What is a sales tax?
A sales tax is a consumption tax imposed by the individual states and local governments (there is no national sales tax) on the sale of certain goods, services and software licenses. The sales tax is owed by the purchaser or recipient of good and services and collected by the retailer at the point of sale. The retailer is responsible for passing it on to the appropriate government authorities within the prescribed time. A business is liable for sales taxes in a given jurisdiction if it has a taxable presence (“nexus”) there. This is generally defined as a physical presence, such as a brick-and-mortar location, an employee, an affiliate, an agent, inventory stored in a warehouse, or some other type of physical presence, depending on the laws in that jurisdiction.
Swiss online merchants, e-commerce providers and mail order companies may be asked to collect and pay sales tax in the US when selling to end-customers. When selling to a reseller of the product, a "reseller exemption certificate" might be obtained which would exempt the seller from the requirement to collect and remit sales tax. These exemption certificates should be kept on file in case of a tax examination.
An economic link (nexus) is given when goods are sold in a US state. What constitutes a permissible state sales tax nexus is at present an evolving and complicated area of U.S. law. However, if a nexus has been established, the Swiss company is liable for the collection and payment of the US Sales Tax.
What to consider as a Swiss online merchant?
It is then essential to familiarize yourself with the obligations. In a first step, it is necessary to check the amount of your corresponding sales in each state, since most of the states have defined a threshold value, which leads to a sales-tax liability (“economic nexus”) in the respective state once it is exceeded. In addition to turnover thresholds (usually $100,000 with variations), there are also (cumulative or alternative) transaction thresholds/ sales transactions (usually 200 per year with variations) effective.
Initial overview on the different States' threshold values
The chart, which can be downloaded below, provides an initial overview. If you think that your business transactions in one or several states in the US exceed these thresholds, we recommend getting professional advice. A disregard of the US-sales-tax-regulations can result in late interest and severe penalties.
Disclaimer: The information provided in this article does not constitute tax or legal advice. Always contact a U.S. tax professional for binding advice.
