Hi Marcel and welcome to WIP!

Taxes are a complicated matter you want to get right. They also vary per jurisdiction so I definitely recommend finding a good accountant in the country your business is based. If you have an accountant yet, I recommend asking other entrepreneurs in your local community with ideally a similar type of business as you are running or plan to run.

Just to give you some pointers though, yes you're right that as a EU-based company doing business with with consumers around the world you'll 1) need to know which country they are from, and 2) charge them the appropriate tax rate for that specific country. For example I think for German customers you need to charge 19% tax, while customers from the Netherlands will need to pay 21%.

I believe for each customer you'll need two pieces of "evidence" about where they are from. Don't quote me, but I think you can save the location of the IP address, the address they entered, and the country of their credit card. If two of those are the same country, you can assume that's the country of origin and you should base the tax rate on that.

The VATMOSS is rather complicated to explain, but yes that's basically one system where you enter all the taxes you charged for different countries, and then wire the total amount to your local tax authority. They will take care of the rest.

For B2B the story is a bit different, because you don't need to charge tax to registered businesses. Provided they are not from your country of origin (e.g. if you're based in France, then you still need to charge French companies tax too), and you need their VAT ID. You should also verify this is a valid number through one of the available APIs. If everything checks out you don't need to charge them VAT, but apply the "reverse charge" rule which means they need to take care of things on their side.

If this all sounds too complicated, you could also look into a service like Paddle or Gumroad who will do much of the heavy lifting for you. In a nutshell your customers become their customers, and they take care of all the taxes. Paddle or Gumroad then becomes your one customer so you only have one thing to deal with.

The price you pay is their fees, plus the limitations and risks that come with using a third party service like that. You'd be limited to whatever accounting and payment services they provide. Everything has to go through them. There's also some risk in that they could choose to no longer serve you, if they don't agree with the product/service you're selling. I think they can be a bit picky, because they are taking on some risks with their model.

But my main take away here is to talk to a professional. Getting information from random people on the internet is a good first step to get a general sense of what to be aware of and which questions to ask. But ultimately you don't want to risk doing this type of thing the wrong way.

Best of luck!

P.S.
My business used to be based in the EU too. It was a real pain. I never found an accountant I was 100% happy with. Ultimately I personally moved out of the EU and so did my business. If that's an option for you, that's worth considering too. But it's only applicable if you're no longer a resident of your own country.

As a EU resident, I investigated this and eventually decided to go with Gumroad (also looked at Paddle and similar services).

Building my own tax system and keeping an eye on tax rates and rules across the globe would cost way too much time and draw my focus away from building an awesome product.

You could also look at an in-between solution like Quaderno they integrate with popular payment services and add tax to your invoice and give you the paperwork to send to various tax agencies.

I'm quite happy with Gumroad, it's not perfect (far from it), for example they don't do bank payment to NL at the moment (apparently they're working on it). My customers purchase through Gumroad and then register their purchase in my customer portal, that way they're my customers and no matter what Gumroad does I have their contact information.

Gumroad: Customer creates Gumroad account and pays to Gumroad via Gumroad payment flow. Gumroad adds tax and pays tax to tax agencies. Paddle takes cut (3% when on 10 dollar plan). Gumroad pays to you.

Paddle: You create a customer portal to manage payments. Customer pays to Paddle via Paddle payment flow. Paddle adds tax and pays tax to tax agencies. Paddle takes cut (I believe 5%). Paddle pays to you.

Quaderno: You create a customer portal and set up (for example) Stripe and everything you normally would. Customer pays through Stripe. Quaderno adds tax. Customer pays to you. You pay tax to tax agencies.

First of all -- thanks for all your detailed answers! +1

So I did a research into topics you provided and also consulted an accountant who claims to have experience with EU VATMOSS and so far it seems that doing business across Europe should not be much of a hustle. It seems the combination of stripe+quaderno would be quite doable with some automation and without too much of an overhead with bureaucracy.

I also discussed with the accountant possibility of selling overseas to the USA and in Asia but this is beyond what he has experience with. Since I'm based in EU this should be much of an issue in the beginning, but still I'd be interested -- how do you guys deal with sales in Americas/Asia/Australia?

USA --- It seems one does not have to have company based in US in order to pay sales taxes on SaaS? You "just" register in individual states and send taxes according to state laws?

China --- Seems like impenetrable fortress for sales from outside, probably better not waste resources until the startup healthy and growing.

Rest of the world --- any other large audience makers usually look at? India/Russia/Japan/Brazil?

And once again, thanks for your time, really appreciated!