by Ariful | Feb 26, 2026 | US Updates
Understanding the UK Side: Zero-Rating Your Exports
Before you worry about the IRS in America or the CRA in Canada, you need to handle your UK obligations. When you export goods from the UK to a country outside the UK and EU, those sales are generally zero-rated for VAT.
This means you do not charge 20% VAT to your American or Canadian customers. However, you must keep thorough evidence of the export: such as commercial invoices and shipping documents: to prove the goods left the country. Failing to maintain these records could lead to HMRC demanding the VAT you didn’t charge.
You should also ensure your VAT invoices are correctly formatted for international trade. For more on managing your local obligations, check out our UK tax tips to run your business accounting.
Navigating the USA: It’s Not VAT, It’s Sales Tax
The biggest shock for UK sellers entering the US market is the lack of a federal VAT. Instead, the USA uses a Sales Tax system managed at the state and local levels. There are over 11,000 different tax jurisdictions in the US, each with its own rates and rules.
What is Nexus?
In the US, your obligation to collect and remit sales tax is triggered by “Nexus.” Nexus is a connection between your business and a state.
- Physical Nexus: Having an office, employees, or inventory in a warehouse (like Amazon FBA) in a specific state.
- Economic Nexus: Reaching a certain threshold of sales or transactions in a state (e.g., $100,000 in sales or 200 transactions in a calendar year).
Once you trigger Nexus, you must register for a Sales Tax Permit in that state and start collecting tax from customers. Don’t worry; we handle the registration and ongoing filings for you, so you don’t have to keep track of 50 different state deadlines.
Marketplace Facilitator Laws
If you sell via Amazon, eBay, or Walmart, your life is slightly easier. Most US states have “Marketplace Facilitator” laws. This means the marketplace collects and remits the sales tax on your behalf. However, you may still have a requirement to register and file “zero-returns” in certain states to stay fully compliant.
Cracking the Canadian Code: GST, HST, and PST
Canada’s system is a hybrid that feels a bit more familiar to UK sellers but has its own traps. Canada uses three types of sales taxes:
- GST (Goods and Services Tax): A 5% federal tax applied nationwide.
- HST (Harmonized Sales Tax): A combined federal and provincial tax (usually 13% or 15%) used in provinces like Ontario and New Brunswick.
- PST/QST (Provincial Sales Tax): Separate provincial taxes applied in provinces like British Columbia, Saskatchewan, and Quebec.
The $30,000 Threshold
Generally, if your worldwide revenues stay below $30,000 CAD in a single calendar quarter or over four consecutive quarters, you may be considered a “small supplier” and might not need to register for GST/HST immediately. However, once you cross that threshold, registration is mandatory.
Being a Non-Resident Importer (NRI)
Many UK sellers choose to act as a Non-Resident Importer (NRI). This allows you to clear goods through Canadian customs in your own company name. It simplifies the process for your customers because they won’t be hit with unexpected duties or taxes upon delivery. Working with ecommerce accountants who understand NRI status is vital to ensure you aren’t overpaying on import duties.
Comparing the Two: USA vs. Canada Tax Compliance
| Feature |
United States (Sales Tax) |
Canada (GST/HST/PST) |
| Tax Level |
State and Local (No Federal) |
Federal and Provincial |
| Registration Trigger |
Physical or Economic Nexus |
Exceeding $30,000 CAD threshold |
| Marketplace Collection |
Widely handled by platforms |
Mixed (Some GST handled, PST varies) |
| Filing Frequency |
Monthly, Quarterly, or Annually |
Monthly, Quarterly, or Annually |
| Tax Type |
Consumption tax (no input credits) |
Value-added tax (input tax credits available) |
How to Maintain Compliance Without Losing Your Mind
Expanding internationally shouldn’t mean spending forty hours a week on spreadsheets. The key to successful cross border VAT and sales tax management is automation and expert execution.
- Centralize Your Data: Use a system that pulls data from your Shopify, Amazon, or eBay stores directly.
- Monitor Your Thresholds: You need to know the moment you are about to hit an economic nexus in California or the GST threshold in Canada.
- Register Early: Don’t wait until you’ve already made thousands of dollars in sales to register. Retroactive tax bills often come with heavy penalties.
- Partner with Professionals: Trying to DIY US sales tax is a recipe for a compliance headache.
As a global tax compliance suite, Sterlinx Global handles the end-to-end process. We take your raw transaction data, calculate the liabilities, and complete the filings for you in the UK, USA, and Canada. Whether you are navigating B2B vs B2C business models or managing bulk shipments, we ensure the math is right every time.
Why You Need an Ecommerce Accountant UK for Global Growth
If you are a UK-based business, you need an ecommerce accountant who understands both local HMRC rules and international requirements. You don’t want a traditional accountant who only looks at your year-end accounts; you need a compliance partner who understands the daily pace of digital sales.
Managing cross-border expansion involves more than just tax. It’s about understanding how your UK bookkeeping integrates with your US sales tax filings. It’s about knowing when to register for GST in Canada to claim back the tax you paid on your inputs.
by Ariful | Feb 26, 2026 | UK Updates
The Points-Based System: How Late Submissions Accumulate
HMRC now uses a points-based system for late VAT returns. This system treats every late submission as a “point.” Once you hit a specific threshold based on your filing frequency, you are hit with a mandatory £200 financial penalty.
Understanding Your Thresholds
The number of points you can accumulate before a financial penalty is triggered depends on how often you file:
- Annual Filers: 2-point threshold.
- Quarterly Filers: 4-point threshold.
- Monthly Filers: 5-point threshold.
For every late submission after you hit the threshold, you will receive an additional £200 fine. The points do not reset automatically just because you paid the fine; you must meet specific “compliance periods” to reset your score to zero. This makes consistent, daily data management essential.
Late Payment Penalties: The Tiered Cost of Delay
While the points system handles submissions, a separate tiered system handles late payments. HMRC has removed the old “default surcharge” and replaced it with a system that penalizes you faster based on how long the debt remains unpaid.
- Up to 15 Days Late: You will not be charged a penalty if you pay in full or stay within this grace period, but you will still be charged HMRC late payment interest (currently at base rate plus 2.5%).
- Between 16 and 30 Days Late: A first penalty of 2% is calculated on the amount you owe at day 15.
- 31 Days or More Late: A first penalty of 2% (on the day 15 balance) plus a second penalty of 2% (on the day 30 balance). Additionally, a second penalty is calculated at a daily rate of 4% per year on the outstanding balance.
From April 2025 and moving into 2027, these rates are scheduled to become even more aggressive. If you are managing a high-growth business, these percentages can quickly erode your margins.
Why This Matters for UK Limited Company Accounting
For a UK limited company accounting structure, compliance is a reflection of the business’s health. Late filings and accumulated penalty points can flag your company for further investigation or audits.
Cash Flow Disruption
Penalties and interest are non-deductible expenses. Every pound paid to HMRC in fines is a pound taken directly from your net profit. For businesses scaling rapidly, especially in the competitive retail or service sectors, losing 4% of a large VAT bill to penalties can disrupt stock purchasing or payroll.
Reputation with HMRC
HMRC maintains a record of your compliance history. Consistent late filing makes it much harder to negotiate “Time to Pay” arrangements if you ever face a genuine financial crisis. By staying compliant now, you build the “trust equity” you might need later.
Immediate Steps to Avoid VAT Penalties
You do not need to be a tax expert to avoid these fines, but you do need a system. If you are looking for an ecommerce accountant UK or a general compliance partner, you should ensure they follow these steps:
1. Centralize Your Financial Data
Whether you use Shopify, Amazon, or traditional invoicing, all data must flow into a central system daily. Waiting until the end of the quarter to “gather receipts” is the fastest way to miss a deadline.
2. Monitor Your Points Total
Check your HMRC online account regularly. If you have already incurred points, you must be hyper-vigilant. To reset your points, you generally need to file all returns on time for a full year and ensure all outstanding returns from the previous 24 months are submitted.
3. Act Quickly on Payment Difficulties
If you realize you cannot pay your VAT bill, do not simply ignore the filing. Always file your return on time. Filing on time avoids the submission points, even if the payment is late. Once filed, contact HMRC immediately to propose a Time to Pay (TTP) arrangement. If an agreement is reached, the late payment penalty is usually suspended.
How Sterlinx Global Protects Your Business
At Sterlinx Global, we don’t just “advise” on tax; we execute the compliance. We are the engine room that keeps your business running smoothly across borders. Our approach is designed to eliminate the risk of HMRC penalties through a structured, data-led process.
Full Suite Compliance in the UK
For our clients in the UK, Ireland, USA, Canada, and Australia, we provide a comprehensive Full Compliance Suite. This includes:
- Ongoing Bookkeeping: We process your data as it happens, not months later.
- Precise Tax Calculations: We ensure your VAT, GST, or Sales Tax is calculated accurately to avoid overpayment or underpayment.
- Timely Filings: We handle the submission of your returns well ahead of the deadline to ensure you never accumulate penalty points.
- Year-End Accounts: We manage the full cycle, from daily entries to year-end statutory filings.
Expanding into Europe
If your business is expanding into Germany, France, Italy, Spain, or the Netherlands, we provide VAT compliance only. While we focus on the Full Compliance Suite in the UK, Ireland, USA, Canada, and Australia, our EU services ensure your VAT registrations and VAT filings are handled by specialists in each jurisdiction.
The Cost of Inaction vs. The Value of Compliance
The HMRC penalty update is a clear signal: the government wants digital, timely, and accurate data. Businesses that rely on manual spreadsheets or “once-a-year” accounting are at the highest risk.
By partnering with a global compliance suite like Sterlinx Global, you move the burden of deadlines from your desk to ours. You provide the data, and we ensure the compliance is completed, filed, and settled. This allows you to focus on growth while we handle the “heavy lifting” of the UK tax system.
Frequently Asked Questions
What happens if I file on time but cannot pay?
You will avoid receiving a submission penalty point, but you will still be charged late payment interest and potentially a late payment penalty. It is always better to file on time and negotiate payment than to do nothing.
Can I appeal a VAT penalty?
Yes, if you have a “reasonable excuse” (such as a death in the family, unexpected hospital stay, or a major tech failure at HMRC’s end). However, “relying on someone else to file” is generally not accepted as a reasonable excuse by HMRC.
by Ariful | Feb 26, 2026 | E-Commerce
Recording Marketplace Payouts as “Sales”
This is perhaps the most common error made by new ecommerce sellers. When Amazon or Shopify deposits money into your bank account, that figure is not your “sales” total. It is a net figure, your gross sales minus marketplace fees, shipping costs, refunds, and advertising spend.
The Risk: If you only record the bank deposit, you are under-reporting your true turnover and under-claiming your business expenses. This skews your profit margins and makes your VAT returns fundamentally incorrect.
The Fix: You must record the gross sales figure. This means identifying the total amount the customer paid and then recording the platform fees as a separate expense. Using automated tools that sync with your accounting software ensures that Amazon accounting is handled with precision, capturing every penny of revenue and every cent of cost.
Ignoring the Complexity of Cross-Border VAT
Many accountants are comfortable with standard UK VAT, but they break out in a cold sweat when you mention OSS (One-Stop Shop), IOSS (Import One-Stop Shop), or US Sales Tax. If you are selling to customers in the EU or the USA, your bookkeeping needs to reflect the tax laws of those jurisdictions.
The Risk: Treating an international sale as a standard UK sale can lead to double taxation or, worse, non-compliance with foreign tax authorities. HMRC and international tax bodies are increasingly sharing data; they will notice if the numbers don’t add up.
The Fix: Partner with a firm that understands cross-border VAT. You need to categorize your sales based on the customer’s location and the relevant tax threshold. We specialize in these complex international structures, ensuring you are registered in the right places and paying the right amounts, whether it’s UK VAT or EU-wide compliance.
Under-Declaring Your Real Turnover
In the eyes of HMRC, your turnover is the total value of your sales before any deductions. Some sellers mistakenly believe they only need to register for VAT when their “take-home” pay hits the threshold.
The Risk: If your gross sales exceed £90,000 (the current UK threshold), you must register for VAT. Failing to do so because you were only looking at bank deposits can result in backdated tax bills and heavy penalties. Knowing what happens if you go above the VAT threshold is critical for any growing business.
The Fix: Monitor your rolling 12-month turnover constantly, not just at year-end. If you are approaching the limit, prepare your systems for VAT registration immediately. This prevents a “tax shock” where you suddenly owe 20% on sales you didn’t charge VAT on.
Poor Inventory Tracking and COGS Mismanagement
Bookkeeping isn’t just about cash in and cash out; it’s about Cost of Goods Sold (COGS). A common mistake is recording the entire cost of a bulk stock purchase as an expense the moment you pay for it.
The Risk: This creates “lumpy” financial statements. One month looks like a massive loss (when you buy stock), and the next five months look like massive profits (as you sell it). You won’t have a clear picture of your actual profitability, making it impossible to make informed decisions about scaling or ad spend.
The Fix: Implement a robust inventory management system. You should only record the cost of an item as an expense when that item is sold. This allows you to see your true gross margin and ensures your balance sheet accurately reflects the value of the stock sitting in your warehouse or FBA center.
Mishandling Returns and Refunds
In ecommerce, returns are a fact of life. However, many sellers fail to document them correctly in their books, often just deleting the original sale or ignoring the refund transaction entirely.
The Risk: This leads to a digital audit trail that doesn’t match your bank statements or marketplace reports. If HMRC investigates, they will see discrepancies between your reported sales and your actual activity, which often triggers a deeper, more stressful audit.
The Fix: Record every refund as a separate transaction. This maintains a clean audit trail and ensures you are reclaiming any VAT previously paid on those sales. Proper documentation is the best defense against a tax inquiry.
Mixing Personal and Business Finances
When you are starting out, it’s tempting to buy a few supplies on a personal card or pay a business bill from a personal account. For a UK limited company, this is a major red flag.
The Risk: A limited company is a separate legal entity. Mixing funds makes it difficult to track business performance and can jeopardize the “limited liability” protection of your company. It also makes your accountant’s job significantly harder (and more expensive) as they have to untangle your personal life from your business operations.
The Fix: Maintain strict separation. Every single business transaction must go through your business bank account. If you need to put personal money into the business, record it as a director’s loan. This keeps your UK limited company accounting clean and professional.
The “Year-End” Panic (Waiting Too Long)
Many sellers view bookkeeping as a once-a-year task to be dealt with before the tax deadline. In the fast-moving world of ecommerce, this is a recipe for disaster.
The Risk: By the time you look at your books in January, a mistake made the previous May has compounded. You might have been losing money on a product line for months without realizing it, or you might have missed a critical VAT deadline.
The Fix: Move to real-time bookkeeping. Using cloud-based software like Xero or QuickBooks, integrated with your sales platforms, allows you to see your financial health daily. We recommend monthly management accounts so you can spot trends, fix errors early, and scale with confidence. Knowing when to hire an accountant who understands digital sales is the first step toward this peace of mind.
Why Sterlinx Global is Different
Most accounting firms can handle a local shop or a consultancy firm. But ecommerce is different. It’s global, it’s 24/7, and it involves complex data streams from multiple countries.
At Sterlinx Global Ltd, we specialize in the areas other firms avoid. We don’t just “do the books”, we provide a strategic partnership for UK limited companies selling online across multiple jurisdictions.
by Ariful | Feb 26, 2026 | E-Commerce
Recording Marketplace Payouts as “Sales”
This is perhaps the most common error made by new ecommerce sellers. When Amazon or Shopify deposits money into your bank account, that figure is not your “sales” total. It is a net figure, your gross sales minus marketplace fees, shipping costs, refunds, and advertising spend.
The Risk: If you only record the bank deposit, you are under-reporting your true turnover and under-claiming your business expenses. This skews your profit margins and makes your VAT returns fundamentally incorrect.
The Fix: You must record the gross sales figure. This means identifying the total amount the customer paid and then recording the platform fees as a separate expense. Using automated tools that sync with your accounting software ensures that Amazon accounting is handled with precision, capturing every penny of revenue and every cent of cost.
Ignoring the Complexity of Cross-Border VAT
Many accountants are comfortable with standard UK VAT, but they break out in a cold sweat when you mention OSS (One-Stop Shop), IOSS (Import One-Stop Shop), or US Sales Tax. If you are selling to customers in the EU or the USA, your bookkeeping needs to reflect the tax laws of those jurisdictions.
The Risk: Treating an international sale as a standard UK sale can lead to double taxation or, worse, non-compliance with foreign tax authorities. HMRC and international tax bodies are increasingly sharing data; they will notice if the numbers don’t add up.
The Fix: Partner with a firm that understands cross-border VAT. You need to categorize your sales based on the customer’s location and the relevant tax threshold. We specialize in these complex international structures, ensuring you are registered in the right places and paying the right amounts, whether it’s UK VAT or EU-wide compliance.
Under-Declaring Your Real Turnover
In the eyes of HMRC, your turnover is the total value of your sales before any deductions. Some sellers mistakenly believe they only need to register for VAT when their “take-home” pay hits the threshold.
The Risk: If your gross sales exceed £90,000 (the current UK threshold), you must register for VAT. Failing to do so because you were only looking at bank deposits can result in backdated tax bills and heavy penalties. Knowing what happens if you go above the VAT threshold is critical for any growing business.
The Fix: Monitor your rolling 12-month turnover constantly, not just at year-end. If you are approaching the limit, prepare your systems for VAT registration immediately. This prevents a “tax shock” where you suddenly owe 20% on sales you didn’t charge VAT on.
Poor Inventory Tracking and COGS Mismanagement
Bookkeeping isn’t just about cash in and cash out; it’s about Cost of Goods Sold (COGS). A common mistake is recording the entire cost of a bulk stock purchase as an expense the moment you pay for it.
The Risk: This creates “lumpy” financial statements. One month looks like a massive loss (when you buy stock), and the next five months look like massive profits (as you sell it). You won’t have a clear picture of your actual profitability, making it impossible to make informed decisions about scaling or ad spend.
The Fix: Implement a robust inventory management system. You should only record the cost of an item as an expense when that item is sold. This allows you to see your true gross margin and ensures your balance sheet accurately reflects the value of the stock sitting in your warehouse or FBA center.
Mishandling Returns and Refunds
In ecommerce, returns are a fact of life. However, many sellers fail to document them correctly in their books, often just deleting the original sale or ignoring the refund transaction entirely.
The Risk: This leads to a digital audit trail that doesn’t match your bank statements or marketplace reports. If HMRC investigates, they will see discrepancies between your reported sales and your actual activity, which often triggers a deeper, more stressful audit.
The Fix: Record every refund as a separate transaction. This maintains a clean audit trail and ensures you are reclaiming any VAT previously paid on those sales. Proper documentation is the best defense against a tax inquiry.
Mixing Personal and Business Finances
When you are starting out, it’s tempting to buy a few supplies on a personal card or pay a business bill from a personal account. For a UK limited company, this is a major red flag.
The Risk: A limited company is a separate legal entity. Mixing funds makes it difficult to track business performance and can jeopardize the “limited liability” protection of your company. It also makes your accountant’s job significantly harder (and more expensive) as they have to untangle your personal life from your business operations.
The Fix: Maintain strict separation. Every single business transaction must go through your business bank account. If you need to put personal money into the business, record it as a director’s loan. This keeps your UK limited company accounting clean and professional.
The “Year-End” Panic (Waiting Too Long)
Many sellers view bookkeeping as a once-a-year task to be dealt with before the tax deadline. In the fast-moving world of ecommerce, this is a recipe for disaster.
The Risk: By the time you look at your books in January, a mistake made the previous May has compounded. You might have been losing money on a product line for months without realizing it, or you might have missed a critical VAT deadline.
The Fix: Move to real-time bookkeeping. Using cloud-based software like Xero or QuickBooks, integrated with your sales platforms, allows you to see your financial health daily. We recommend monthly management accounts so you can spot trends, fix errors early, and scale with confidence. Knowing when to hire an accountant who understands digital sales is the first step toward this peace of mind.
Why Sterlinx Global is Different
Most accounting firms can handle a local shop or a consultancy firm. But ecommerce is different. It’s global, it’s 24/7, and it involves complex data streams from multiple countries.
At Sterlinx Global Ltd, we specialize in the areas other firms avoid. We don’t just “do the books”, we provide a strategic partnership for UK limited companies selling online across multiple jurisdictions.
by Ariful | Feb 26, 2026 | European VAT
Why Cross-Border Compliance is Different (and why general accounting isn’t enough)
Most accounting firms focus on “within-the-borders” compliance. They understand your local tax return, but they might not understand how a UK-based company storing goods in a German warehouse affects your VAT liability in France.
Cross-border accountancy requires a deep understanding of international treaties, import/export evidence, and digital tax thresholds. If you get it wrong, you face hefty fines, seized shipments, and banned seller accounts. If you get it right, you unlock a seamless global supply chain.
UK VAT (Post-Brexit): the rules that decide what you charge and what you file
Brexit changed how goods move between the UK and EU. The UK VAT system now operates independently, and your VAT treatment depends heavily on where the goods are at the time of sale and the consignment value.
UK VAT (authoritative definition)
UK VAT is a consumption tax administered by HMRC. You must register and submit VAT Returns when required, charging VAT where the rules say your supply is taxable in the UK.
The £135 consignment rule (goods sold into the UK)
For goods sold to UK customers from outside the UK, the £135 threshold is critical:
- Consignments under £135: you usually charge UK VAT at checkout and pay it to HMRC via your VAT Return. This reduces delivery friction and avoids “surprise fees” for customers.
- Consignments over £135: VAT is typically handled at import (often collected by the courier), unless you use Postponed VAT Accounting (PVA) where applicable, improving cash flow.
EORI numbers: don’t ship without it
You can’t move commercial goods into or out of the UK without an EORI (Economic Operator Registration and Identification) number. If you’re setting up a UK structure, company formation for non-UK residents can help you streamline your registrations and ongoing compliance.
Why specialist support matters in the UK
HMRC increasingly checks whether:
- VAT returns match marketplace and payment processor data
- import declarations align with your bookkeeping
- zero-rated exports have proper evidence
This is why working with specialist ecommerce accountants protects you from costly inconsistencies and VAT queries.
EU VAT: OSS, IOSS, and when you still need local registrations
The EU introduced OSS/IOSS to simplify consumer VAT reporting, but your obligation still depends on where stock is held and how goods enter the EU. For the official EU overview (useful to sanity-check terminology and scheme scope), refer to the European Commission’s Value Added Tax (VAT) page.
OSS (One Stop Shop) — authoritative definition
OSS is an EU reporting scheme that allows you to declare certain B2C sales across EU member states in a single return filed in one member state, instead of registering in every country for those specific sales.
Use OSS when:
- you sell B2C goods to customers in other EU countries, and
- you’re making supplies that qualify for OSS reporting
IOSS (Import One Stop Shop) — authoritative definition
IOSS is used for distance sales of imported goods into the EU with a value of €150 or less, allowing VAT to be charged at checkout. This prevents customers receiving import VAT demands on delivery, which protects conversion rates and reduces returns.
Key points:
- Benefit: charge VAT at checkout → fewer delivery issues and better customer experience
- Catch for non-EU businesses: you generally must appoint an EU-based intermediary to use IOSS. We can support you as a cross-border compliance partner and coordinate the moving parts.
New EU change to watch: €3 customs duty on parcels under €150 (from July 2026)
If you sell into the EU, build this into your pricing and customer messaging now.
From July 2026, the EU is introducing a new €3 customs duty on parcels with an intrinsic value of under €150. This matters because €150 is also the key IOSS value limit, so many ecommerce shipments sit in this band.
What you should do (and why it helps):
- Update landed cost assumptions (product + shipping + VAT + duties/fees) now to protect margin.
- Review checkout messaging to reduce “surprise cost” complaints and chargebacks.
- Keep your IOSS and customs data clean (product values, HS codes, origin evidence) to minimise border delays.
Local EU VAT registrations: the “inventory location” rule
OSS does not remove the need for local registrations when you hold stock in an EU country.
You typically need a local VAT registration if you:
- store inventory in that country (e.g., Amazon FBA/3PL)
- move stock between EU countries
- have local domestic sales that require local reporting
Example: stock in Poland usually means you need a Polish VAT number—even if you use OSS for eligible cross-border B2C sales.
USA compliance: sales tax (not VAT), 1099-K reporting, and the nexus rules that trigger registrations
The USA does not operate VAT. Instead, sales tax is state-led, which means your obligations depend on where you have nexus.
Just as importantly, US marketplaces and payment platforms can trigger information reporting that impacts your bookkeeping and tax workflow—even if you’re not US-based.
US sales tax — authoritative definition
US sales tax is a state (and sometimes local) consumption tax collected on taxable retail sales to end customers. Rules, rates, and filing requirements vary by state.
Nexus — authoritative definition
Nexus is the connection between your business and a US state that creates a requirement to register, collect, and remit sales tax.
Common triggers:
- Physical nexus: inventory (including FBA stock), employees, offices, or other physical presence in a state
- Economic nexus: exceeding a state’s sales threshold (e.g., $100,000 or $200,000 in annual sales into that state)
- Click-through nexus: referral payments to in-state affiliates or influencers
- Marketplace facilitator: if a platform (Amazon, eBay, Shopify) meets nexus, you may still owe tax even if you don’t directly trigger it
Where you have nexus, you must register for sales tax and file returns (frequency varies by state: monthly, quarterly, or annually).
1099-K and information reporting (a crucial cross-border pain point)
1099-K is a US information return filed by payment facilitators (PayPal, Stripe, Amazon Payments) reporting payment card transactions. For non-US businesses, this creates two problems:
- Problem 1: Your UK/EU bookkeeping may not be structured the same way the 1099-K is reported, creating reconciliation friction if you file US taxes.
- Problem 2: A high 1099-K threshold can trigger US tax filing obligations even if you have no US nexus or US employees.
For UK-based businesses selling into the USA, you typically need either a US tax ID (EIN) or Foreign Tax ID (ITIN), plus a W-8BEN form to claim treaty benefits and reduce withholding.
Working with cross-border tax specialists ensures your 1099-K data matches your accounts and that you’re not overpaying US taxes or missing filing deadlines.
What triggers a US tax obligation for non-US businesses
- Sales nexus (physical or economic) + filing requirement = sales tax liability
- 1099-K reporting = information sharing to the IRS; may trigger a filing obligation if the IRS inquires
- US source income (e.g., affiliate commissions, rental income) = federal tax return filing obligation
- US entity ownership (forming a US LLC or C-Corp) = separate US tax return filing
