MoR has become a definitive advantage at least here in the UK - to the point where I'm not sure any other arrangement currently makes sense for the kind of tech startups we often discuss here on HN.

For one thing we have the Making Tax Digital VAT reporting rules as soon as we cross our domestic VAT registration threshold (which is lower than £100k of annualised revenue within the scope of UK VAT so something a high growth startup is going to want to cross pretty quickly). To comply with those rules we need a 100% automated system for transferring VAT records from any services we use to collect payments into our MTD-compliant VAT reporting software. I'm still waiting for anyone to show me an easy and cost-effective way to do that properly with any non-MoR payment service provider. AFAIK none of the PSPs I've ever used has any documentation on how to do this, nor do any of the VAT reporting systems I've used since MTD came in. I'm not sure all of the approved reporting systems have the kind of API available that you'd need to implement this kind of data transfer even with significant programming/integration effort.

And that's only the easy case of domestic collection and reporting. Internationally there are several services that will accurately calculate the required tax for you based on whatever rules apply wherever your customer is and whatever they are buying (you hope) but again that's only the relatively easy part. You also need to handle all the registration, tax reporting, possibly specific customer invoicing requirements, and tax remittance obligations everywhere they might apply. Obviously that's completely impractical for any SME that isn't a tax specialist because no business at that scale has lawyers and accountants in every relevant part of the world to advise them and manage those relationships with the local tax authorities. In sensible places there are again thresholds for local sales where you don't have to do anything about tax until you're also doing a significant amount of business there that isn't going to happen overnight but who wants to try to work out everywhere in the world that isn't sensible like that?

Merchants of record usually charge pretty hefty fees compared to vanilla payment service providers but they're essentially a combination of automating a lot of pain and an insurance policy. Apparently the global tax system is now sufficiently opaque and risky that the market estimates the compliance overhead to be around 6-7% of all relevant trade worldwide.

How does Stripe Tax compare with MoR?

I would love to use only Stripe, but MoR provides for me more than calculating how much tax I need to report per country. It takes a couple of days per month to prepare documents for my country's fiscal authority to report VAT and other taxes from customers inside and outside the EU. This is because in case of MoR I only have a couple of invoices per month but from a single company (the MoR) that is from one country. So there is little reporting done.

We have introduced flat fee pricing recently: https://stripe.com/tax/pricing

MoR for marketplaces basically means merchant of record for Stripe Connect and you, as the platform, take the tax liability via the MoR functionality automatically for your sellers (connected accounts), right?

Mind sending me an email at kevinpeters at stripe dot com? Would love to hear about the use case.

Does Avalara handle MoR? I know they handle complex taxation in the US for the alcohol industry pretty well but I don't know their other features.