Sales tax and VAT software for Paddle sellers

On your Paddle revenue, no. Paddle's developer documentation states that as merchant of record it calculates, collects, and remits taxes for all supported countries, and that you have zero sales tax liability for any Paddle transaction. It is registered in over 100 jurisdictions and sells into over 200 countries and territories. If every dollar you earn arrives through Paddle Checkout or a Paddle invoice, a tax platform on top of it would duplicate work Paddle already owns. Four things sit outside that scope, and they are the reason Paddle sellers talk to us: revenue that does not run through Paddle, the periods before you moved to Paddle, registrations your entity triggers through physical presence, and your own corporate filings.

No. Paddle registers in its own name. It describes the mechanism plainly: Paddle acts as a reseller of your product and is therefore the seller on record, so Paddle is responsible for the collection and payment of VAT and tax instead of you. Those registrations belong to Paddle's entities and cover Paddle's transactions. Your company's own registrations are separate, and they are triggered by your company's own activity in a jurisdiction.

Everything except the Paddle share. This is the common shape, and it catches people out precisely because the Paddle part genuinely is covered. Economic nexus thresholds are assessed on what your entity sold into a state, so the non-Paddle revenue is measured on its own against each state's threshold. Most states sit at $100,000 in sales, while New York and California use $500,000, which changes the answer a lot at low seven-figure revenue. Our nexus guide sets out the test state by state. Commenda reads each source separately, consolidates them into one ledger tagged by ship-to state, and keeps Paddle-processed revenue flagged so it is never filed twice.

No, because Paddle will not sell them. Its Acceptable Use Policy lists physical products, or products that require physical delivery, as prohibited. It also prohibits human services that are not related to a software offering, naming pure consulting or advisory services, legal advice, coaching, IT services, and access to a community of experts. If you sell hardware alongside your software, or bill implementation work as a service, that revenue is collected somewhere else and the indirect tax on it is yours. Commenda treats it as another source and applies the correct treatment by jurisdiction and product type.

No. Merchant of record applies from the date Paddle became the seller onward. If you crossed a threshold two years earlier and collected nothing, that liability is still your company's, and lookback periods run two to four years in most states and are unlimited in a few, Nevada among them. Commenda runs an exposure analysis over your full history, including the pre-Paddle period, and prepares back-period filings. A voluntary disclosure agreement usually waives penalties and leaves interest. Below a meaningful liability, a plain backdated registration costs less than a VDA, and we will tell you which one applies.

No. Physical nexus comes from your own presence in a state. An employee, a leased office, contractor activity in some states, or inventory held in a warehouse can each create a registration and filing obligation for your entity on its own. None of it shows up in a transaction feed, so no processor and no merchant of record can see it. Commenda covers it with a short questionnaire about where you have people, property, and stock, then registers and files where the answers require it.

Through the reverse charge. Paddle states that if a VAT-registered business buys through Paddle and the transaction is cross-border, they will not pay VAT to Paddle at the time of purchase, and the buying business becomes responsible for calculating and reporting that VAT in its own return. The buyer enters a valid VAT ID at checkout to get that treatment. The same mechanism runs on your payout: Paddle says no tax is charged to Paddle, because the supply is taxable in the buyer's country, so Paddle charges itself the VAT and reclaims it. None of that gives your entity a VAT registration, and none of it covers a direct sale you invoice yourself.

It becomes yours on the changeover date. From that point you are the seller, and you need registrations in every jurisdiction where your own activity has crossed a threshold, which may already be several. The same applies in reverse when you move onto Paddle, where the pre-migration period stays with you. Commenda handles the boundary by reading your history on both sides of the date, sizing where you already owe, filing back periods where needed, and getting the forward registrations in place. Where a system has no connector, a mapped monthly CSV is fully supported.