There is no federal VAT in the United States. Each state sets its own sales tax, often topped up by local taxes. Since the Supreme Court’s South Dakota v. Wayfair ruling of June 21, 2018, a seller can owe tax collection in a state without having any office there. Many European companies find out too late.

Sales tax in 3 points

  • 45 states and the District of Columbia levy a statewide sales tax. Alaska, Delaware, Montana, New Hampshire and Oregon do not (Alaska allows local taxes).
  • Rates and taxable products vary by state and locality.
  • The tax is owed by the end consumer, but the seller must collect and remit it if it has “nexus” in the state.

Physical nexus and economic nexus

Physical nexus comes from presence: an office, employee, warehouse or inventory (including stock placed in a marketplace warehouse such as Amazon FBA).

Economic nexus comes from sales volume alone. Thresholds vary: the Wayfair model was $100,000 in sales or 200 transactions a year, but California and Texas use $500,000, New York $500,000 and 100 transactions, and many states have dropped the transaction count. Each state must be checked individually, and thresholds change.

Marketplaces: what they do and don’t do

Every sales-tax state has adopted “marketplace facilitator” laws: on sales made through a marketplace, the marketplace collects and remits the tax. However:

  • sales on your own website remain your responsibility;
  • inventory in a marketplace warehouse can create physical nexus and a registration obligation.

B2B sales: exemption certificates

When you sell to a distributor or reseller, the sale is generally exempt because tax will be collected on the resale to the consumer. But you must obtain and keep a valid resale certificate for each customer. Without it, the state can claim the tax from the seller in an audit.

Setting up compliance

  1. Map sales by state (amount and number of transactions), at least quarterly.
  2. Register before collecting in any state where a threshold is crossed.
  3. Configure tax calculation on your website and invoices (specialized software exists).
  4. File periodic returns, even zero returns.
  5. Don’t confuse sales tax with state income tax, which follows different rules.
Key takeaway

Sales tax is not a one-off task: it is ongoing monitoring, state by state. The risk is real: uncollected tax remains owed by the seller, with interest and penalties.

Frequently asked questions

Does a European company have to pay US sales tax?

It must collect and remit it in every state where it has nexus, either physical (inventory, employee, office) or economic (sales above the state’s threshold).

Does Amazon collect sales tax for me?

Yes for sales made on the marketplace, thanks to marketplace facilitator laws. No for sales on your own website, and warehouse inventory can create nexus.

What is the economic nexus threshold?

It depends on the state: often $100,000 in annual sales, but $500,000 in California and Texas. Check the current rules state by state.

Sources

External links checked on October 24, 2026.

This guide is not tax advice. Thresholds and rates change regularly: check them with each state’s tax authority or a US CPA.

Take the free self-assessment ↗

Back to all articles