Taxes for a European SAAS startup selling in the US


3

I'm looking into selling a web application to US customers. Is it necessary to create a US subsidiary such as a Delaware LLC or not? How are taxes worked out? Income tax, sales tax?
I know this is a very complex topic so even a pointer would be helpful.

Thanks.

Foreign Tax Subsidiary

asked Mar 4 '12 at 10:35
Blank
Frenchie
4,166 points

2 Answers


2

I'm looking into selling a web application for US customers

Just do so.

I know this is a very complex topic so even a pointer would be helpful.

Ah - this is TRIVIAL. Seriously. I sell international all the time for years now. If you have a problem with that stuff get someone on board knowing the basics of running a business. Also you SHOULD have an accountant to talk to.

How are taxes worked out? Income tax, sales tax?

Sales tax for you would be European style VAT as per your registration / busienss country That is.... ZERO. NO VAT - VAT only applies to consumers (not companies, if they are VAT registrered) within the EU. You write out an invoices to the US company with their registration data and the tax rate is 0 (Non-Eu). Ask your accountant what to write exactly onto the invoice (depends by country).

Income tax: money you receive is your income. Whether this is EU or not, consumers or companies is irrelevant.

That is it. Simple like that.

answered May 3 '12 at 14:14
Blank
Net Tecture
11 points

0

Ok. Let's apply ye standard disclaimer: IANAL, IANAA

This will need a serious involvement from both lawyers and accountants to figure out what is best solution. There is generally no legal necessity to have a subsidiary in the US to sell to the US. The issue is though that in general people prefer to deal with someone local in case of issues and whatnot.

If someone is willing to pay to your entity in Europe in euro or if you accept dollars even in dollars then this will work just fine. You will probably have to file an 1120-F.

One thing that you will have to consult an accountant and probably a lawyer about is whether or not this would be advantageous to actually have a subsidiary set up for your business in the US.

answered Mar 4 '12 at 12:04
Blank
Karlson
1,779 points
  • -1. No, this is trivial. – Net Tecture 8 years ago

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