Lemon Squeezy

What "merchant of record" actually means

When you sell a digital product internationally, you are technically obligated to register for, collect, and remit VAT in the EU, UK, Australia, and a growing list of US states. The mechanics are tedious and the penalties for getting it wrong are real.

A merchant of record (MoR) is a company that legally sits between you and the buyer. They are the seller of record on the receipt. They register, collect, and remit the tax. You invoice them at the end of each month for the net of sales minus their fee.

Lemon Squeezy is the indie-friendly MoR. Paddle is the other big one (more enterprise-shaped, slower to onboard).

When it is worth the 5%

Take the math seriously. On a $30 product:

• Stripe direct: 2.9% + 30¢ = $1.17 in fees + you owe ~$5–6 of VAT to whoever the buyer is in EU/UK = ~$23 net
• Lemon Squeezy: 5% + 50¢ = $2 in fees, no tax for you to remit = $28 net

The 5% is cheaper than the 20% VAT you would otherwise have to register for, collect, and remit yourself. And that is before you count the time saved not learning international tax law.

What it is good for

• Selling courses, templates, ebooks, fonts, presets, plugins, or basically anything digital
• Indie SaaS at sub-$100k MRR (above that, Paddle's enterprise pricing starts to look better)
• Founders who do not want to incorporate a company in the EU just to sell to EU customers

What it is not for

• Services (use Stripe + your local invoicing)
• Physical goods (Shopify is the right shape)
• Subscription products at large scale where the 5% becomes meaningful. You might graduate to Paddle or back to Stripe + Stripe Tax

Verdict

For one-person digital product businesses, Lemon Squeezy is the path of least resistance. The 5% fee is the cost of not learning international tax law, and that is a trade most solopreneurs should take.