Black Friday sales may topple tax thresholds in the EU and US
After a turbulent 2020, this year’s annual Black Friday / Cyber Monday could well be the most competitive, and potentially lucrative one, yet.
With the decline of the high street, European online retailers have seen increased growth due to the rise in mobile shopping, convenient delivery options and payment innovations.
Make the most of Black Friday – Don’t be caught out by new US sales tax obligations
For European ecommerce merchants selling to customers in the United States for example, this jump in orders could trigger new sales tax obligations or “nexus”. Given the number and complexity of sales tax jurisdictions in the US, it can be challenging for businesses to assess whether they are liable for sales tax and what the US remote seller thresholds are.
As fourth-quarter sales will be larger than the preceding three quarters combined, EU sellers shipping cross-border may also be pushed over both the EU VAT Distance Selling thresholds.
Sacha Wilson, Director Tax Technology Solutions at Avalara, said: “Faced with the highest budget deficits in a generation, governments will be relying on taxes more than ever. Expect to see tax increases and new forms of tax legislation over the coming months.
How much can my business sell before I go over tax thresholds in the EU and US?
With Black Friday fast approaching on 27 November, retailers will be pushing out discounts and price breaks to capitalise on peak trading. While the US is a large market, it is important for retailers to know where the financial limits are and where to draw the line.
Following the 2018 Wayfair ruling in the US Supreme Court, nearly all US states can now tax foreign sellers. Some US states operate on a $100,000 sales limit or delivering over 200 products into the state, whichever comes first.
| For companies exporting goods into the EU, HMRC says that UK VAT should be charged until the value of your supplies in a calendar year exceeds the distance selling threshold in that country. |
Additionally, if a company trades above the UK Intrastat threshold, all distance sales that were made to a non-taxable person should be reported on an Intrastat Supplementary Declaration form—even if the distance sales from the UK are “below the distance selling threshold in the member state of arrival,” according to HMRC’s online guidance.
To learn how to make the most of Black Friday and stay sales tax compliant, call us on +44 (0) 1273 022400 or visit avalara.com
