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Registration or Sales Tax for Selling to European Market

Taxes and regulation

TreyAllDay

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Feb 9, 2016
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Would VERY MUCH appreciate any insight into this question I am stuck on.

I operate a SASS service and currently have customers in Canada and the US. I am allowed to have US companies subscribe and pay for our software without registering in the US, and I don't collect sales tax as I have no NEXUS (physical presence) in the US.

I have had a huge increase in traffic and outreach from European Union and Mexico - however no phsyical presence and I'm not making sales calls. Does anyone have experience selling software subscriptions in either countries? Is this similar to the US, no physical presence, no need to register or pay taxes? I know these countries can be a bit backward with their business structures compared to north america.

I will look for a lawyer/professional before launching, however I'm curious if this stuff is maybe super obvious and a well known fact?
 
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fhs8

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Jan 22, 2016
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Would VERY MUCH appreciate any insight into this question I am stuck on.

I operate a SASS service and currently have customers in Canada and the US. I am allowed to have US companies subscribe and pay for our software without registering in the US, and I don't collect sales tax as I have no NEXUS (physical presence) in the US.

Just because you don't have a physical presence in the US doesn't mean that you don't have a nexus. This is because Bellas Hess and Quill where both tossed out of the Supreme court in 2018. You can definitely have an economic nexus in the US. Subscriptions or software might need to be charged sales tax in many states where there are over 200 sales transactions OR over 100,000 in gross revenues derived from a state in a rolling year. Even if sales tax isn't charged there might be a use tax notification requirement that lasts for a full year for one transaction. Also you may need to open a foreign corporation in some states that you are conducting business in and pay income tax in those states as well and pay the minimum franchise tax.

For example in the state of Washington, USA:
Software might be charged sales tax:
Information technology products and services | Washington Department of Revenue

It applies to remote sellers with no physical presence in WA: Remote sellers | Washington Department of Revenue

The minimum fine for completely not following WA use tax notification law is $45,000: Use tax notice and reporting penalties | Washington Department of Revenue
 

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