Charging U.S. sales taxes on product purchased online and sold from foreign location
We are building an online application that will allow users to create and purchase high-quality typographic logos and business cards. The application is taking a while to develop so we've decided to just start selling logos and business cards "manually" online in an effort to jump start our business and gather insights into our customers.
We are based in Spain. Do we have to charge/collect U.S. or state-level sales taxes if a customer from any U.S. state purchases a logo (an eps file) and a set of business cards from us?
Sales Ecommerce Foreign Tax Online
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possible duplicate of [Online Sales Tax: location based on transaction server, shipping address, CC, or location of purchaser?](http://www.brightjourney.com/q/online-sales-tax-location-based-transaction-server-shipping-address-cc-location-purchaser) – Karlson 12 years ago
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Every state is different. However, for the most part, foreign businesses don't collect sales tax but have to file some paperwork. – Dnbrv 12 years ago
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I read the question that karlson notes prior to posting my question since it was still not clear to me what obligations I have as a foreign online merchant selling to US customers. – Miguel Buckenmeyer 12 years ago
2 Answers
No, EU companies don't collect taxes for non-Eu countries. Also, you don't charge them with VAT (see the europa.eu site).
As with all of this, please understand that I'm not an attorney, or an accountant, and am just providing my understanding of this.
(now with that caveat out of the way)...
Taxes in the US are based on state, county, city (and more, in some areas). The general problem is that each state, city, county, etc manages their own tax rules. Online business is typically an interesting problem since the tax varies on whether the good is tangible or digital, and then where the good is shipped from, and shipped to. Typically, taxes are only applied when a company has nexus in a given location. This means if you have an office in New York City, all New York (state) customers will be taxed, but customers in Florida would not be taxed.
Colorado, on the other hand, requires that each consumer report the goods they have purchased at the end of the year on their taxes, so they may be charged appropriately. Long story short, anything outside of the US, you can typically roll your own tax engine. Inside the US, unless you have limited nexus, I would recommend a product. You might also be able to spend a few hundred USD to talk to an accountant/tax lawyer, and they might be able to give you a better answer, customized for your business.
Hope this helps.
