What Wayfair Means for European Businesses

The Supreme Court’s 2018 Wayfair decision reverberates far beyond U.S. borders. As if contending with the frustrating uncertainty of Brexit isn’t a steep enough challenge, many retailers based in Europe will need to adjust to numerous, state-specific sales and use tax changes occurring in the wake of last year’s Wayfair decision.

A webcast on Wayfair’s U.S. tax implications for European businesses will help non-U.S. sellers understand how state sales tax rules are being rewritten and what those changes mean from a tax compliance perspective. The event features insights from a team of Vertex and PwC experts.

Nancy Manzano, tax director in the Vertex Chief Tax Office, gives a quick run-down on the bewildering complexities of U.S. sales and use tax, including its more than 11,000 sub-state jurisdictions, non-uniform taxability rules and disparate filing requirements. “Just when you think you’ve got it all figured out, obviously those tax rates and taxability rules can change regularly,” Nancy notes. “That requires sellers to keep up-to-date with those rules, sometimes as much as monthly.” PwC indirect tax expert Rob Morris agrees, pointing out that “there has been a ton of state activity in response to this decision. It’s important to know what you may already need to do – it’s really not a wait-and-see game anymore.”

To that end, the webcast explores some of the most pressing Wayfair topics for non-U.S. businesses, including:

• The details of the June 2018 ruling and South Dakota’s economic nexus statute provisions;
• The sales and use tax landscape at the state level, including the economic nexus thresholds already in place, and Wayfair’s potential implications for state income tax;
• The foreign industries most likely to experience a significant impact and enforcement considerations at the sub-national level; and
• State income tax considerations – Wayfair’s repercussions will likely extend beyond the indirect tax realm. As Nancy explains, “there are many tax professionals and academicians who believe that removing the physical nexus barrier for sales tax also means that state income tax should now also be predicated on an economic presence, as opposed to a physical presence.”

The webcast offers other practical guidance on meeting the compliance challenges, as well as a discussion of how tax automation solutions can help.

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.