US Sales Tax for Foreign Sellers: Nexus, Marketplaces, Prices.

US sales tax for foreign sellers works nothing like VAT. There is no federal VAT; each state sets its own sales tax, local jurisdictions often add their own, and a foreign seller can be required to register and collect in a state once its sales there pass that state's economic nexus threshold. Marketplaces collect on marketplace sales in most cases, but your own web store is your responsibility.

This guide explains how sales tax in the USA is structured, how economic nexus works after the Wayfair decision, what marketplace facilitator laws change, how registration and filing are handled, and why US prices are displayed without tax. We are a growth firm, not accountants or tax advisers. We build the storefronts, feeds and checkout settings that carry these rules and coordinate with your accountant, and every registration and filing decision should be made with a US sales tax professional.

No Federal VAT: How Sales Tax in the USA Is Structured.

Sales tax in the US is a state-level tax on retail sales of goods and some services, charged to the end buyer at the point of sale and remitted by the seller. Unlike VAT, it is generally not charged at each stage of the supply chain. Wholesale sales for resale are usually exempt when the buyer gives the seller a valid resale or exemption certificate, and the seller must keep those certificates on file.

Forty-five states and the District of Columbia have a statewide sales tax. Alaska, Delaware, Montana, New Hampshire and Oregon do not, although Alaska allows local sales taxes. Within taxing states, counties, cities and special districts can add their own rates, so there are thousands of taxing jurisdictions and the correct rate depends on the exact delivery address, not the state or even the ZIP code. What is taxable also varies: clothing, groceries, supplements and digital goods are treated differently from state to state.

Sales tax is also separate from two other things foreign sellers confuse it with. Import duties and customs fees are federal and are paid at the border; at the time of writing, the US has suspended duty-free de minimis treatment for low-value parcels from all countries, so direct-to-consumer shipments from abroad now face duties, which your customs broker should confirm. Income tax is separate again: federal income tax exposure for a foreign company depends on treaties and on whether it has a US business presence, and state income or franchise taxes follow their own nexus rules. An accountant should look at all three together.

Economic Nexus for Foreign Sellers After Wayfair.

Nexus is the connection that lets a state require a business to collect its tax. Before 2018, that generally required physical presence, such as an office, employees or inventory in the state. In South Dakota v. Wayfair, decided in June 2018, the US Supreme Court allowed states to require collection based on economic activity alone. Every state with a statewide sales tax has since adopted an economic nexus rule.

Thresholds vary by state and have changed over time. A common threshold is $100,000 in sales into the state over the current or prior year, and some large states use higher figures; California and Texas, for example, use $500,000. Several states once also counted 200 transactions, and a number of them have dropped the transaction test. States also differ on whether marketplace sales, exempt sales and wholesale sales count toward the threshold. Check each state's current rule, or have your accountant run a nexus study, rather than relying on a summary table.

These rules apply to foreign sellers too. A company in Germany, Brazil or Australia that sells enough into a state has the same collection obligation as a US company. Physical presence still counts as well: inventory stored in a US warehouse, including Amazon fulfillment centers, can create nexus in the state where it sits, regardless of sales volume.

Marketplace Facilitator Collection.

Marketplace facilitator laws require marketplaces that process sales for third-party sellers, such as Amazon, Walmart Marketplace, eBay and Etsy, to calculate, collect and remit sales tax on those sales. At the time of writing, every state with a statewide sales tax has such a law. For a foreign brand selling only through Amazon, the marketplace handles collection on those orders, which removes most of the day-to-day burden.

It does not remove all of it. Your own Shopify or other direct store is not covered, wholesale and B2B orders are not covered, and some states still expect a registered seller to file returns even when all of its sales ran through marketplaces. Whether marketplace sales count toward your threshold for direct sales also depends on the state. So a brand that adds a direct store after launching on Amazon can cross a threshold it never thought about. Our Shopify vs Amazon comparison covers how those two channels fit together.

Step by Step: Registering and Filing With an Accountant or Software.

The Streamlined Sales and Use Tax Agreement, adopted by 24 member states at the time of writing, offers a single registration for its members and, for qualifying remote sellers, access to state-paid Certified Service Providers. Ask your accountant whether it fits your footprint.

Tax-Exclusive US Prices vs VAT-Inclusive Europe.

In the EU and UK, consumer prices must include VAT. In the US, the shelf price, the product page price and the advertised price are normally shown before sales tax, and tax is added at checkout based on the delivery address. A product priced at 29.99 in Germany including VAT is a different pricing decision from 29.99 in the US before tax, and copying a European price list across without that adjustment changes margin in ways nobody planned.

The difference reaches every system that shows a price. In Shopify, the setting to include tax in prices should be off for the US market, which Shopify Markets lets you set separately from European markets. US product feeds for Google Merchant Center generally submit prices without sales tax, following Google's current US specification. Ad copy, email and landing pages should show tax-exclusive prices so they match the product page and the feed, or ad platforms may flag the mismatch. The checkout should show the tax line clearly before payment.

What Usually Goes Wrong.

• The brand assumes that because it is foreign and has no US entity, US states cannot require it to collect.
• Amazon inventory is spread across fulfillment centers and nobody checks whether that created physical nexus.
• A direct store launches with tax collection turned on everywhere, or nowhere, instead of in the states where the brand is registered.
• Every SKU uses the default tax code, so exempt or reduced-rate products are taxed wrongly.
• VAT-inclusive prices are copied into US feeds and ads, creating mismatches and unplanned margin changes.
• Wholesale orders ship without resale certificates on file, leaving untaxed sales exposed on audit.

Where the Tax Advice Stops and the Launch Work Begins.

Your accountant decides where you have nexus, where to register and how to file. What follows is systems work: storefront tax settings by market, tax software connected to checkout with correct product codes, US-specific price lists that account for tax-exclusive display, feeds and ads that match the storefront, and reporting that shows sales by state so thresholds are tracked before they are crossed. Our page on US business setup for foreign companies covers how entity, banking and tax registration decisions fit into a launch, and building the storefront, feed and reporting side of it is work Theory Road does through our e-commerce and Amazon service.