that don’t handle the VAT correctly can face a government inquiry, incur thousands of dollars in fines, and be banned from selling in certain countries.
In fact, the country of origin is a huge issue for SaaS sellers. Prior to 2015, the VAT was based on the home country of the seller. Then a new regulation reshaped the VAT, taxing by the location of the buyer.
Adding to the confusion, the definition of “location” itself is complex. Take the case of ThemeIsle, a SaaS business based in Romania. Because Romania didn’t have an office in charge of collecting EU-related VAT, the German tax office demanded payment on sales to German customers.
Struggling to manage this level of taxation detail, ThemeIsle turned to FastSpring’s ecommerce platform. FastSpring was able to provide a smooth, hassle-free way to handle detailed tax issues and stay in full compliance.
A Moving Target
The lesson here is that VAT compliance – really, all financial and legal compliance – is a moving target. As soon as you do everything necessary to stay within the law, the law changes.
This is why FastSpring is a powerful force for an EU-based SaaS company. The humans behind the FastSpring platform are constantly updating its algorithms to include the latest regulatory information.
It makes a huge difference for a business owner. Just ask Ionut Neagu of ThemeIsle, which had been using a homegrown solution for shopping cart management and order processing. Over time, the VAT became a logistical nightmare.
“Basically, if you’re on your in-house shopping cart, you need to hire another person full-time just to handle all the effort that goes into staying up-to-date with [VAT/tax handling],” Neagu explained.
Neagu and ThemeIsle took the FastSpring partnership and ran with it. FastSpring not only handled taxation issues flawlessly but managed their entire cart process, taking advantage of revenue-enhancing subscription options and upsells. Instead of focusing resources on dealing with tax issues, ThemeIsle could put that energy elsewhere.
“With someone like FastSpring, you’re outsourcing all the worrying about international taxation and regulation changes,” Neagu said.
FastSpring isn’t just a shopping cart manager. For an EU seller – and any seller around the world – FastSpring offers a comprehensive ecommerce experience for every buyer, every time.
Customers encounter an intuitive, robust platform that allows purchasing flexibility. It can handle special promotions, currency conversions, refunds, and more. All along the way, it gathers information and builds a deeper customer relationship.
For an EU-based SaaS business, this means there’s plenty of potential to scale up and compete in the global market. FastSpring handles the details while you focus on expansion.