Black Friday and Cyber Monday Can Push Sellers Into New Tax Liabilities

International tax authorities have their eyes on the holiday shopping calendar as an opportunity to extend their tax net on eCommerce retailers.

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Biggest shopping days of the year in EU and US

Retailers will usually generate more sales in Q4 2019 than during the preceding 3 quarters combined. Peak festive shopping days in the EU and US will tip thousands of online merchants over annual VAT and sales tax selling thresholds in new territories. This will mean that they may need to register and collect local taxes for the first time.

Sales will spike in both regions at the start of the December, potentially pushing EU sellers over the EU VAT Distance Selling country thresholds. Similarly, EU sellers into the US run the risk of going over remote seller sales tax thresholds.

The latter has become the hot tax zone following the 2018 Wayfair Supreme Court ruling, which has enabled almost 45 states to tax EU and other foreign sellers for the first time.

The key dates are:

29th November – Black Friday: A Thanksgiving tradition exported from the US where
high street and online retailers push their biggest discounts. It’s a hugely popular
time to shop for tech – from smartphones to laptops.

2nd December – Cyber Monday: The biggest online shopping day in the US, with
online sales totalling around $8billion for 2018. It’s now well embedded in Europe, too.
Its origins were around encouraging small e-retailers competing with the large
brands

VAT and Sales Tax thresholds trap distracted sellers

This manic selling period often distracts sellers from being aware or tracking their thresholds, and the authorities are all too aware of this.

EU countries and US state annual thresholds require sellers to register and report local tax.

You can check the EU thresholds here and US state thresholds here handily supplied by tax experts Avalara.

“The tax authorities in the EU and US have been investing heavily on staff and analytic software to spot sellers who have passed these thresholds. A number – including Germany, France, Italy and Austria – are requiring marketplaces to report sellers’ transactions in detail.

In the US, similar marketplace responsibilities have been rolled out. Many new marketplace obligations include the power for tax authorities to force platforms to block offending sellers. This means it is more important than ever that sellers identify if they are over any tax threshold.” – Richard Asquith, VP Global Indirect Tax, Avalara

Are you likely to push into new liabilities this Q4? Let us know in the comments below or over in our Facebook Group.