Here’s a pop quiz for tax professionals in Europe-based companies that sell online to consumers in other European Union (EU) countries: If your company’s online sales exceed a country’s annual revenue threshold for distance selling, does your company need to register for value added tax (VAT) in that country?
If you answered “yes,” take a quick bow before moving on to a tougher question: If your Europe-based company conducts online sales in to the U.S., does it need to register to collect and remit sales and use tax within individual states where your company’s annual turnover exceeds that state’s threshold?
If you replied “yes, in most cases,” or “probably – and we’re closely monitoring how each state is responding to the U.S. Supreme Court’s historic South Dakota v. Wayfair decision,” give your tax function a gold star.
If you answered “no” or did not understand the question, you need a crash course in the Wayfair ruling’s far-reaching implications; unless, of course, you want your company to risk failing compliance with a dizzying number of state-specific sales tax compliance changes coming down the pike.
Tax professionals and executives whose EU-based companies conduct online sales into the U.S. should learn as much as possible about the Wayfair ruling’s implications on their sales tax landscape and compliance requirements. The same holds true for tax professionals in any company based outside the U.S. that conducts online sales to U.S. customers.
The best way to begin this intensive education is to familiarise yourself with the Supreme Court’s post-Wayfair ruling. Then learn more by reading a list of FAQs, listening to our recent webcast and reviewing a collection of state-specific sales tax updates. The purpose of this coursework is to help you complete state-specific sales tax registrations in the U.S., much like VAT registration in the EU.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.