Q&A: Understanding US sales tax

Despite its current challenges the US market is still a key place for European businesses looking to sell goods and services overseas. But for businesses who don’t fully familiarise themselves with the complex nature of the US’s sales and use tax regime it can prove more difficult.

How do VAT and US sales tax differ?

Europeans familiar with VAT have a new complexity to learn as they try to understand how US sales and use tax works. VAT and SUT are both indirect taxes but they vary widely in scope and implementation.

VAT is applied at multiple points along the supply chain with suppliers manufacturers distributors and retailers all collecting tax on taxable transactions. Each party including end consumers pays VAT on their purchases and businesses must track both the VAT they collect and the VAT they...