Sales Tax, VAT & Marketplace Nexus Compliance for Ecommerce

Shopify does not decide that for you. You must collect sales tax in every state where you have nexus — either physical presence (inventory, staff, an office, stock held in a fulfilment centre) or economic nexus, which is triggered by revenue or transaction volume into that state. Shopify will calculate and collect tax only in the states you have already registered in and switched on, and it does not tell you when a new state obligation begins. TaxDo tracks your sales against every state's current threshold, tells you when registration is required, opens the registration, and files the returns.

No. Marketplaces such as Amazon, eBay, Etsy and Walmart collect and remit tax on the sales made through them under marketplace facilitator laws, but they do not file your returns, and they do not cover sales made through your own store, wholesale orders or any other channel. Shopify, WooCommerce, BigCommerce and Magento calculate tax at checkout but never file — the registration, the return and the liability stay with you. TaxDo prepares, files and remits the return for every jurisdiction you are registered in, and reconciles marketplace-collected sales against your direct sales on the same return.

When you cross that state's economic nexus threshold, or the moment you establish physical presence there. Most states have standardised on 100,000 US dollars of revenue measured over a rolling twelve-month or calendar-year period; California and Texas sit at 500,000 dollars, and several states have removed transaction-count triggers entirely. The measurement period, the sales included (gross, retail or taxable) and whether marketplace sales count toward the threshold all differ by state. TaxDo measures your revenue and transaction counts against each state's current rule, alerts before you cross, and projects the date you will cross at your current growth rate.

In most states, yes. Owning inventory in a state creates physical presence nexus with no employees, office or revenue threshold involved. Amazon FBA redistributes stock across its fulfilment centre network without seller approval, so an FBA seller can acquire physical presence in a dozen states without ever deciding to. The same applies to third-party logistics providers and consignment stock. TaxDo tracks where your inventory physically sits against every state's physical presence rules alongside economic nexus, so a registration obligation surfaces before an audit does.

Usually yes, if you are registered in that state. Many states require registered sellers to report marketplace-collected sales as gross sales and then deduct them, rather than omitting them. Reporting only your direct sales understates gross receipts and is a common trigger for a notice. Marketplace sales also still count toward the economic nexus threshold in a number of states even though the marketplace remitted the tax. TaxDo separates marketplace-collected sales from your own direct sales per state, applies each state's reporting treatment, and files accordingly.

If you are established in the EU, distance sales to consumers in other member states are covered by a single pan-EU threshold of 10,000 euros, after which you either register in each destination country or, far more commonly, file a single One Stop Shop (OSS) return covering all of them. If you are established outside the EU, there is no threshold — the obligation applies from the first sale, through OSS for goods already inside the EU and Import One Stop Shop (IOSS) for goods shipped from outside. TaxDo determines which registration you actually need, opens it, applies destination VAT rates at checkout and files the OSS or IOSS return.

IOSS (Import One Stop Shop) lets a seller charge EU import VAT at checkout on consignments valued at 150 euros or less and report it through one monthly return, instead of the customer being billed VAT and a handling fee on delivery. The VAT mechanism is unchanged. What changed is customs duty: the EU Council agreed to levy a fixed 3 euro customs duty on small consignments valued under 150 euros entering the EU as of 1 July 2026, as a temporary measure ahead of the wider customs reform. Sellers shipping low-value parcels into the EU now carry a duty cost per parcel that has to be priced, disclosed and reconciled. TaxDo manages IOSS registration and filing and applies the correct landed-cost treatment at checkout.

Often, and the rules diverge sharply. In the US, digital goods, streamed content, software and SaaS are taxable in a substantial number of states and exempt in others, with definitions that turn on whether the product is downloaded, streamed or accessed remotely. In the EU and UK, electronically supplied services are taxed where the customer is located, with no registration threshold for non-established sellers, and you must hold evidence of the customer's location. TaxDo maintains taxability by product type per jurisdiction and applies it per line item, including recurring subscription billing and mid-term plan changes.

The liability is the tax you never collected, plus interest and penalty, and in most states it runs from the date nexus was established with no statute of limitations while you remain unregistered. Registering normally without addressing the back period invites the state to ask how long you have been selling. A voluntary disclosure agreement (VDA) is the standard route: it typically limits the look-back to three or four years and waives penalties. TaxDo quantifies historical exposure per state from your own order history first, so the decision to file a VDA is made against a number rather than a guess.

Connecting a store or marketplace is a credentialed connection, not an implementation project — most sellers are live the same day. Historical orders are imported on connection, so your exposure position is calculated from real transaction history rather than from the day you signed up. Native connectors cover the major e-commerce platforms, marketplaces, payment processors and accounting and ERP systems, and anything else connects through REST APIs, webhooks and batch file import. Custom-built and headless storefronts use the same calculation API as the native connectors.