Selling Internationally: Sales Tax Tips for U.S.-Based Tech Companies

As U.S.-based tech companies expand their reach across global markets, many discover that selling internationally introduces a new level of complexity—especially when it comes to sales tax and VAT compliance.

Whether you're offering SaaS products, downloadable software, digital subscriptions, or API services, international sales come with tax rules that vary by country, product type, and customer (B2B vs. B2C). Failing to comply with foreign tax laws could result in penalties, lost revenue, or even blocked access to markets.

In this article, we’ll break down key sales tax tips for U.S. tech businesses selling internationally—and how Manage My Sales Tax can help you stay compliant while growing globally.

Do U.S.-Based Companies Need to Collect Foreign Sales Tax?

Yes—in many cases.

If your company has customers in Canada, the UK, the EU, Australia, or other countries, you may be required to register, collect, and remit VAT or GST, even without a physical presence there. Many jurisdictions have adopted economic nexus thresholds, just like U.S. states.

For example:

• European Union (EU): VAT must be collected on B2C digital sales, regardless of company location.

• Australia: Requires 10% GST collection from foreign sellers on digital goods and services if you exceed AUD 75,000 in sales.

• United Kingdom: Requires VAT registration for non-UK sellers of digital services to UK consumers.

Sales Tax Tips for International Selling

1. Know Your Product’s Taxability

Digital goods and software services are usually taxable in international jurisdictions. However, the classification of your product (SaaS, license, subscription, etc.) can impact whether and how tax applies.

Example: In the EU, SaaS is generally taxed as an electronically supplied service, subject to VAT in the buyer's location.

2. Distinguish Between B2B and B2C

• B2B: Sales to registered businesses may be reverse charged (the buyer handles the tax).

• B2C: Sales to individuals usually require you to collect VAT/GST at the point of sale.

Tip: Collect valid VAT IDs for your B2B clients to support your reverse charge reporting.

3. Track Thresholds by Country

Each country has its own economic thresholds that trigger tax obligations. Some countries require registration from the first dollar, while others have minimum sales thresholds.

Example: The EU’s OSS (One-Stop Shop) system streamlines VAT compliance—but only if you’re registered and reporting correctly.

4. Use Geo-IP & Billing Address Validation

To determine the right VAT/GST rate, you may need to validate customer location using two non-conflicting pieces of evidence (e.g., billing address + IP address).

5. Don’t Assume U.S. Sales Tax Covers Everything

U.S. sales tax is completely separate from VAT/GST. International tax compliance is a parallel obligation that requires separate registration, filing, and remittance systems.

What Happens If You Don’t Comply?

• Blocked Payments: Some marketplaces and payment processors will withhold funds if you can’t prove VAT registration.

• Fines & Penalties: Noncompliance with foreign tax authorities can result in steep penalties.

• Reputational Damage: Clients may hesitate to work with companies that don’t provide compliant invoices or pricing transparency.

Selling Internationally: Sales Tax Tips for U.S.-Based Tech Companies

Expanding your business globally brings exciting opportunities—but also complex tax responsibilities. That’s why understanding Selling Internationally Sales Tax Tips for U.S.-Based Tech Companies is so important. From navigating VAT in foreign markets to staying compliant with U.S. export rules, having a tax strategy tailored to cross-border digital sales can protect your bottom line and ensure a smoother international launch.

How Manage My Sales Tax Helps You Go Global

At Manage My Sales Tax, we guide U.S.-based tech companies through the often-confusing sales tax challenges that come with selling across borders—especially when digital products and international customers are involved.

Here’s how we support your expansion:

• U.S. Sales Tax Compliance – We manage your sales tax registrations, calculations, and timely filings across multiple U.S. states, ensuring full compliance as your business grows.

• Nexus & Exposure Review – We assess where your U.S. operations and international sales may trigger sales tax obligations under economic nexus laws.

• Product Taxability Analysis – We help you determine whether your SaaS, software, or API is taxable in different U.S. states and advise on proper classification.

With over 20 years of experience in U.S. sales tax compliance and a deep understanding of tech-driven businesses, we equip you with the insights and support you need to scale confidently and responsibly.

Expand Globally—with U.S. Sales Tax Compliance Handled

Going global is an exciting step for any tech business—but selling internationally can create complex sales tax exposure in the U.S. At Manage My Sales Tax, we help you stay compliant with multi-state U.S. sales tax rules while offering guidance on what to consider as your business reaches global markets.

With our expert support, you can scale your tech company with confidence—knowing your U.S. sales tax obligations are covered.

👉 Visit our website at https://www.managemysalestax.com/ to schedule a free consultation and get tailored guidance for your growing digital business.

Book your FREE consultation with our sales tax experts today!

👉 https://lisajonescpa.youcanbook.me/