 Everybody thank you for the introduction So I'm here today to speak about indirect Texas and how you can use WooCommerce to comply with indirect text laws First of all, what are indirect Texas? Well, just a fancy name of describing The Texas some of which are behind me here I'm sure you know a few of them in the US. You have sales tax in Canada, Australia You have GST in Germany Mirvert Stoljer in the Netherlands. You have day to day and Almost all countries in the world have these and they're called indirect Texas because as opposed to Direct taxes that are directly collected by the government you as a business owner get a great joyful job of collecting those on behalf of the Government and that can be a bit of a hassle So I will explain exactly how you can do that. I will cover how they are calculated how you can configure WooCommerce to Correctly calculate your your taxes What the limitations are because no no tool is perfect and WooCommerce is no exception And then finally I'll talk a bit about conversion rates because that's a question that frequently comes up as it is connected to text calculation So I work as was said to the introduction as the head of sales at the sales tax automation tool and don't worry I won't be pitching any of our products, but we do get a lot of inquiries from People who start selling online or have a modest business and Need help with their taxes and in most cases they don't need the text automation tool they just need some basic consulting which is logical because Texas are boring Let's face it and most business people don't start a business because they they want to deal with Texas Moreover, there is a lot of foot standing for fear uncertainty and doubt in the industry created by Sales consultants or tax consultants who are incentivized to do that because it will attract more customers and they can bill more hours by making it look more complex they can right justify sending larger invoices so the result is that a lot of people don't really know how to do how to deal with Texas and We see three archetypical ways of people who contact us who deal with Texas in an Unhelpful way and the first strategy we often see is this one The ostrich strategy right people who say okay. This is complex What I'll do is I'll just ignore this old texting altogether stick my head in the sand and hope it will just disappear But unfortunately it doesn't Often they are close to having an anxiety attack every time they get a regular communication from their local tax office And it's taking a lot of their Brain space and mental space and that's completely not necessary The next archetype is the polar opposite of this one Analysis paralysis People who want to know everything there is to know about Texas before they even make a sale or launch their business Founders who launch their business in Europe and want to know exactly how their Product will be text in different states of the US how the Thresholds are in the different states how to register once they hit such a threshold and Yeah, that's taking up a lot of their time, which would be better spent focusing on their product or Doing marketing or sales and then finally Geofencing people who are worried about what's how to comply in certain regions and then just geofence their solution making it unavailable for purchase from for people from certain locations and That's a lot of a lot of lost market potential also Not necessary. I vividly remember the conversation. I had with an influencer one day who was about to launch his Online product. He was based in Europe and he had a lot of followers in India And he was really worried about what would happen. He was convinced. I will launch this it will blow up I will have tons of sales in India And then I have a problem. So he was close to a panic the attack had already researched extradiction treaties between India and the country where he lived and This is also completely unnecessary because you can comply With Texas in four simple steps Not easy always to implement but four simple steps. First of all, you have to know where you are obliged to register right in most locations There's a threshold Meaning that if you sell for a certain amount only then you have to register for Texas in other countries such as Spain It's from the get go. So for example in the UK It's 85,000 pounds. You'd be based in Spain. You would have to start or register before you start selling and The way to find this out is By visiting your local tax office People are often hesitant to to do this because they're afraid their head will get bitten off or something in general They're kind people and they also have information on websites Otherwise you can consult with your local Chamber of Commerce and there you should also be fine be able to find this information Registration itself if you have the obligation to do so is usually quite easy you fill out the form Then you get a tax ID and with this tax ID. You can start collecting taxes It's very important never to start collecting taxes before you have registered for in the tax jurisdiction in question Because that would be illegal and then finally the fourth step you'd have to file all the taxes you have collected So the tax calculation in itself is the most complex part because the tax you have to calculate Depends on where you are based where your buyers based the type of product you sell the amount you've sold whether your customer is a business or a consumer so whether it's a B2B or B2C transaction and There are yeah as many cases as we have probably have companies in this audience so it's recommended to always consult with a tax advisor before implementing any of these configurations I suggest because You might get in trouble right if you configure things the right way best case scenario you get some paperwork worst case scenario you get paperwork and a huge fine so always confirm it and What I will do is I'll cover the US and Europe because I think that will be most representative for people here today And it's a bit dry Tax calculation and we're approaching the end of the day. So I hope you'll bear with me So the first scenario I will cover is how to Sell how to calculate taxes if you have a business in Spain in Europe you sell in Europe So I imagine I start a webshop in Spain and I start selling t-shirts So from the get go what I would start collecting and calculating on all transactions would be my local Spanish tax rate So if I would sell as t-shirts to somebody based in Spain I would calculate the Spanish tax rate if the person would be based in Germany I would also calculate the Spanish tax rate, but there is a threshold you should be aware of of 10,000 euros for sales within the European Union So if you sell for more than 10,000 euros Outside of your home country. So in this case, it would be outside of Spain So say to Germany the Netherlands etc. Once I hit that I would have to register for a system called OSS and This is probably the only time today. You'll see it where it doesn't mean open source. It means one-stop shop And once you're registered for the one-stop shop, you would collect the tax rate of your buyers country So from that point onward if I would sell a t-shirt to a German consumer I would calculate the German tax rate if my buyer would be in Greece I would calculate the Greek tax and of course for Spain it will would remain the Spanish tax rate and It's also Important to differentiate between B2B and B2C transactions because indirect taxes are a consumer tax So businesses are exempted So when I say make a sale to a business that is in Europe But outside of the country where I'm registered What I would have to do is validate that they are indeed a business against the system called fees And if it is the case not calculate any taxes So I might also have sales outside of Spain Internationally if I would sell my t-shirts around the world, they would be exempt so outside of Europe around the world They would be exempt from indirect taxes, but I might have to pay Export or import taxes or what have you if I would sell Services B2B services are exempt as well B2C services. You have to charge your local tax rate for those and It's very important to know for sure whether your product is B2B or B2C because if I would sell for example Right co packages It's quite clearly a B2B product because no child is going to ask for a co package for their birthday but imagine I would sell for example tennis consulting where I would consult people on how to improve their tennis strokes and I would not collect any taxes and Text office would ask any questions And then I would say well, it's a B2B product They would probably argue that given my tennis skills It's highly unlikely that any professional players would purchase my product. So it would be a B2C product meaning that I would be on the hook for any taxes I would not have collected and then finally for digital products. There are thresholds. So digital products are things such as downloads SaaS products membership sites and There are thresholds around the world for that because countries right if you think of a country as a company They want to maximize their revenue as well. So they start taxing sales on consumers in their country from companies that are not based ever This is why they're launching digital tax laws and most countries around the world have thresholds You should be aware of such as Switzerland, South Korea Australia and once you hit the threshold you should officially also register in that country and start collecting those taxes Now if you're based in the US It's usually a single rate for most states. Some states have no sales tax such as Delaware others have a single rate other states It's a bit are a bit more of a nightmare because in the US there are more than 12,000 different texture addictions There are swimming pools that are in their own textures diction So you could be in for a for a treat depending on the state where you're in and it could be a bit more complex Usually single rate some cases. However, you should configure. You have to configure many different rates And then if you're selling to other states There's this thing called nexus There are two types of nexus economic nexus physical nexus Economic nexus came about a few years ago because there was a US Supreme Court ruling That made it possible for states to start taxing transactions on People who are based in the states from sellers who are not based there again to maximize revenue right for the state and Most states have since then launched different nexus laws Meaning that if you sell for a certain amount to different states You have to register there and start collecting and calculating those taxes going forward Typically, it's it starts at about one hundred thousand dollars. For example, New York. It's five hundred thousand dollars So once you hit thresholds, you have to register there as well Apart from economic nexus, you can also get physical nexus if you have employees or a warehouse in a different state It might also mean you have to register there and start collecting those taxes Now if you're based in the US and you sell internationally if you're selling to the EU If you sell digital taxes You can register for the OSS for the one-stop-shop system Meaning that there's also a 10k threat threshold and from that point onwards You need to register for the one-stop shop and start calculating the tax rate of your buyer's country So if I would sell downloadable products From the US and once I would hit the 10k I would I would register for the one-stop shop Probably in Ireland. I always recommend doing it in Ireland because everything is in English and it's digital But you can register in any European country that you like and once you're registered You start calculating the tax rate of your buyers country So if your buyer is in Greece the Greek tax rate of your buyers in the Netherlands the Dutch tax rate and so on For physical goods, there's the import one-stop shop With a value of 150 euros registration is optional, but highly recommended If you're registered you can already calculate and collect taxes on sales on goods that are valued less than 150 euros if you do not do that customers would have to pay this VAT at the time they collect their package So they would have to pay the courier or go to their local postal office and pay before they can get access to their package Which does not make for the best user experience and will probably lead to some returns as well for goods over 150 That's not an option and if you sell to the rest of the world, it depends right every country is different So you would have to investigate on a case-by-case basis Now can you configure all of this in WooCommerce first of all you have to enable the tax calculation people sometimes say Well, I don't have this text these tax options in WooCommerce. You do make sure you check the box So you can start configuring taxes and then you have a whole range of options The first choice you have to make is if you want to input your taxes inclusive or exclusive of taxes I always recommend doing it exclusive of taxes because if you do it tax-inclusive and the rates change You have to update Oliver pricing, which is a bit of a which is a bit of a hassle then you probably Decide to calculate taxes based on your customers address because as we've seen in the cases discussed previously. That's usually What should be done shipping tax also usually standard in most locations in some cases it exempt so you might want to check this as well with your tax advisor Then you have an option to create additional tax classes Which can be interesting if you sell products that do not products that do not have a standard tax rate because usually products that are considered bad for your health such as alcoholic beverages or basic necessities such as bread are Text at a higher or lower rate right depending on whether or not they're dangerous or a or a basic necessity so here you can Create those tax classes so you can later associate products with them and charge lower taxes Then you have to choose whether you want to display your prices inclusive or exclusive of taxes. I Would recommend doing it inclusive of taxes, especially if you're in Europe In some places it's illegal to do it exclusive of Texas because it would mean that Customers see a difference price at the time of the checkout and what is advertised to your website So in some cases it's illegal if it's not illegal, right? The Europeans expect to see the product expect to pay the price They see advertised if they come to the checkout and have to and see taxes are added It would be a conversion killer and Then text totals do that itemized because it gives the clearest overview The next step is configuring the tax rates You have to do that manually or you can also find the CSV online. There are many different Websites that publish CSVs with tax rates as you might know not everything you find on the internet is true So be careful when you upload CSV file you found somewhere and also rates change So you should be stay on top of it. For example, Germany Temporarily lowered their their vet rate after the corona and pandemic to stimulate the economic recovery So you have to stay on top make sure to update your rates once they when they change And then finally you have the option here to associate the products with the different tax classes as I mentioned Then it comes time to filing For every transaction what you should do is generate the tax receipts or an invoice Which is basically the same thing because this is the basic underlying documents You need and the first thing and tax auditor will ask for one day When you're submitted to a tax inspection and invoices have to meet a certain set of criteria They have to clearly indicate who you are as the seller Who your buyer is The date of the sale an itemized overview of the product sold with a description of each The value tax rate applied and a sequential Number because that's one they need to be in a sequential series all your invoices because that's one of the first things they will look at to to detect frauds and if you think you're In the right wrong place, and you're not really that interested in taxes here's one takeaway you can use anyway from this Presentation if you ever find yourself in an airplane, and you just want to relax and the person next to you doesn't stop talking When the inevitable question comes up, what do you do for a living? There's no better conversation killer than saying I'm a tax inspector All right, you also need to collect location evidence Because if I would sell my T-shirts from a Spanish webshop and 80% of my sales would be outside of Europe, and I would not have collected any taxes during inspection they would ask questions right because They want to maximize their revenue and they would say hey you've not collected taxes on so many sales I would have to it's not a problem necessarily, but I would need to be able to justify that the way to justify that is by showing The billing address of the customer, so I would need to have the billing addresses for digital products You typically don't have a shipping address, and you can collect Three data points if two out of those three coin seeds you've established a buyer's location in a legally felled way So the three data points that you can collect are the billing country of the customer the big Which is location of the bank that issued the credit card and the IP address For for B2B transactions. You also need to validate those And in Europe you can do it against the system called vis Which has been made available by the European Union you can input The customer's tax ID there it will then tell you whether or not it's valid It will also give back a check out that's very important You store that because a company can be in business today, and the tax ID can be valid today But not tomorrow, so you should store that and then if it's indeed the valid tax ID note Texas are applied When it comes to actually doing the filing so remitting the taxes you have collected to the government If you're in Europe You have to OSS the one-stop shop which makes it very easy because you can collect you can you can file your taxes in the country where you're Registered for the entire EU so if you're registered in Ireland, and you collected taxes on sales to Germany Greece and Spain You just pay the iris tax office and they take care of the redistribution for you if you're in the US It can be a bit more complex It depends a bit on the state I mean if you if you're registered in many different states It's a bit more cumbersome because you have to fill out a lot of tax forms You have to fill out a different one for each state and some states also want a detailed breakdown Because they have many different layers of taxes such as Colorado where you have the state tax Local tax city tax special taxes etc. So filling out those forms can be a lot of work around the world It's generally easy right it makes a lot of sense for governments to make it easy because you want people to be to comply And the way to do that is not to make it cumbersome But your mileage may vary in some countries. It's still very difficult to register and file Then what are the limitations of WooCommerce if you use WooCommerce to calculate your taxes You have to make sure you keep your tax rates up to date as I already mentioned There is a head on that WooCommerce is made available and you can use for that as well I Haven't used it so I don't know but I assume it's quite good concerning that everything they put out is quite good if you Sell for multiple locations That's not possible to configure. So if you have stores in different locations, that's not something you can use WooCommerce for There are the thresholds that I mentioned you have to monitor and that's also not available out of the box with WooCommerce And then finally the location evidence and the tax IDs is also something that you would have to use other plugins for Now finally a bit about conversion rates because a lot of people are worried that when they start calculating their taxes on their Checkout page their conversion rates will drop to the floor The evidence I have is anecdotal, but I've seen many many businesses were afraid of this happening and it's almost never the case Usually there's no decrease or the decrease is almost right statistically Insignificant if you sell physical products, you have to start you need the billing address But you already have the shipping address of the customer So it's not something that will complicate the the checkout And digital products you have the location evidence you can collect so It's it's also not that that's conversion. The only thing you should be aware of is The tax-inclusive versus tax-exclusive Because if you sell in Europe and you start adding taxes on the price of the checkout It could be or it would be a conversion killer for sure in the US people are quite used to it So that brings an end to this presentation it may sound a bit overwhelming after all the information I Mentioned I suggest you know if it's if you feel overloaded start with your business where you're based what you have to do to comply and forget about all the rest and Now we have plenty of time to answer all your questions. So thank you very much. Thank you very much Thank you very much. That was really really interesting. I learned a lot. I have one question. I'm coming I'll get back to the first the audience and what have any questions about taxes Okay The mic please Hi evo. Thank you. We are neighbors. I'm from Portugal from Spain, right? So I have a question about when selling in the EU physical goods Regarding the location of the tax. So you mentioned the billing address But I've been heard from tax advisors the shipping address So for instance if I have a shop in Portugal and I have someone buying from me from Spain But they want me to deliver in France. Where are the tax collected? Yeah, you take into account both the shipping and the billing address So you calculate it based on where your business is based and for that you typically take the shipping address so where you ship from and The customer is the billing address. So because your shipping address So where you ship from and where do you build a customer to where you? To where they are built Yeah, the billing address. All right. Thank you Another question, please Mike Thank you as well about the location verification if I'm selling digital products So the people give me an address pay-pay Prepaid credit cards and I have to trust them. Do I have to have technical measures to verify a location? Yeah, so officially you need to coinciding data points to Establish the location and legally valid way PayPal already gives you the billing address So you will have that I would recommend also collecting the IP address And then if those two coincide you have Establish the location and legally valid way if it's not the case and you have the doubt You can always connect with a customer and ask them to to make sure you apply the right text read Okay, thank you All right. Thank you very much. Any other questions? Okay, I'm not seeing any hands. So I guess that's all from the audience. I have one question though Maybe two but the first one now as you mean, there are two things that are inevitable You don't say rain and tax basically, right? So Let's say someone It's not really aware, you know about the whole tax scenario and stuff And then doesn't file it properly. It doesn't collect the right taxes, you know from the previous sales and all that What's that implications for that business and for that individual? Well, if you don't collect the right tax rate and you you don't you have not collected them right historically You can get in trouble if you get the tax audit So the government knows you're registered right to your registered as a business you've made these sales So they will ask for a list of all your transactions And if they find out you have not collected your your taxes you could you could get a fine Okay, good But it's good you were asking for a friend, right? So next question It says Is it really necessary to register for tax collection if you hit the threshold in a foreign country? So if I'm in a different country, but I sell to maybe an external country and then I hit the threshold there Is it still necessary? Yeah So if you sell for example digital products and you sell them around the world some countries have a zero rate threshold Meaning that if you sell one ten euro e-book, you should already register officially and start filing your taxes there No tax advisor will tell you this but I'm not a tax advisor so I can say it. I recommend being pragmatic about it. It's it's like if you Walk to the center of the city You walk home three o'clock in the morning. There's no traffic whatsoever. Nobody on the street You come across a red pedestrian light red traffic light What do you do right? If you're like me you look left you look right you look left. No, nobody's coming. So you cross But that does not mean it's legal Because the law does not say right you cannot cross a red traffic light unless at three o'clock in the morning You're walking by yourself. There's no traffic coming etc. So if a police officer sees you you can get a ticket and I think it would even be right to get a ticket because if you if a police officer sees you It means you did not look carefully before you crossed or you did see the police officer and decided to cross anyway Which would be a bit disrespectful so The same for Texas would be pragmatic I mean if you have to pay one thousand a year and need a local fiscal representative to file 100 euros in Texas It does not make a lot of sense, but it also does not mean you cannot get in trouble But if you do get in trouble, I think as an entrepreneur you have a really big PR opportunity there as well to To exploit. Okay. Thank you very much. Okay. We have another question Just just a minute, okay Thank you for all the information. I just wanted to double check This 10k threshold in EU also applies for services. For example, I have a service provided from Greece in whole Europe and I Reached the 10k from clients from Luxembourg. Let's say or anywhere Do I need to register? Yes, but typically services are B2B. So I assume you're B2C. B2C. Yeah, so normally you need to Okay, thank you And just to make sure because I think she has if I if you reach the 10k for example in Luxembourg Correct me if I'm wrong, but it used to be per country But now the 10k are for all over Europe, right? So you do not need to reach 10k in Luxembourg You you need to reach 10k in Europe period. So it's really fast. Yeah outside outside of your home country Yeah, so if you sell in Greece and you sell for if you sell 2000 to Spain 2005,000 to Luxembourg. Yeah, you got a great register Alright, thank you very much. Any other question, okay? I guess that is it and We've come to the end of this talk and I want to say big Thank you to EVO for coming and giving us this Enlightenment and helping us understand better about taxes like I said two important things rain and tax Don't you kind of you cannot avoid them. So a round of applause for our speaker, please