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I'm about to go crazy due to the amount of information I have explored on this matter and still I have no answers. Anyone with at least some knowledge, please share it.

My case is very simple (I think), I create a small software application and want to sell licenses for it from my own web-site, taking payments using PayPal. I'm registered in Canada. If I was to sell it in Canada only I would have to collect and pay GST/HST taxes. But I have no clue where my clients will be from.

According to the information I was able to find, every zone, country, or even states, have their own taxation rules for sales made there. Well, in no way it's possible that small companies or individuals that sell products internationally deal with tax rules for each buyer, that would be a non-sense, and paying such taxes worldwide would be a nightmare not worth having a small business at all. So it must not be the case. But PayPal's page on international sales suggests exactly that it's the case.

The main question, if someone buys a license from my web-site, is it considered a sale in the buyer's country/state which requires me to collect and pay some remote tax, or it's a purchase in my country/state which requires me to collect HST from that buyer?

Another question is regarding invoices, I know that Canada requires certain information to be included into an invoice for sales in Canada. If my sales will be considered sales in a buyer's Country with some other rules, does it mean I have to manage tons of invoice templates?

I also known that usually countries specify certain limits before their taxes has to be collected, which makes it even more confusing. Let's say if my sales in UE exceed 30K EUR it looks like I need to register and pay VAT there. But what if I have less? I want to show tax amount in the invoice, but it such case it looks like there will be no tax collected at all.

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According to the information I was able to find, every zone, country, or even states, have their own taxation rules for sales made there.

Correct.

Well, in no way it's possible that small companies or individuals that sell products internationally deal with tax rules for each buyer, that would be a non-sense, and paying such taxes worldwide would be a nightmare not worth having a small business at all.

You are required to comply with the law. If it is complicated, or difficult or expensive to do so then, it's complicated, difficult and expensive and you still have to do it.

The answer is obvious: if it's not worth having a small business, don't have a small business.

The main question, if someone buys a license from my web-site, is it considered a sale in the buyer's country/state which requires me to collect and pay some remote tax, or it's a purchase in my country/state which requires me to collect HST from that buyer?

It depends on the law in both Canada and the destination country. In most cases, the sale will be an export sale from Canada (GST/HST exempt) and an import sale in the destination country - requiring you to comply with GST/HST obligations there.

Another question is regarding invoices, I know that Canada requires certain information to be included into an invoice for sales in Canada. If my sales will be considered sales in a buyer's Country with some other rules, does it mean I have to manage tons of invoice templates?

Yes.

Let's say if my sales in UE exceed 30K EUR it looks like I need to register and pay VAT there. But what if I have less?

Then you don't need to register and remit tax. Nor are you allowed to collect it from your customers. By the way, I have no idea what country in the Eurozone goes by the initials UE.

In most jurisdictions, you need to register either when you reach the threshold in fact or reasonably expect to reach the threshold. Also in most, you can usually register even if you are below the threshold. For example, these are the rules for Australia.

Anyone, please advice.

Hire an accountant versed in international digital services. They will be able to give you the advice you need. They will also be able to recommend sales/payment platforms that can handle most of this for you (for a fee, of course).

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  • Thanks for confirming my fears :) If it's the way to go then I'll need to adapt. And UE was meant to be EU, just a typo.
    – Alexander
    Aug 18, 2021 at 2:05
  • The EU is not a country and doesn't levy taxes.
    – Dale M
    Aug 18, 2021 at 2:06
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    In practice, if you have an application that you can put on an App Store (Apple, Google, Microsoft) they will charge you money, but they will handle all the taxes for you.
    – gnasher729
    Aug 18, 2021 at 18:23
  • No, it's not the case for me, my product cannot be sold in such stores, as it's more about B2B.
    – Alexander
    Aug 19, 2021 at 13:02
  • @Alexander with B2B the other buisness (if they are larger companies) will likely have a team for this kind of stuff. For smaller buisnesses the last paragraph about hiring an accountant for that is the way to go. This is not something that you can learn on the fly, its just too complex
    – Hobbamok
    Dec 3, 2021 at 12:31
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Not sure if this is considered an answer to your question, but using a digital commerce solution (e.g. paddle.com / fastspring.com etc) allows you to sell software internationally while only dealing with tax regulations of the digital commerce solution's country since they are technically the Merchant of record, so they are the ones that are technically selling to customers in many countries and not you.

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  • What about selling to other states within the same country?
    – pete
    Mar 24, 2023 at 16:47
  • do you mean that you will use a digital commerce solution or not?
    – Lawand
    Mar 25, 2023 at 18:55

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