I am wondering if running an online service and not allowing customers from European Union would make sense when one takes into account the bureaucracy and dangers that come with GDPR and VAT collection?
You would have to not serve most of the world, GDPR-like laws are being adopted everywhere to facilitate data transfer with the EU. Japan, South Korea, Israel, Australia, New Zealand, Canada, China, India, Brazil and many other countries, and New York and California in the United States all have comparable laws now. It's only a matter of time before everyone will, that's how important the European market is.
There are only so many things a single person can focus on (hint: this is why companies get big). A solo entrepreneur or a small company needs to focus on a small set of things. That may involve only releasing your product in English or only worrying about US regulations by not launching outside the US. It depends on what you're doing.
They may be able to ignore the GDPR, but they can't ignore the VAT requirement. The problem is, VAT gives them constructive knowledge about who is in the EU and who isn't.
Yes they can ignore the VAT if they operate outside of the EU. It's up to the importer to pay the tax in that case. National posts and delivery companies have a standardized procedure for it. It's done in the same sweep with duty fees.
And even if the seller is based inside the EU they don't necessarily need to care about VAT - the limit is around 100k EUR yearly revenue (varies by state).
I would never advise to dodge taxes but pragmatically it also depends on the volume of rateable sales they do, or expect to do, in the EU. If you don't target EU customers and get one once in a while on small ticket digital items (I suppose for most physical items VAT will be charged to receipient when going through customs), I don't think many people will bother with EU VAT... Same for foreign customers from any countries, really. Let's say you get a customer from Brazil, are you going to check all Brazilian laws and regulations first and register with the Brazilian tax office if legally required? Frankly, probably not.
Personally, foreign regulations are not something I would spend time on until I start getting traction from the relevant country, otherwise it's a real rabbit hole.
You can use Paddle as your payment provider and it will handle VAT for you.
For a small business I would imagine GDPR is pretty much just have a straight forward privacy policy that states your intentions with someone's data. If someone requests their data then send it to them, if they want it deleted then do. I think that GDPR likely doesn't come up for the majority of small business besides a data consent pop up on a homepage.
It is like saying, we don't sell our soda in the EU because their health requirements are too strict.
It doesn't inspire trust in the way you make your soda now does it?
No, it's like European banks saying we don't serve US customers because their financial requirements are too strict.
Oh wait, that actually happens. Let me guess, someone is going to rush in and tell me why that's different (it's not).
And even if the seller is based inside the EU they don't necessarily need to care about VAT - the limit is around 100k EUR yearly revenue (varies by state).
Personally, foreign regulations are not something I would spend time on until I start getting traction from the relevant country, otherwise it's a real rabbit hole.
For a small business I would imagine GDPR is pretty much just have a straight forward privacy policy that states your intentions with someone's data. If someone requests their data then send it to them, if they want it deleted then do. I think that GDPR likely doesn't come up for the majority of small business besides a data consent pop up on a homepage.