If you want to sell worldwide, you will need to stay on top of sales tax and VAT regulations. As your ecommerce provider, cleverbridge monitors and complies with complex global taxation requirements – in addition to calculating, applying, displaying, collecting and remitting taxes.
Determining whether the product or services you sell are taxable is one thing. Determining rates is another, and your requirements may change according to the location of both your business and your buyers. To further complicate things, the rules change frequently and repercussions for violating the rules can be swift and severe. Our platform incorporates local tax rates and applies them to subscriptions and non-recurring charges from that region.
|Region||Taxation of Digital Goods and Services|
|United States||In the United States, businesses must pay taxes in states where they have a physical presence, or a nexus. As each jurisdiction defines nexus differently today regarding online sales, some states do require sales tax to be collected on sales of digital goods and others don't.|
|European Union||The European Union collects value-added tax (VAT) on digital products based on the residence of the customer, not the origin of the product. For the seller, it is important to distinguish between B2B and B2C transactions because different tax rules apply. A transaction is considered B2B if the buyer provides a valid EU VAT number.|
|Rest of the World||Many countries charge VAT, goods and services tax (GST), or an equivalent, which may also be imposed on digital goods.|
When it comes to payment pages, you will need to display tax correctly depending on the location of the customer. For EU consumers, you may only indicate the entire full price customers will pay. You may not display a price and then later add the tax amount to it as is possible in the United States. Also, you are required to indicate which portion goes towards taxes in the invoice. The cleverbridge hosted payment pages are fully compliant with the different requirements for the display of tax.
Remitting taxes to a foreign tax authority can be very cumbersome and even more so if you're dealing with dozens of them. Not only are you required to register with each tax authority before you can start paying taxes, but you also have to calculate the correct amount, file the taxes and transfer the money to a foreign account. As your ecommerce provider, cleverbridge handles the entire remittance process.