Set up a SaaS company in Europe, or decide you do not need one
A founder outside the EU can sell software to Europeans without an EU company, through the non-Union OSS or a merchant of record. Below: when each route works, how countries compare and what payment providers ask.
Three ways to sell software to EU customers
Two of them need no European company.
E-services to EU consumers are taxed in the customer's country (art. 58). A seller established outside the EU gets no threshold: VAT is due from the first euro (Commission notes).
| Route | Who handles VAT | Limits | Source |
|---|---|---|---|
| Home company and non-Union OSS | You: one quarterly return in a member state you choose, even with no sales, by the end of the next month. B2B customers reverse-charge. | VAT from the first euro. | OSS portal |
| Paddle | Paddle, as seller on record. | Sellers anywhere except 28 countries and regions. No physical goods, no human services unrelated to software, such as consulting, no marketplaces. | countries, products |
| Lemon Squeezy | Lemon Squeezy; income tax stays with you. | No services of any kind, no physical goods. | Lemon Squeezy |
| Stripe Managed Payments | Stripe, in more than 80 countries. | Businesses in 37 listed countries, Latvia and the US included; not India, the UAE or Nigeria. No professional or human-delivered services. | Stripe |
| Your own EU company | The company, through the Union OSS where it has its seat. | Books, an annual report, a bank account and real activity. | OSS portal |
When an EU company is not worth it
If a merchant of record accepts your product and your country, start there: it carries the VAT and you form nothing. A US LLC qualifies for Stripe Managed Payments too. Above EUR 10,000 of EU consumer sales a year, an EU company charges the customer's VAT as well (art. 59c). A company makes sense when merchants of record refuse what you sell, such as consulting, or a provider wants a company in its country.
What changes once the company is in the EU
Withholding and VAT by client country: services and SaaS in Europe, and Latvia.
EUR 10,000, EU sellers only
A seller established in one member state charges its own VAT on cross-border e-services to consumers up to EUR 10,000 a year excluding VAT. Opting for the customer's VAT earlier binds it for at least two calendar years (art. 59c).
Two proofs of location
Regulation 282/2011 asks for two non-contradictory items, such as billing address, IP address or bank details. One item from a third party involved in the supply suffices below EUR 100,000 a year excluding VAT, but only for a seller established in a member state (arts 24b and 24f).
A representative only under art. 3(2)
Article 27 applies where article 3(2) does: a controller not established in the EU that targets people there (GDPR). An EU establishment falls under article 3(1), which covers all processing in its context (EDPB 3/2018).
Latvia, Estonia, Ireland, Germany and the EU Inc
| Country | Company | Corporate tax | Source |
|---|---|---|---|
| Latvia | SIA, capital EUR 2,800, registered in 1 to 3 working days for EUR 75 with one founder. VAT registration before the first B2B service to another member state. | 0% on retained profit, 20% on gross distributed profit; since 2026, a 15% option if all shareholders are natural persons. | CIT Law, register, VAT Law |
| Estonia | OÜ, no minimum capital, EUR 0.01 per share. | 22/78 of net distributions in 2025 and 2026, nothing on retained profit; for 2027, no official guidance found. A company managed from abroad is probably taxed abroad, e-residency or not. | rates, EMTA |
| Ireland | Not covered by our research. | 12.5% on trading income, 25% on passive income. Residence test: no official guidance found. | Revenue |
| Germany | GmbH, capital EUR 25,000; a UG with less reserves a quarter of each year's surplus. | Not covered by our research. | GmbHG |
| EU Inc | Proposal COM(2026) 321: no minimum capital, at least one EU-resident director, registration in 48 hours for at most EUR 100. | Not adopted in November 2026. Parliament: "Awaiting committee decision". | proposal, Parliament |
A SaaS that keeps its profit pays nothing in Latvia or Estonia until it distributes. One that distributes everything pays less in Ireland, if the Irish activity is real; Irish dividend tax was outside our research. Compare formation routes for non-residents.
What payment providers ask of a Latvian company
Each provider decides on its own criteria.
For a Latvian account, Stripe wants an entity registered in Latvia, a tax ID, a physical address that is not a PO box, a phone, a working website, ID from any country and a physical, not virtual, bank account in Latvia (Stripe help). Owners are checked against the Latvian register (Stripe help). EEA standard cards cost 1.5% + EUR 0.25, international cards 3.15% + EUR 0.25, a dispute EUR 20 (pricing). If Stripe freezes payouts later, see our page on Stripe reviews and closures.
Latvia is one of 41 countries
Pakistan, Nigeria, Turkey and India are not. A Latvian store needs a EUR SEPA account with an IBAN; multicurrency accounts are refused (Shopify).
Registered in one of 13 countries
Latvia is among them. The Latvian agreement sets no cap on holds, and PayPal can close at its convenience with two months' notice (agreement). See a limited PayPal account.
Why one coherent file matters
A US Stripe account needs a US-registered business "even if you operate in another country", and Atlas "can't guarantee that your business will be approved" (Stripe, Atlas). Any account can meet the 120-day payout pause (policy). A real SIA gives the provider one file: a registered company, a Latvian bank or EMI account, a VAT number in VIES, a published annual report and kept books. Compare an EU company with a US LLC.
Substance is checked in Latvia too
Latvian banks, payment institutions and e-money institutions may not serve a shell arrangement that lacks real economic activity, with no documents proving otherwise, and is registered where no financial statements must be filed (AML Law). An SIA files an annual report that the register publishes (Annual Reports Law) and keeps books with an accountant, in-house or under written contract (Accounting Law).
The VID refuses a VAT number when the company cannot be reached at its legal address (VAT Law). It can suspend a company without warning within five working days for a risky address or a straw director, then freeze its settlements with banks and payment providers (Law on Taxes and Duties). More on substance in Latvia.
What no company set-up can promise
No company set-up guarantees that a payment provider will accept an account or keep it open. The provider decides. Providers close European accounts too, for restricted businesses, high dispute rates and sanctions; Stripe's agreement allows closure at any time (SSA, restricted businesses). See closed Stripe accounts.
Your home country's rules still apply: foreign-exchange rules, the tax residence of a company managed from home and controlled foreign company rules. Our research did not cover them beyond the Estonian warning above, so check them with a licensed adviser in your country. Declare the real facts to every provider. A coherent, truthful file is the point.
Open points: whether a US LLC that stays data controller needs an EU representative, how the Latvian shell rules treat a given US LLC, and what the Council mandate of 23 October 2026 on the EU Inc contains.
From decision to first payout
Test the merchant of record lists
If a merchant of record accepts your product and country, you may not need a company.
Form the SIA
The board declares the company reachable at its legal address (register). See Latvian company formation.
Open the account, then apply yourself
We introduce the SIA to banks or payment institutions, which decide (bank account service). You apply to the provider with the name exactly as registered (Stripe docs).
Keep the company alive
Record documents within 20 days after month end and file the annual report on time, or face a warning or a fine of up to 400 fine units (Accounting Law).
Questions about a SaaS company in Europe
No. A non-EU seller can use the non-Union OSS and charge each customer's VAT from the first euro, or sell through a merchant of record such as Paddle, which pays the VAT itself.
Stripe lists 37 countries, including Latvia, Estonia, Ireland, Germany and the US, but not India, the UAE or Nigeria. It covers automated digital products only, after a Stripe review.
It depends on whether you keep or distribute profit. Latvia and Estonia tax nothing on retained profit; Latvia takes 20% and Estonia 22% of the gross distribution in 2026. Ireland charges 12.5% on trading income, if the activity there is real.
No. It applies to a seller established in a single member state. A seller established outside the EU owes the customer's VAT from the first euro.
No. Stripe can close an account at any time, PayPal with two months' notice. A real SIA gives the provider a coherent file; the provider still decides.