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Merchant of Record for SaaS companies handling all global tax complexity
Paddle operates as a Merchant of Record (MoR) for software companies, taking on full liability for global tax compliance — VAT, GST, digital services tax, and sales tax — in exchange for a transaction fee. This model fundamentally changes the economics of global SaaS taxation: instead of managing VAT registrations in 40+ countries, filing quarterly returns in multiple jurisdictions, and handling currency conversion, Paddle's customers simply sell through Paddle and receive clean revenue with all tax obligations fulfilled. The MoR model means Paddle appears as the seller of record on customer invoices and payment receipts, handling all chargeback disputes, fraud management, and payment processing risk as well. This wholesale outsourcing of tax and payment compliance is particularly valuable for software companies expanding internationally who lack the resources to build an internal tax compliance team. ProfitWell (acquired by Paddle) is included free, providing subscription analytics including churn analysis, LTV modeling, and MRR reporting. The platform supports one-time, recurring, and usage-based pricing models with trials, discounts, and coupon management. Checkout customization provides branded payment flows. Integration with Stripe, Braintree, and PayPal provides payment method flexibility. Paddle's transaction fee model means zero upfront platform cost, with costs scaling directly with revenue — advantageous for early-stage companies but worth evaluating against flat-fee alternatives at scale. For B2B and B2C SaaS companies that prioritize global tax simplicity over per-transaction cost optimization, Paddle's MoR model is unmatched.