Invoicing questions

Hi,
how does it work when I sell my own domain name through SquadHelp?

I read your terms of service here: https://www.squadhelp.com/Terms-Of-Service

As far as I understand, SquadHelp is not the reseller of the seller owned domains, but SquadHelp is only a marketplace, right? The TOS says that the domain name buyer and the domain name seller will be in direct contract.

But then the domain name seller must issue a proper tax invoice to the buyer upon request, right? Or will SquadHelp issue the tax invoices always to the buyers?

But if SquadHelp is not a reseller, just a marketplace, then how can Squadhelp issue a tax invoice after a domain name purchase?

I am confused about this. I am just a seller, I have never bought a domain name on SquadHelp. I see the checkout form, the customer must fill in the name, address, and then will SquadHelp use that information to send a tax invoice to the buyer?

But the checkout form is incomplete. For example if the buyer is a business registered in the European Union, then that business will require a VAT invoice. But on the checkout form there is no field to enter the company name and EU VAT number. EU businesses need their EU VAT number displayed on the VAT invoice. It doesn’t matter that SquadHelp is a US company, if the buyer is located in the EU, then a VAT invoice is needed.

And if the buyer is located in the EU, and the buyer has no valid EU VAT number, then SquadHelp or the seller might have to charge EU VAT on top of the price. However there is no field on the checkout form to ask for and to validate EU VAT number, and in my seller account I see no option to charge EU VAT on top of the sale price. Which is a problem, because if the seller account is actually a business registered in the EU with a VAT number, then in some cases VAT must be charged to EU buyers, on top of the sale price.

But I still don’t know if SquadHelp is actually a reseller of our domains, or just a marketplace?

I think the best would be if SquadHelp would become the reseller in all cases. Squadhelp would buy the domain name from the seller, then immediately resell it to the end customers. In this case, the domain name seller would invoice SquadHelp, and Squadhelp would invoice the buyers, and Squadhelp would collect and remit any international taxes applicable, like sales tax or value added tax, on top of the sale price. And Squadhelp would verify EU VAT numbers upon checkout and send a proper tax/VAT invoice to every buyer.

Currently I don’t understand if I sell a domain name through SquadHelp, then should I issue a tax invoice to Squadhelp, or a tax invoice to the buyer? In a lot of countries, if a company or a sole trader sells a domain name, then that company or sole trader must issue a tax invoice to the buyer, displaying the tax rate used etc.

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You will get a tax statement from SH (1099 in the US). So no, you do not work with the buyer at all. You do not issue a tax invoice to anyone.

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Well in my case, I am a business, so I must indeed issue tax invoices after each transaction.
What I don’t understand, even after reading the TOS, is whether Squadhelp Inc. is a reseller of the domains, or just a marketplace?
For example, Ebay is just a marketplace, they are not a reseller. When a seller sells something on Ebay, then Ebay will not issue any invoices, it is the seller’s responsibility.

On Squadhelp I see that if someone buys a domain name, then Squadhelp will issue a tax invoice for that domain name purchase. But the TOS isn’t saying that Squadhelp is a reseller. So if Squadhelp isn’t a reseller, then they shouldn’t issue any invoices, right? Invoices should come directly from the domain name owners.

And someone has to pay for example the EU VAT. If the buyer is located in the EU, and the buyer doesn’t have a valid EU VAT number, then local VAT rate must be charged on top of the sale price. Suppose the buyer is from Germany, no EU VAT number supplied, then the local 19% German VAT must be charged on top of the sale price, and this VAT is payable to Germany. (domain name sale price: 100 USD, local German EU VAT. 19 USD, total price payable: 119 USD)
It doesn’t matter whether the seller is a US company, or a company in the EU, VAT must be paid after digital services sold to end customers in the EU.

For example when you register a domain name on GoDaddy, they are a US company, but if you are from the EU, they ask for your EU VAT number. If you don’t have an EU VAT number, then GoDaddy will charge the VAT rate applicable in your country, on top of the domain price.

Either Squadhelp or the seller must pay the VAT in applicable cases. If Squadhelp is just a marketplace, then the sellers must charge and pay any international taxes payable on top the sale price. If Squadhelp is a reseller, then Squadhelp must pay the taxes.

It is not just the EU VAT. For example, there is also the Australian GST on digital services. From 1st July 2017, Australia imposed 10% GST on the sale of electronic/digital services by non-resident providers to its consumers. International taxes are difficult.

That’s why I think the best would be if the TOS would clearly state that Squadhelp Inc. is in fact a domain name reseller: they buy the domain name from the marketplace sellers (immediately after the domain has been sold), then Squadhelp resells the domain name to the end customer. And then Squadhelp would issue the proper tax/VAT invoices, collect and remit any taxes payable from the buyer on top of the sale price. That would eliminate any confusion.

SH handles all of it is what I am saying. They sell it, they pay you, they handle those sales taxes and you pay income tax on your sales. I don’t know if the TOS are right or not. I just know we do not deal with any of that.

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SH is marketplace and escrow agent. When domain sells , SH acts as an escrow.

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So for seller owned domains (I am the seller who owns a domain name on Squadhelp), who is my customer when I sell my domain name on Squadhelp?

Is my customer the end user who bought my domain name?
Or is my customer Squadhelp?

If the end user is my customer, then I should issue a tax invoice to the end user. Squadhelp shouldn’t issue any invoices.

If my customer is Squadhelp, then Squadhelp issues a tax invoice to the end user, then I issue a tax invoice to Squadhelp.

I think the TOS is not clear. If the TOS says that Squadhelp is only a marketplace and I have in direct contract with my buyers, then why is Squadhelp issuing tax invoices to the end users? In this case, Squahelp shouldn’t issue any invoices to buyers.

But if Squadhelp is a reseller, then indeed they should issue invoices like they do it.
But in the TOS I cannot read that Squadhelp would be a reseller.

Have you read this article?

From July 2021, marketplaces may become the deemed supplier when they facilitate certain cross-border B2C transactions of their third-party sellers.They will therefore be liable to collect, report and remit the VAT due from the consumer. Whilst the marketplace takes on the VAT rights and obligations of the sale, they do not take on other obligations, such as product liabilities. This new rule comes into force as part of the e-commerce package of reforms to help simplify VAT compliance and tackle online VAT fraud.

I don’t know whether it will apply to domains or not. Will Squadhelp implement such a mechanism for collecting and remitting VAT when selling to EU customers?

I think now the problem is that it is not clear who is responsible for collecting and remitting the EU VAT: is Squadhelp responsible or the domain name sellers?

As I see on the checkout form, there isn’t even a VAT field there. So I guess the domain sellers are responsible.

But you don’t give us any tools to collect and validate EU VAT numbers on the checkout, and to charge EU VAT on top of the sale prices! So how could the sellers be responsible for EU VAT, if you don’t provide a way to actually charge the EU VAT on top of the sale prices?

In some cases someone has to charge EU VAT on top of the sale prices. For example, if the customer is located in the EU, and that customer doesn’t have a valid EU VAT number, then VAT must be charged. Domain names are cross-border digital services, and therefore special VAT rules apply to domain names, and even sellers outside of the EU must pay the VAT.

it doesn’t matter that you or a domain seller is a US company, if we sell to EU customers, then EU VAT may be payable.

Here’s a link:

Other marketplaces like GoDaddy, Sedo, Dan, etc. ask for EU VAT numbers upon checkout (if the customer is from the EU), and they validate EU VAT numbers, and if the VAT number is missing or invalid, they charge EU VAT on top of the domain and web hosting prices. Why doesn’t Squadhelp do this?

@grant what do you think about this issue? Could you please help me? It is a very important topic I think.

As per Squadhelp’s ToS, sellers are required to pay any taxes on their proceeds that may be due in their local jurisdiction. We do not share customer’s information with sellers due to our privacy policy however if you need data related to a sale (e.g. country of customer) in order to ascertain your tax obligations, please let the customer service know and we will do our best to provide that information.

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Ok, thank you.
I understand that sellers are responsible for all taxes.
However the current checkout process is not ideal for example to sellers who are located in the European Union and have to collect and remit VAT (=value added tax) on certain purchases, on top of the sale prices.

Here are the rules for cross-border VAT: https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm

For example if both the seller and the customer are located in the EU, and the seller must collect and remit VAT:

Selling services to the final consumer in another EU country

You must usually charge your customers VAT at the rate that applies in your country , except for telecommunications, broadcasting and electronic services, which are always taxed in the customer’s country (where a private person has a permanent address or usually resides, or where a non-taxable person is established).

Suppose I am selling my domain name for 2000 USD, and I have to charge 20% VAT, then the final price should be 2000*1.2 = 2400 USD.
But in certain cases I mustn’t charge VAT, so in these cases the sale price must be 2000 USD (see the rules above). It depends on the customer’s billing details.

However your checkout form doesn’t support the collection and validation of EU VAT numbers, so if I am a seller located in the EU, subject to VAT, and my customer is from EU without a valid VAT number, then I must pay the 20% VAT from the 2000 USD, so I lose a lot of money. In this case I sell the domain name for 2000 USD including VAT, so my net proceeds will be only 1666.67 USD, and I must pay 333.33 USD VAT.

Do you see the problem here?

And your whitelabel marketplace solution is also affected, it uses the same Squadhelp checkout form, so the whilelabel marketplace software is not good for EU sellers either.

I propose two solutions:

  1. allow EU sellers to collect EU VAT numbers from EU customers on the checkout form, and the checkout form should also validate the EU VAT numbers, you should introduce the EU VAT field if the billing address is located in the EU, and then the system should charge VAT on top of the sale prices in some cases. The checkout form should also contain the “company name” field (optional field).

  2. Or there is an even better solution, it requires more development, but this would be a lot of help to sellers: I think the best solution would be to explicitly declare in your TOS that Squadhelp is always the seller of the domain names, be it Squadhelp or seller owned domains.

For seller owned domain names, here is how the process could work:

  • Customer buys a seller owned domain name from the marketplace, Squadhelp receives the funds in escrow
  • Squadhelp would maintain an escrow account at each major registrars like GoDaddy, Namecheap, Dynadot etc. Squadhelp buys the domain from the actual seller. The seller invoices Squadhelp, Squadhelp pay the seller and the seller pushes or transfers the domain name into Squadhelp’s registrar account.
    -at this point, Squadhelp has just bough the domain name from the seller. Now Squadhelp is the owner of the domain name. Now it’s time to resell the domain to the final customer.
  • Squadhelp pushes / transfers the domain name into the customer’s registrar account, then Squadhelp issues a tax invoice to the customer. Since now Squadhelp is a seller, then Squadhelp would collect and remit any taxes payable, like sales tax, or VAT, or GST etc.

In these relationships, if I am a domain name seller, then I always only sell my domain names to Squadhelp. And then Squadhelp immediately resells these domain names.

This would eliminate any confusions about international taxes, and it would be so much easier for the sellers.

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Wait, what? You mean VAT and sales taxes? (Are there even sales taxes?) or do you mean income tax?

OK, now I am officially worried.

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