by Renee

5 min reading time

E-commerce and taxes: should your company automate VAT compliance?


As the saying goes, only two things are certain in life. One of them being taxes. Paying them is one thing, but the process of maintaining your compliance with changing tax legislation is another. Depending on the situation of your company, dealing with these different obligations can be pretty difficult. Especially when you’re an e-commerce seller, this might be quite a time-consuming task.

A growing body of companies are turning to professional assistance to regulate a full tax compliance. In turn, the services of professionals like Staxxer are more and more reliant on automated tax services. Automated software, like Staxcloud, simplify and streamline the process of compliance. A task that was once deemed complicated can now be put on autopilot.

However, is this a positive turn for the industry? Is a computer better able to secure full VAT compliance when compared to its human counterpart?

Man vs. machine: e-commerce and automated tax services

As an e-commerce entrepreneur, you oftentimes have customers all over the world. Also, it’s not uncommon that you sell through different marketplaces. Both these aspects determine the VAT obligations that your company has to abide to. 

As a seller, you want to focus on selling rather than navigating through all the different VAT obligations. Because e-commerce mainly relies on software, you would say that the branch can also benefit from software that automates VAT compliance. Therefore, more and more e-commerce sellers are resorting to automated VAT compliance services without thinking twice. After all, it comes with a lot of benefits.

Meet Ties: the e-commerce entrepreneur on a mission to fully automate VAT compliance

Automation indeed seems like the perfect solution for your VAT compliance. What many such services don’t tell you, however, is the fact that there goes a lot into creating a platform that suits both the company and values the importance of the human aspect. 

For this article, we will turn to one of our co-founders and experts in the field of automated VAT compliance. Ties has put many hours into trying to comply with VAT regulations during his experiences in e-commerce. Time is valuable, especially for business owners. As opposed to an accountant or tax specialist, Ties is the face of people who have to deal with the time-consuming practice of VAT compliance. In his years of experience, he gained elaborate knowledge on the topic and is now able to share it. This article will therefore share his views on the benefits, the doubts and the future of automated VAT compliance for e-commerce sellers.

From manual to automatic: a growing trend in VAT compliance

Formerly, automated technologies were predominately used in commercial markets. Things like law and regulations didn’t really trust their processes to be automated. If something goes wrong in automation, you would prefer to talk to an actual person rather than a chatbot that tries to understand or answer questions. Because of this, they preferred to keep to the manual way of handling things. 

The cons of manual VAT compliance

Although there was still little faith in automating VAT compliance, it can’t be denied that manually managing spreadsheets is labor-intensive work. This, potentially, costs your company way more money when compared to its automated counterpart. Furthermore, managing your VAT compliance manually puts companies at increased risk when global economic pressures ask for greater regulation of tax compliance. 

Plenty of reason to automate the process. Luckily, we have come to a point that more sophisticated technology takes away the distrust in automation. This allows fields like law and regulations to also enjoy its conveniences. In line with this, automated tax services have become available for the broader audience. 

The benefits of automated VAT compliance

Automated tax services can be a solution to many tax-related processes. One of them is providing support for the VAT compliance of your company, making it easy to account for all the differences in legislation between the countries where your customers reside.

With the automated version, problems that arose when manually handling the VAT compliance vanish. Automation means that human errors are avoided, so your compliance will always be fully correct. Also, it is a tool that overarches different departments and controls workflow between them. For larger entrepreneurs that have to deal with different departments, automation is therefore a valuable asset.

The convenience of VAT automation software is evident on many levels. In sum, automating your VAT compliance comes down to the following benefits:

  • Human errors are avoided;
  • Lowers expense;
  • Accounts for changing global economic pressures;
  • Easy control of workflow and brings different departments in sync;
  • There is no need for in-house expertise

What is important for VAT compliance software?

Although automating your VAT compliance has several benefits, there are definitely some things to take into account when searching for the right automated tax service. Indeed, they are convenient, but a hasty decision when picking a platform can lead to inadequate compliance or the fact that you have to deal with someone with insufficient expertise. 

In his time as an e-commerce entrepreneur, Ties has identified several aspects that should be covered in the VAT software and platform of your choice. 

For starters, a lot of software only covers part of the solution for e-commerce sellers. Sure, calculating returns is cared for, but how about monitoring changing sales tax obligations, or registering in new states and jurisdictions in case you start selling there? If the software doesn’t cover, for example, changes in legislation, you might not be VAT compliant after all. In that case, the whole point of using an automated tax service isn’t legit anymore.

Also, does the software pay attention to the human aspect? As indicated before, the biggest obstacle for e-commerce entrepreneurs to automate their VAT compliance is that there is little trust in chatbots or other robots that answer their questions. If you have a problem, you want to make sure that you’re in contact with someone that speaks your language and understands your problems. The line between man on the one hand and machine on the other is oftentimes not taken into account when thinking about automation.

Last but definitely not least, as an e-commerce entrepreneur, you should be sure that the platform can convert several inputs into just one output. That is to say, it is very well possible that you sell products through different platforms or marketplaces (e.g. Amazon, eBay, Shopify, etc.). Only an automated tax service that is able to combine your sales on these different platforms, and convert them into one output, is suitable as a tax solution for your e-commerce company. Every cent must be reported precisely. If not, you will never be VAT compliant and will have to live with the consequences. 

Conclusion: man vs. machine in VAT compliance

Because of recent developments in technology, automation has become more normal in the world of VAT compliance. It’s a logical step, since it comes with several benefits. Human errors are avoided, costs are reduced, processes are streamlined, and there is no need for in-house expertise. However, it is also crucial to take into account several important requirements for your VAT compliance software.

Especially when you run into problems, you want an adequate service. A software that automates your VAT compliance therefore has to contain at least the following:

  • A complete solution:
    * calculates your returns;
    * takes into account changing regulations;
    * registers you in the new places you’re selling to.
  • Human contact: professionals that help you in your own language;
  • A way to convert inputs from several marketplaces into just one output.

A tailored tax solution for your company

It is a challenge to develop understandable automation software that guarantees accurate and up-to-date VAT compliance for e-commerce entrepreneurs. This challenge is the one that Ties is willing to take on as a co-founder of Staxxer. 

While other automation software programs are robotic on both the compliance and the service side, Staxxer values local service and human contact. Staxxer’s tax specialists not only provide elaborate answers to your questions, they do so in your own language. While your questions are being answered, Staxxcloud makes sure that all the calculations surrounding your VAT obligations are accurate. This way, an affordable and tailored service relieves your stress for VAT compliance.

Take a look at the different packages from Staxxer, or shoot us a message to see how we can help you with your VAT compliance.

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Yonis Brander

VAT consultant

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