Legal

The reseller / principal model

StayLocalX (operated by G-HAT LLC, a US LLC registered in New Mexico) operates as a marketplace principal: it sells advertising services to local businesses and engages property owners as subcontractors who provide the advertising inventory. This page explains why this model is the cleanest way to operate the marketplace legally.

The two-sided contract

Contract 1: platform ↔ advertiser

The advertiser is buying "advertising space inside vacation rental guides" from G-HAT LLC. G-HAT LLC is the legal seller. The B2B invoice is issued by G-HAT LLC for the full slot price (€100 example) plus the applicable VAT (or reverse charge if EU B2B).

Contract 2: platform ↔ owner

The owner provides the inventory (the right to feature ads in their property guide) as a subcontractor of G-HAT LLC. They are paid 70% of the gross slot fee. The platform issues a self-billed invoice to itself on the owner's behalf each month, documenting the cost.

Why this model and not the alternatives

Alternative 1: agent / commissionnaire model

In this model the owner would be the legal seller and the platform would just be an intermediary charging a commission. Examples: Etsy, Amazon (some categories), eBay.

Problem for our use case: every owner would need to be VAT-registered and issue invoices to advertisers directly. Most vacation rental owners are individuals, not registered businesses. The advertiser would receive a fragmented set of invoices from many small private sellers, which is operationally bad and often legally murky.

Alternative 2: platform holds funds

In this model the platform would receive 100% of the payment, hold it, and pay out to owners later.

Problem: holding customer funds in your own bank account triggers Payment Institutionregulations under EU PSD2 and equivalent rules elsewhere. You need a license, you need capital requirements, you need annual audits — it's a regulatory burden that doesn't fit a marketplace.

The reseller / principal model (what we use)

Combines the best of both: clean B2B invoicing (Booking.com style), no fragmented owner invoices, and no PSD2 exposure because the cash never sits in the platform's bank account. Stripe Connect routes the 70% owner share directly into each owner's connected Stripe account in real time.

The key insight

Invoicing and cash flow are two separate things. We invoice as principal for 100%, but the cash physically routes 70/30 via Stripe's books. Tax authorities accept this — what matters is the contract and the invoice trail, not the physical bank balance.

Real-world precedent

This is exactly how Booking.com's merchant model works in many markets. The platform invoices the customer, the hotel is a subcontractor, and the cash is split via the payment processor. We're applying the same well-understood model to local advertising.

Owner consequences

For you as an owner, this model means:

  • You don't have to write any invoices yourself — we self-bill on your behalf
  • You don't have to charge VAT to anyone — Stripe Tax handles it on the advertiser side
  • You receive 70% net of platform fees, no further deductions from us
  • You remain responsible for declaring this income to your local tax authority — see tax responsibility