Hey anyone have any experience with setting paypal up to collect VAT based on the point of sale. For example, I've read that for EU sales, i.e. online sales that come from the EU to a US based business, that the US company is responsible for collecting VAT and submitting to the EU taxing authority. Any thoughts on payment processing through paypal & international payments would be most appreciated. Thanks!
Normally you only have to worry about paying taxes for the country you're in. If the business is in the US, and they sell to a EU customer, they're only responsible for taxes inside of the US. Same thing goes for a EU business, and a US customer. I've never heard that a US business would need to submit VAT for transactions from EU customers. I could be wrong on this, but I'm fairly sure you don't need to pay out of country taxes under normal circumstances.
Actually with VAT the situation is very different. There are two kinds of taxes around. If you are a business, you will be responsible for paying tax for the income earn for your business. VAT on the other hand is Value-Added Tax (aka Sales Tax or Value Added Tax). This is a tax on the customer who spends the money and not on the merchant. The EU VAT applies to all Europeans who made purchase from Europe and merchants from across the pond who cater to these customers would have to collect VAT on behalf of the EU authorities and remit it back to the EU. It is a bothersome and sticky issue. With Paypal, they are merely acting as a remittance company and thus as a merchant you are fully responsible to collect and pay VAT. Other payment processor like plimus.com , shareit.com and 2checkout.com does all the necessary nitty gitty on your behalf thus freeing you from the issue of VAT.