This lesson provides a practical, comparative overview of the registration processes for remote sellers in the United States and the European Union. It examines how each jurisdiction’s approach aligns with OECD recommendations and highlights the challenges faced by businesses .
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USA – Economic Nexus: The US lacks a nationally administered indirect tax; instead, 45 states and the District of Columbia collect sales tax. Registration is triggered by “economic nexus,” which is typically based on crossing a state-specific sales revenue or transaction threshold. Thresholds vary significantly, from $100,000 in Georgia to $500,000 in California. Many states have recently removed transaction thresholds to simplify compliance .
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USA – Registration Challenges: Registration is conducted state-by-state, with varying processes and requirements. International sellers face additional hurdles, such as the need for a US bank account and a Social Security Number (SSN) for business owners (though an ITIN may be accepted in some cases). Obtaining an ITIN can take up to seven weeks. States like Louisiana and Alabama have local jurisdictions that require separate registrations, adding further complexity .
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EU – No Economic Nexus for B2C: In the EU, foreign sellers must register for VAT as soon as they begin B2C sales in any member state; there are no economic nexus thresholds for non-resident suppliers. Local businesses, however, may benefit from domestic registration thresholds (e.g., Ireland’s €40,000 threshold for services). The rules for local vs. foreign sellers thus create a different compliance landscape .
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EU – Deemed Supplier Rules for Marketplaces: The EU has introduced “deemed supplier” rules, shifting VAT collection responsibility to marketplace operators in certain B2C scenarios (e.g., low-value goods shipped from outside the EU, or goods sold by non-EU sellers from stock stored in the EU). When the marketplace is the deemed supplier, the underlying seller does not charge VAT on those sales. However, the seller may still need to be VAT-registered in the EU if they store goods there .
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The One-Stop Shop (OSS): To simplify cross-border VAT compliance, the EU introduced the OSS. This allows businesses to register for VAT in one single EU member state and account for VAT on all B2C cross-border sales through a single quarterly return, rather than registering separately in each country. This aligns with the OECD’s recommendation for simplified regimes .