What is a Merchant of Record?
We take on the liability of international sales taxes globally for you. So you can focus on growing your business vs. accounting bills. Leave billing infrastructure and international sales tax headaches to us.Payment Service Providers vs. Merchants of Record
Payment Service Providers (PSPs)
- ✅ Powerful, flexibile & low-level APIs to facilitate transactions
- ✅ Can be used to power all business- and pricing models under the sun.
- ❌ You are responsible for all liabilities associated with transactions, e.g international taxes
- ❌ Low-level APIs require more development even for common use cases

- ✅ Higher-level Dashboard, APIs & SDKs to better facilitate digital products, services & orders beyond the underlying transactions
- ✅ The platform (Polar) handles international taxes by being a reseller of your digital goods & services. Of course, without being in the way of your relationship with your customers.
- ❌ Less flexibility & control in terms of advanced business- and pricing models.
- ❌ Higher fees per payment
- You’ve already integrated it? Just ship already - we salute builders however they ship
- You’re comfortable with the Stripe API and prefer absolute control with low-level APIs.
- You’re looking for the lowest fees possible.
- You’re fine with handling international taxes yourself (you absolutely can).
- You want product-, customer-, order- and subscription management via an intuitive and easy dashboard
- You want to offer file downloads, license keys, Discord- and/or private GitHub repository invites with ease - with more built-in automations to come.
- You prefer a more high-level API optimized for making monetization easier. We’re only getting started here and have some big things coming
- You want us to handle international taxes for you
Polar MoR
tl;dr We take on the liability of international sales taxes globally for you. So you can focus on building your passion. Leaving billing infrastructure and sales tax headaches to us. So how does Polar offer a Merchant of Record (MoR) service and handle international sale taxes? All other Merchants of Record simply state they handle it internationally - don’t worry about it. We do too. But we believe in transparency and don’t want to scare customers into thinking it’s impossible to manage it themselves. So below we’ll share how exactly we go about doing this.International Sales Taxes
Most countries, states and jurisdictions globally impose sales taxes on digital goods and services (VAT, GST, US Sales Tax etc). Regardless of whether the merchant (seller) is a resident there or not - they’re doing business there. For example, a $10/month subscription should cost $12.5/month for a Swedish (25% VAT) consumer, but $10/month for a Swedish business with VAT registration (reverse charge). Merchants are responsible for 1) capturing & 2) remitting sales taxes to the local tax authorities. What does that mean in our example?- Capturing. Charging the Swedish consumer $12.5/month and saving $2.5/month for the Swedish tax authorities. Stripe Tax is an excellent service to automate this and the one Polar uses today.
- Remitting. Filing & paying the captured sales taxes with the tax authorities on time. Stripe Tax does not do this, i.e the merchant is liable to register, file and pay taxes to local tax authorities.
- ✅ Your volume alone is what counts towards international thresholds vs. the MoR platform, i.e customers might not need to pay sales taxes with you, but would via a MoR.
- ✅ You can deduct inbound VAT against purchases your business does with VAT
- ❌ You’re liable for capturing & remitting international sales taxes
- ❌ Stripe Tax is great to monitor & automate capturing, but registration and remittance is up to you.
- ✅ We are liable for all of the above as your reseller, i.e we have to worry about it vs. you.
- ✅ Offer EU VAT for B2B sales (expected and desired within EU for businesses) without having to register, capture and remit it yourself.
- ❌ Sales taxes would be added for more customers vs. with you selling directly
- ❌ You cannot leverage inbound VAT towards VAT expense deductions yourself
Polar Coverage
tl;dr We support global payments and are liable for all international sales taxes. We continuously monitor and work with our accounting firms to expand registrations as needed on our end. Global Payments & Tax Liabilities As your Merchant of Record, Polar is liable for tax compliance globally on all sales internationally via our platform, hosted- or embedded checkoutsfrom payments anywhere in the world. Current Polar Tax Registrations- Polar Software Inc. is incorporated as a US Delaware C Corp and will register for US State Sales Taxes upon reaching thresholds
- EU VAT (Irish OSS VAT)
- UK VAT
- ~$500 upfront for registration
- ~$300 per filing and remittance (~quarterly)
- Excluding consultations (billed hourly) and our internal efforts and automations to transform Stripe Tax reports into correct output for the accounting firms.
- At $6,000+ the tax liability start outgrowing the accounting costs for you standalone ($1,200/20%)
- Polar with a 1.1% premium vs. Stripe would need to help facilitate $109,090 in sales for the given market in order for it to cover our accounting costs ($1,200/1.1%)