One thing I would love to know more about is how European SAAS startups handle invoicing and taxes. Afaik the tax situation in Europe is super complicated and you have to charge the tax of the country the customer is from.
I am in Europe and want to start a SAAS service that caters to individuals and small companies. I wonder if it is feasible to do so in Europe. Do I really have to ask each customer where he is based, if he is an individual or a company and then tax him accordingly? Do I have to create invoices?
US based startups seem to simply not care. Even big companies don't. They just ask for your credit card number and thats it. For example I used Amazon Mechanical Turk recently to outsource some work. And there simply is no way to get an invoice from them.
Do European startups have a big disadvantage in this regard or am I missing something?
Are there services that abstract that away? Deal with all the invoicing and tax issues?
Running a Germany-based SaaS startup at some scale, so I feel confident to chime in.
To put it bluntly, you're right. We have to do more work just to get started accepting money than our American counterparts. Yes, the insanely complex EU-VAT rules actually need to be followed. Yes, a lot of your customers will want to pay via bank transfer and not through credit card. Yes, the American folks will still want to pay in USD and not in EUR.
We use ChargeBee (https://www.chargebee.com/) to abstract away most of the pain. I would greatly suggest using such a service (Recurly and Chargify are more enterprisey alternatives). We had a selfmade implementation before switching to ChargeBee, and one EU rule change caused us to have to re-issue all customer invoices for one quarter. Not fun. ChargeBee prevents you from doing the biggest blunders in taxation, and also allows you to keep track of invoices paid through credit card or through bank transfer (and specify the Dunning rules accordingly). Overall, I'd greatly recommend it.
We've been using Chargebee since the start of 2015. I found it after trying to figure out how we were going to deal with the EU VAT rules. At the time I couldn't find anyone else using it but we took a punt on it and I can say that it's probably our favourite bit of software in the business.
Beyond the subscription and invoicing side (in which they seem to have thought of everything) it also manages all our reconciliation in Xero. The payments come in to a holding account from Stripe in big transactions so you don't know which invoices should be mapped against the transactions. Chargebee have a chrome extension that will match everything up and automatically reconcile it all for you.
Also, the team have always been awesome to work with. Could not recommend them highly enough.
I tried your site and I saw that it adds the VAT when the user selects their country. Since the order page makes network requests to ChargBee, I guess they provide all that functionalilty.
Would you say ChargeBee is also a good solution for small one-time-payments?
When you say it abstracts away 'most of the pain' - what pain is left?
> Would you say ChargeBee is also a good solution for small one-time-payments?
My startup uses ChargeBee and deals with one-time-payments as well as subscriptions. It's definitely geared towards the subscription model, but you can make the one-off payments work by using the API and utilizing add-on products.
First, the customer would need to be signed up for a subscription plan that has a trial set to expire X years out (I think the maximum is 10). ChargeBee's pricing model is based on the total number of invoices per month (or at least that's how our plan works), so signing them up for a trial does not result in an invoice being generated.
Then you would set up an add-on product in ChargeBee that is of the "Quantity" type and has a price of $.01. When the customer makes a one-off purchase, you would call use the ChargeBee API to purchase a quantity of X of the add-on. So if the total charge is $10, you would use a quantity of 1,000 (1,000 x .01 = 10).
If you have products that have a set price, you can just add each one as an add-on and reference that product ID when calling the API.
It sounds kind of hack-ey, but I'm very happy with our decision to go with ChargeBee. Their customer support is awesome as well.
I think my sibling comment's experiences are somewhat dated. Running one-time payments has been absolutely no problem with ChargeBee for us. It's obviously geared toward subscription businesses, but it has full support for one-time charges as well. No need for any hacks or weird work-arounds.
Regarding what pain is left: I'm approaching this from an end-to-end perspective, so answering the question "Even when using ChargeBee, what additional work do we have to do compared to a similar business based in the US?":
- You still have to code in UI-level support for multiple currencies. ChargeBee handles the backend.
- ChargeBee gives you a nice UI for keeping track of paid and unpaid invoices. Nonetheless, for payments via bank transfer [which your EU business customers will want to use], you still have to manually confirm in ChargeBee that you've received payment.
- You still have to supply quarterly MOSS tax returns to your local tax authorities (though ChargeBee does all it can to make that process quick).
The tax stuff is a bit of a pain, but you can buy things (eg Stripe plugins) to make collecting the necessary data much smoother.
In short: If you're supplying digital services to consumers, you need to charge them Value-Added Tax (VAT) in the country they're in, not the country you're in. If you're supplying to businesses, you charge them VAT where you are. You need to collect certain evidence with each transaction, to prove which category/country your customer is in.
The search term you probably want is "VAT MOSS". This officially refers to the "Mini One-Stop Shop" provided by HMRC (the British tax authorities), which tries to ameliorate the situation. You still need to charge people the right amount of tax, but then you can just upload a quarterly spreadsheet saying how much revenue you got from each EU country. But "VAT MOSS" is also used as a catch-all term for the whole cross-border digital VAT kerfuffle.
It started out as a well-intentioned attempt to close a tax loophole, but it was clearly drafted by people with no understanding of how computers work. (There are actually "FAQs" about how, precisely, to handle a German citizen with a British SIM card making a mobile transaction from a train journey crossing the Italian-Swiss border...as if this were something a website could reasonably detect.) But, as I say, there are decent solutions you can use, and you just spend a couple of days implementing one of them.
But, as I say, there are decent solutions you can use, and you just spend a couple of days implementing one of them.
A couple of days seems very optimistic!
The situation today is certainly better than it was for those of us who got hit by the new rules before the payment services had caught up and had to do it all ourselves.
However, even the payment services today typically concentrate on adding the correct VAT rate onto initial purchases and possibly doing some sort of look-up to try to keep the required proof of location. They still won't do much to help you keep up to date with different tax rates for different types of service or in different territories, filing (and, if necessary, later re-filing) the MOSS returns themselves, knowing which location and therefore which tax rate to use for later payments after a customer starts an automatic recurring subscription of some kind, and so on.
And of course it's all relatively simple if you collect all your payments through the same payment method, such as Stripe and a plugin as you mentioned. If you're collecting through different channels then you're still going to have to reconcile all the figures yourself as well, at least with any payment systems I've ever seen.
> as if this were something a website could reasonably detect.
Do you not record your users' GPS, connection point, roundtrip delay, microphone, and camera at all times?
Because I stepped into a restaurant the other day and my brand new Android phone asked me to take a picture of the specific booth I had sat down in (by number and floor plan) for Google. Get with the modern analytics stack bro.
I intended the connotation of the word I used. It feels like the MOSS scheme's heart is in the right place, but the best they can do is make a bad situation suck a little less, and "ameliorate" is about as polite as I felt like being.
(While I'm making a new comment, and since the last one is out of its edit window, I should acknowledge I mangled my attempt to summarise the place-of-supply rules. Sorry. Don't get your tax advice from HN comments, kids.)
yes, it is much more complicated in Europe, but you can rent software that handles most of it (and you should).
If you cater to companies, it is easier. You ask for the VAT number and only if the company is from your own country, you add the VAT, otherwise its 0%.
If you cater to individuals, you need to use two different mechanisms to identify where the user is from (IP Address + Geo location and another one) and store this information, then you need to charge the VAT from that country and you need to signup for the EU Mini One Stop Shop (MoSS) with your local tax office, report your european VAT earnings quarterly.
Selling to a customer (business or individual) from outside the EU you can charge 0% VAT, so that is easy as well.
I recommend that you use either Recurly or Quaderno in combination with Stripe, because they generate the invoices for you and handle the VAT calculation perfectly.
I don't know about other countries than Germany (were we are located), but we also have to submit monthly VAT report to our tax office, all in all we pay our tax attorney 400-500 Euros per month, plus another 1000 for the yearly report. Maybe other EU countries allow startups to report quarterly or yearly? Idk.
I appreciate you are trying to help but 0% vat is a totally different thing than deferred vat and if you would accidentally use the term 0% on your invoices rather than the correct term it would cost you dearly by the time you discovered your mistake (most likely during a tax audit).
I was incorrect in saying "zero rated" - the term I should have used was "out of scope".
B2B sales between EU nations are out of the scope of VAT in the supplier's country, and in scope in the customer's country (the customer must account for VAT using the reverse-charging rules)
Maybe other EU countries allow startups to report quarterly or yearly?
In the UK it's usually quarterly, but you have to file separate returns and make separate payments for VAT MOSS and domestic (UK) VAT, which might be out of phase unless your VAT quarters happen to fall on calendar quarters anyway.
EU SaaS founder here. It really is not as complicated as people are making it out to be, at least for digital services (I have no experience with physical products). Use a service like Quaderno https://quaderno.io for the invoicing, they plug into Stripe. Once you get that set up it's not a big issue.
Just because you are paying someone to do the complicated things does not mean it is not complicated. Also, $150 per month may be pennies to you but not for people in easter EU countries, or for a student trying to make a business. And that's only for 2500 invoices per month, what if you have thousands of tiny amounts?
> EU doesn't have complicated email system, it has complicated tax systems compared to anywhere else in the world.
I'm glad you've shown your lack of knowledge here, VAT on digital services has some complexity, but overall taxation in the EU is simpler than what a lot of other countries require.
Oh dont get me started. It's impossible. I am an indie developer and want to sell virtual products to europeans. The easiest way to do it is to have an american company collect the payments and take a cut. Meanwhile, the EU is busy coming up with cookie laws. Thanks EU.
ps. here is a startup that is supposed to help companies with this minefield: http://taxdoo.com . We shouldnt need these things.
EU cookie laws might feel silly, but I’m really glad that EU politicians are erring on that end of the spectrum than taking the path the US has been walking with net neutrality and surveillance.
What's silly is people tacking in the cookie notice even for 99% of the times they are not needed
> Cookies clearly exempt from consent according to the EU advisory body on data protection- WP29pdf include:
> user‑input cookies (session-id) such as first‑party cookies to keep track of the user's input when filling online forms, shopping carts, etc., for the duration of a session or persistent cookies limited to a few hours in some cases
authentication cookies, to identify the user once he has logged in, for the duration of a session
> user‑centric security cookies, used to detect authentication abuses, for a limited persistent duration
multimedia content player cookies, used to store technical data to play back video or audio content, for the duration of a session
> load‑balancing cookies, for the duration of session
> user‑interface customisation cookies such as language or font preferences, for the duration of a session (or slightly longer)
> third‑party social plug‑in content‑sharing cookies, for logged‑in members of a social network.
Aren't the VAT requirements going in the exactly opposite direction then? Is it good for privacy that a bunch of different - and of questionable security - tax offices have to know who and where you were exactly when you purchased your sex toys?
C'mon man the cookie thing is a silly PR gesture, with measurable economic cost in the time it takes to dismiss all those dialogs in your tiny phone screen. It has done nothing, absolutely nada measurable in attitudes towards tracking.
The easiest thing to do from the accounting and complexity perspective is to use a reseller. We use paddle.com and are very happy with them. In such setup, reseller is selling your product/service and handles all the invoicing, per country tax calculation, etc. No matter how much you sell, you always get only a single invoice per month from the reseller, with only one entry - the cumulative sales from the month, which is very easy to account. If I understand correctly, Apple store also operates as a reseller (but Google Play doesn't).
The drawback is that customers see your reseller company name in invoices, which can be problematic for some, but we haven't yet hear complains.
It's an improvement over the pre-EU situation, where every country was independent and shipping something 100 miles to a neighboring country would require customs declarations and tariffs and possibly complying with different labeling laws, assuming the countries weren't actually at war with each other at the time.
Tax authorities systematically underestimate how much they harm the economy through complexity.
The VAT MOSS scheme we're talking about (currently) only applies to digital services, not physical products. The problems you mentioned don't apply in this context.
There is absolutely nothing about this scheme that is better than before it was introduced. Nothing.
Several years after it was introduced, as others have noted, some of the payment handling services have kind of caught up, to the point where if you can use one of them then you'll probably fly under the radar.
You'll still have to spend time/money on the integration itself. You almost certainly still won't be fully compliant, because 100% compliance is practically impossible. You'll potentially be giving up a significant chunk of your margin in extra fees. And you'll still have the extra paperwork to do and the potential for an expensive audit by any of 28 member states' tax authorities if your number comes up. But at least you can carry on doing business in the meantime and hope for the best.
This tax scheme is my go-to example of what happens when politicians who see a problem but have no idea what they're doing try to fix the problem anyway. Your final sentence is right on point, sadly.
> There is absolutely nothing about this scheme that is better than before it was introduced. Nothing.
Under the previous scheme Luxembourg/Ireland would get a gigantic share of VAT. I guess you could argue that this money can be redirected by EU support programs to countries in need. I think that having the VAT go directly to the country closest to the buyer is a more optimal solution. Less dependence on EU welfare to know that your tax money is benefiting your community.
But that is already happening with regular taxes. EU allows apple and google to set up shop in Ire and do business throughout the EU. Why treat VAT so differently?
I think this was the aim of the scheme, but perhaps similar to the GDPR[0], it's hurting small businesses extremely disproportionately to larger ones...
Yes, but your customer would need to pay the VAT at the point of bringing the goods to his country. As you can see, the pre-EU laws are a bit outdated.
Personally I find the sales tax system in the US much more complicated. At least in Europe the percentages are the same within each country, but in the US they differ per state, county and even per town.
At least in Europe the percentages are the same within each country
This isn't actually true. There are quite a few dependent territories and the like that are part of the same country but have different tax arrangements. There are also multiple VAT rates for different types of product or service in a lot of countries, with different rules from place to another about which products or services attract a lower rate.
Sure. The table can be found here[1]. But let's not pretend it's more complicated than it is, for a company that operates in a specific market, usually their products fall within the same VAT category. Unless you're Amazon or Bol that sells a range of products.
In the US you basically can be sure that sales-tax varies by zip-code. I worked for a telecom company in the US that sent all their invoices to a specialized company, to have them calculate the tax, before sending them out to their customers. It was too complicated to do that on their own. Also because tax rates can and do change at the whim of some local city-government for example. And as far as I know tax rates in the EU are determined by the country-governments only, which means not very often.
You're right that many businesses will operate in specific markets, but even then it's still not always clear which rate should apply, and different classifications might apply in different member states or even different areas within the same member state. E-books were a controversial ambiguity when the new rules came in, for example. We could get more into how many technicalities there are in this system, but I think I'm just going to mention that the document you linked there is 116 pages long, which probably says all that needs to be said on that point.
As for locations, there are plenty of potential gotchas there too. Would you like to guess the rule if the person who bought an e-book did so while on holiday on a cruise ship in the Mediterranean?
And as for not changing very often, I think the shortest notice so far was just over a week from legislating the change to the new rate coming into effect (Greece in summer 2016). To this day, I'm aware of no standardised mechanism for alerting merchants to future changes in the relevant rates, nor any authoritative list of current rates available in a machine-readable format for automation purposes.
So while I agree that we shouldn't pretend it's more complicated than it is, the current EU VAT situation is a complete mess full of traps and technicalities to catch out the unwary, and full compliance is effectively impossible. It's a bad system, made by people who don't understand how either digital markets or small businesses actually work.
Yeah you have to do all that you mentioned, and more. For example, with EU SaaS sales to individuals, it doesn't matter where the customer lives or what citizenship they have, what matters is where they are at the moment of the sale.
There is an endless supply of people who are willing to do this work for you, for a fee. Essentially this is the classic get an accountant advice.
You could also do all of this yourself if you consider yourself smart and limited on cash. Frankly it isn't that complicated to understand. There's plenty of information available online. In my case (Estonia) the local tax authority is even giving regular education classes for free that you can attend.
You could also do all of this yourself if you consider yourself smart and limited on cash. Frankly it isn't that complicated to understand.
The basic principle is easy enough to understand.
I doubt that there is a single person alive who fully understands the technicalities, and I doubt that there is a single person who worked on the scheme at the EU who understands why full compliance is essentially impossible for most if not all businesses.
We’re B2C selling globally. We implemented VAT ourselves on top of Stripe. It’s a pain though. But it’s not only VAT MESS as they call it. At least in Germany tax is complicated and bureaucratic with freelancers and corporation tax rules.
If I could start fresh, I would probably set up a company in Singapore. Moving an existing business is FAR more complicated... There’s a pretty great post from the Ghost founder about it (on mobile so can’t look it up easily). Worth considering in my opinion.
>Afaik the tax situation in Europe is super complicated and you have to charge the tax of the country the customer is from.
This is why you have to keep in mind of possibility of setting up a fulfillment centre outside of EU economic area and countries with which EU has tax deals with, but on the border with it.
Yeah, you're right. Always have everything legal figured out before even starting your business, especially in the EU, no matter the cost. Good advice that everyone should follow.
Not only it is cheap, 1 week deliveries are some times possible on Finpost, Singpost, Swedish Post and most well known, HK Post.
Establish small warehouses in those countries.
2. Do not have legal presence in as many countries as possible. Countries do not tax purchases of their citizens abroad (no VAT, hooray)
3. Be secretive (or at least until you can afford to do things the way "big co." do)
4. If you 100% need to have physical presence in the country, you are doing something wrong.
5. If you 100% need to have a team meeting in person with an ability to rent an office for work for some time, only consider no hassle visa countries. Singapore was once super hospitable to internationals: hire whom ever you want, from where ever you want, but now they did a U turn. They also largely cancelled their legendary high income individual visa (a de facto residentship permit given just for agreeing to live and spend money in Sing.)
Vietnam, Thailand, Malaysia, PRC, Pakistan have no problem at all giving out long term business visit visas to all and everybody. For as long as you get your body on their side of the border, you are free to do whatever you want for the duration of the visa unless you do something really stupid.
6. If you are really insistent on having a single physical workspace, consider places out of beaten path: look for countries that are cheap to live in, yet fancy, and without bureaucratic culture. For example, say Kazakhstan (their capital ranked 1 in Economist's list of cheapest megacities to live in) or Pakistan (they have an actually working FDI assistance and protection program.) There, locals are ready to almost worship the few foreigners who want to spend money in the country, plus they are the kind of countries where you can buy anything for money including the disposition of authorities. Also check for possibility to do split tax/salaries legally in the country (pay base in the country, and a project premium/stand alone consulting payment to a proprietorship in their home or third countries.)
7. Consider the fact that the majority of world's middle class lives outside of the West today and that you get more opportunity for the money in markets that are not yet as mature as in the West.
8. Middle class outside outside of the West is easier to cater to: in the West, you gave a plethora of different classes all qualifying as paying middle class, with their own subclasses, and vastly varying demographics. Compare this to Central and South East Asian middle class: age 25-35, 90% technical professional occupation, %60-%70 with families/couples, highly geographically clustered, employed full-time, mid to high property ownership, mid to high light vehicle ownership, almost all with higher education and second language knowledge.
9. P.S. Pakistan has fabulous 200GB 4G data plans for only ~$90 a month.
5. You’re going to need to get on an airplane sometimes
Yes, this is very important. There's still nothing like human contact. I use video calls constantly all day, but still fly a tremendous amount because so much communication happens non-verbally or with higher fidelity than video provides.
Especially so with your high-profile customers. There's nothing, NOTHING better than meeting your customer personally, shaking hands, visiting their office or having lunch together.
Humans are, by nature, social beings. Even though, as a civilisation, we've come a long way and have created ways of communicating across huge distances, we still feel like the personal contact is so much more powerful.
Never underestimate personal contact, especially when running a business.
There is a very simple reason for this, you always get more information in person.
If you're interacting with a text-based chat interface you get one thing, pieces of text, not only that's all you have to make decisions, but you have no idea how much effort and time went into designing those messages for you, this translates into the simples human interactions.
If you are talking on the phone, you get words and maybe a tone of voice, you get more timely information, but that is all.
If you are doing video chat, you get to see the persons expressions, which is a plus, but not much more(and how many times have I seen audio/video data issues).
But, if you are meeting in person, you get all of that and then some, plus it signals commitment and effort to allocate time to physically attend a meeting considering how much other options you have. These do not have precise metrics, but it drives people gut decisions.
After spending years building next-level video conference systems, I reluctantly came to the conclusion that even perfect video and audio, with the ability to move around independently, didn't come close to being there in person.
A hypothesis I haven't seen falsified is that smell or pheromones are part of the human bonding mechanism, even for business relationships.
Another thing you lose through videoconference is the potential for violence. Even though it almost never happens in business meetings, perhaps there is a part of our evolved brain that's active when interacting with someone who could, in principle, punch you if you offended them, and even business relationships are affected by this. Underneath our sophisticated neocortex lives the brain of a small mammal.
In a startup sales/bizdev context, the point you make about signaling commitment and effort is particularly important. "The founder (or CEO) showed up in person" can make a lot of things happen more quickly than they otherwise would.
That's a very fair point. Might be that to a certain degree people feel in debt with the person who offered them their time, thus making a positive business decision easier.
I run the US office of a German startup. I'd add the below:
1) Issuing employee equity across countries is difficult: There are good US solutions to prevent employee equity/ option holders from needing to pay taxes before liquidity, and similarly for good German solutions to the same problem. Getting these two systems to "play nice" with each other is challenging.
2) Time zones: If possible, I'd think about time zones when expanding internationally. SF->Europe is brutal (8-9 hours), which is a major reason we put our US office in NYC. I wake up at 6, check email, and have half a day to work with the Germans during their work day. If I were to be on the West Coast, even by starting at 6am it's already 3pm in Germany.
3) Visas: A good option for international companies expanding to the US is an E-2 "investor" visa- these make it easy for employees of the foreign HQ to come over to the US for a few years as long as the foreign company is investing substantial money in the US organization (I think over a couple hundred $K is enough)
I had a few more things that helped with a platform that I built that went global:
- Internationalization - bake it into the bread from the beginning, the cost is marginal, relatively speaking. Internationalize the UI for sure, and make design decisions relative to having reasonable multi language support for any user type content. It won't be perfect out of the box, but you will have a huge head start when you have to optimize rendering of languages.
- Localization: The forgotten sibling of internationalization can be critical when going for an experience to show a native experience that is local and inviting to the user.
- Equality for the international user: Consider your browser configuration globally and not just North America, which is typically better equipment, higher screen resolution, faster internet connections, the latest browsers, etc. This doesn't mean avoiding using the latest and greatest, but consider it. As much as I like React, lighter libraries like Vue can be a little less heavy. Lean, mean, and fast go a long way when you have a user on an off-shore platform needing to access something required to do his job.
- Mobile first - the world is mobile first, North America is a mix. For many people, depending on the country, the mobile is the only device they have, through which they have to accomplish tasks that others may complete on tablets or laptops. Consider this in your design and also try using only a phone for a week to do what you do normally on a laptop - it can be eye opening.
Thanks to folks who have reccomended services like Chargebee - sharing current resources that solve neccesary problems like this help a lot. It's great to be able to take money in any form rather than force a user down a particular path.
As a side comment on the ideology of going "global first", startups from smaller countries (with smaller markets) are almost forced to adopt this mindset from day one.
Many advantages from going US only first: same currency & language, homogenous culture, huge market, etc. The main disadvantage though is that you don't learn how to operate in an international environment until later in the business life cycle, at which point the institutional DNA is harder to change.
Your competitors will be taking a global-first mindset, so it's something to think about.
Good stuff. You can easily get surprised. We had not even thought about "going international" to any meaningful degree, and then out of the blue a prospect from Canada calls us. At that very moment, I had NO idea what would have been involved in doing a deal with them... taxes, payments, etc., etc... all totally beyond my ken.
Just a heads up that the YC blog spits out far more data than it should when it errors out. I received a 503 and encountered this:
Service Temporarily Unavailable
The server is temporarily unable to service your request due to maintenance downtime or capacity problems. Please try again later.
Additionally, a 503 Service Temporarily Unavailable error was encountered while trying to use an ErrorDocument to handle the request.
Apache/2.2.24 (Unix) mod_hive/5.5 mod_ssl/2.2.24 OpenSSL/1.0.0-fips mod_auth_passthrough/2.1 mod_bwlimited/1.4 FrontPage/5.0.2.2635 mod_fastcgi/2.4.6 mod_fcgid/2.3.6 Server at blog.ycombinator.com Port 80
Is this really problematic from a security perspective? Presumably anyone malicious is already running a script-kiddie package that is actively probing for vulnerabilities, so would it even help such an actor to know what library versions you're using?
I've been running my company as a globally distributed business for awhile now and I'd also emphasize #2 and #5.
Also, managing a 40 person team across many time zones created interesting communication issues. Be prepared to dial in processes far earlier than you would expect to need them and learn how to manage / archive conversations that happen in chat effectively. I've found that voice / video chat is still very challenging due to time zones, varying internet connections, and spoken accents vs text.
I definitely expect to see much more of this going forward though. Asian markets are on fire right now and many US companies, large and small, are focused on growth there.
I run an international Startup as well and we ship stuff around the globe too. It sounds like the author has good experiences with DHL. Unfortunately that has not been the case for us. Too many delayed packages, customs trouble and general incompetence made us switch to FedEx a long time ago. Haven't had a single problem since then.
Although I'm German I can't recommend DHL to anyone in good conscience.
Seconded, I used to ship a lot of stuff using DHL and have transferred all our business to FedEx or the US bound stuff and other carriers locally and within Europe. DHL caused us no end of trouble with breakage (more so with packages marked fragile), lost packages, late packages and so on.
On the shipping front there is a nice expression that you only air freight the 2 Fs “fresh flowers and f* ups”. I would say though that shipping large goods internationally is easier in my expiernece than small individual orders, for that amount of shipping cost it is far easier to get a good service that can keep things moving than for an individual order.
So , tax accounting and immigration paperwork are areas ripe for innovation. There is an unjustified amount of effort and time going into accounting, which should be automated in western countries.
I understand the surprise given that many companies these days hire full time "employees" as "contractors" in other countries. These employees are sometimes not really "contractors" (they have a fixed salary, they get benefits like paternity leave or paid time off, they have performance reviews, they can be promoted, etc.) but on paper they are "contractors".
Personally I know various companies that have employees all over the world but DON'T have accountants and lawyers anywhere. These "employees" are both "contractors" and "employees", depending on which angle you look from.
That's true, but the reality is that lots of small start-ups are "doing it wrong" and will be caught eventually [0]. Most jurisdictions have firm differences between a temporary worker (contractor) and an employee. Generally, companies have responsibilities to pay things like payroll taxes for employees and not for contractors.
While management and team members might consider them selves BOTH employee and contractor. The legal and tax situation is that those are different employment states and you can't be both. For a recent example see Uber in the UK.
It's somewhat a tech industry thing the idea that employees can wander around the world and work from wherever they want - the tax and legal system isn't quite as fluid.
[0] statistically the chance of being noticed by the tax authority is pretty small at the start which is why it doesn't happen that much. But, if you start 'employing' tens of people in a jurisdiction and don't have company tax affairs in order then it gets increasingly risky.
Over the course of several companies, I have noticed something special regarding China (in the context of expanding there, from a western country):
1. You inevitably hire a local person to handle this market.
2. Because of the combination of language issues and timezone differences, communication suffers. All of your communication is via your one local person.
3. Your Chinese country manager decides that the Chinese market is significantly different from every other country in the world, so your product needs to be rebuilt to address the local market. Fortunately they can hire lots of people very quickly and relatively cheaply. You don't really have any insight to say whether they are right or wrong.
Comment: I feel this tends to be a combination of a) empire-building strategies and b) ignorance of the rest of the world, and a specific assumption that China is special in some specific way, which often turns out to be false.
I am in Europe and want to start a SAAS service that caters to individuals and small companies. I wonder if it is feasible to do so in Europe. Do I really have to ask each customer where he is based, if he is an individual or a company and then tax him accordingly? Do I have to create invoices?
US based startups seem to simply not care. Even big companies don't. They just ask for your credit card number and thats it. For example I used Amazon Mechanical Turk recently to outsource some work. And there simply is no way to get an invoice from them.
Do European startups have a big disadvantage in this regard or am I missing something?
Are there services that abstract that away? Deal with all the invoicing and tax issues?