Selling Fast, Filing Sales Tax Faster: The E-Commerce Challenge Facing Tax Teams

E-commerce has transformed the way goods and services are sold, offering businesses unprecedented access to global markets and consumers. Since the early days of online shopping in the 1990s, innovations such as mobile commerce and online marketplaces have driven widespread adoption. In 2025, Forrester projects online retail sales alone will reach $5.3 trillion, representing roughly one-fifth of all retail sales worldwide.

This momentum signals more than just a change in where transactions occur; it marks a fundamental shift in business operations and tax compliance. As cross-border activity becomes increasingly commonplace, tax teams and regulators alike face growing complexity. To keep pace, businesses need scalable tax technology, integrated processes, and a strong grasp of external regulatory changes – ensuring tax compliance is embedded from checkout to filing.  

How has e-commerce growth impacted indirect tax in Europe?

There is a common misconception that e-commerce is an industry. In reality, it’s a sales channel that enables direct-to-consumer (DTC) transactions, fundamentally changing how goods are distributed. Traditionally, sales tax depends on physical logistics – a product’s origin, the buyer’s location, the delivery address, etcetera. E-commerce disrupts this. When someone in China can ship directly to a customer in France, with goods manufactured in India, the complexity of tax determination increases exponentially.  

Over the past decade, digital-first businesses have been able to scale at speed, reaching customers in multiple countries without establishing a local presence. That early advantage – selling globally while taxing locally – has steadily narrowed as regulators have caught up, introducing destination-based rules for ‘distance sellers’ and expanding obligations for platforms.

Local tax authorities are acting to level the playing field for domestic sellers and to recover VAT revenue. As digital platforms and cross-border transactions become standard, countries are making it clear: if you sell here, you must collect and remit sales tax here too.  

What do regulations mean for cross-border sellers?

As tax rules evolve, companies operating across jurisdictions face increased complexity. Businesses must manage multi-level regulations spanning countries, product categories, and sales channels simultaneously.

It’s created a shift in how internal tax teams operate. They must ensure accurate tax determination at the point of sale and stay compliant without compromising customer experience. With numerous rates and rules to navigate, and transactions that might span in-store and online channels or require line-item liability calculations, teams need a sophisticated understanding of tax compliance.

Regulators are trying to simplify this. For example, the EU’s IOSS (Import One Stop Shop) aims to harmonize VAT filing for cross-border e-commerce. It’s largely successful, but country-specific interpretations of tax determination still create challenges.

The demand for real-time, accurate tax calculations is rising, and tax has become deeply intertwined with digital infrastructure. Businesses have had to adapt their internal processes for speed, scale, and new systems. Online, tax compliance must match the pace of commerce, enabled by digital platforms that make instant decisions on products, payments, and sales tax.

This is underscored by the EU’s ViDA (VAT in the Digital Age). While many of its proposals won’t take effect until the 2030s, the real-time e-invoicing mandates it requires mean that e-commerce businesses should already be planning. In a space where checkout speed is critical, it is vital to ensure that pushing tax filing closer to the point of transactions won’t interrupt customers.

What’s notable about how companies sell online today?

One of the most striking developments in today’s e-commerce landscape is the rise of omnichannel sales. Businesses that once relied solely on physical distribution now sell online, in-store, and through marketplaces.  

Procter & Gamble is a prime example. Once a traditional manufacturer and distributor, e-commerce sales accounted 18% of the company’s total in 2024. This reflects a broader trend: businesses are no longer choosing between physical and digital – they’re doing both.

Meanwhile, ‘pureplay’ e-commerce companies – those selling digital goods without a physical presence, like Netflix and Spotify – are now fully accounted for in many tax regimes. Their digital-only models and global reach have prompted regulators to expand rules and close gaps in sales tax collection.

For all these businesses, consistency is critical. Whether selling online or in store, the correct tax rate must be applied, and customers must experience uniformity across channels. Tax teams must work across a wider range of systems, from ERPs to e-commerce platforms, to achieve this and ensure smooth, compliant transactions across every sales point.  

How can systems and technology support e-commerce tax teams?

As digital platforms expand and cross-border selling becomes the norm, technology is critical. The speed of transactions demands real-time sales tax calculation without slowing the checkout. That’s why latency is a key topic in request for proposals (RFPs) – and why Vertex’s solutions sit close to the point of calculation for instant, more accurate tax determination.

It's not just about speed though. Tax teams now manage more systems: ERPs, e-commerce platforms like Shopify, logistics tools, invoicing software. The right tech helps bring all that data together so you can calculate, collect, and file tax correctly across multiple channels and jurisdictions.  

Compliance is another angle. With an exponential number of tax rules in O Series now, it's hard to imagine staying compliant without automation. The software helps avoid penalties, audits, and resource drain. Strategically, it enables planning, so businesses know their tax liability before entering a new market or launching a product.

Ultimately, good tax technology frees up teams to focus on forecasting and growth, rather than chasing filings. It’s no longer just a back-office tool, it’s part of the infrastructure powering e-commerce.