Taxes around the world - Creator’s guide to selling digital products globally

You’ve probably heard the famous saying: "In this world, nothing is certain except death and taxes." Hard to argue with that, right? Taxes are... everywhere.

And while each has its specific purpose, one particularly affects our wallets - consumption tax. This tax applies almost worldwide, and although it theoretically burdens the customer, in practice, its calculation and payment fall on the creator.

That’s our focus here, as you, the creator, will need to add this tax to your products and services (or rather, Easytools will do it automatically).

Let’s see how it works in practice and whether there’s really anything to fear!

Digital products and services

First, let’s clarify what digital products are, as the type of your product or service determines the tax you must pay.

There’s no single, universal definition of a digital product or service. Each country, and even some states, counties, or municipalities, has its own version of what qualifies as a digital product.

Still, certain features are common to most definitions. Generally speaking, a digital product is:

• content or service delivered via the Internet - often through email, website downloads, or access granted after logging into a platform,
• a product that exists in digital form and is created by a creator operating in a digital environment.

💡 The term "digital product" is elusive – it’s constantly changing and evolving. New solutions emerge daily, and technology is advancing rapidly. Something that doesn’t fit the definition today might very well qualify as a digital product tomorrow.

Digital products are inseparably linked to technology - they couldn’t exist without a digital environment. However, there’s another crucial feature that appears in some definitions, like in the European Union or the UK: the delivery of a digital product must be automated and require minimal human intervention.

💡 From January 2025, the EU treats live, instructor-led online courses similarly to on-demand products — this division is gradually losing significance, and the classification of products and tax rates is becoming standardized.

Here’s a list of the most popular examples of digital products:

• e-books,
• images, illustrations, graphics - downloadable or automatically emailed,
• video games - both downloadable and online,
• online courses and e-learning materials,
• subscriptions - services offering access to content or tools on a subscription basis, e.g., Netflix or Spotify,
• software, including SaaS (Software-as-a-Service), PaaS (Platform-as-a-Service), and IaaS (Infrastructure-as-a-Service),
• templates and themes - ready-to-use designs for websites, presentations, or documents,
• music - tracks available for download or streaming on music platforms,
• websites and web hosting services.

Remember not to treat this list as “fixed.” For instance, software is taxable in 25 U.S. states, and in 7 states, only if the customer needs to download it. Some states consider software a service, while others see it as a product. In Hawaii, it’s taxed as a service since services are generally taxable there. Meanwhile, in Florida, where services aren’t taxed, it’s also treated as a service, so no tax is added.

💡Fortunately, with Easytools, you don’t have to worry about this because you declare your product category, and we ensure the correct rate is applied in the specific jurisdiction. And there are tons of these rates!

Why should digital creators care about consumption tax?

Consumption tax is a topic you can’t ignore if you’re a digital creator. We live in an era where selling digital products and services knows no borders. You can sell them globally — as long as your potential customer has Internet access. And you, whether offering e-books, online courses, music, graphics, or software, must charge the appropriate tax rate according to applicable regulations.

Taxes often evoke fear. Many see them as a necessary evil complicating life. But really, it’s about charging the correct tax rate — if you even need to — and then remitting the collected funds to the respective tax authority. Unlike income taxes, which are based on earnings, consumption taxes are based on what people spend (and where they are) rather than how much you earn.

What about the rate? It usually depends on your customer’s location, but don’t panic. While it may seem complex at first glance, it’s not! There are plenty of solutions to help you. For instance, many systems automatically calculate the appropriate tax rate based on the customer’s location.

📢 Digital products are a unique and rapidly growing industry, forcing countries to regularly adjust regulations. For years, many countries ignored this sector until realizing they were losing significant revenue. As a result, regulations were introduced requiring the addition of the tax applicable in the customer’s country — and then settling it with the local tax office.

A potential solution to this problem is using a so-called Merchant of Record (MoR) — essentially a company that sells your products in its name, appears on invoices and receipts, and takes care of compliance and taxes for you. Sounds ideal?

Unfortunately, it’s not ideal for everyone. While MoR has its advantages for some businesses, for digital creators, it can cause additional problems and is much more expensive than handling taxes independently. Moreover, typical creator products like courses or e-books often don’t fall under the catalog MoR handles, as they focus more on SaaS and software sales.

You can read more about MoR in this article.

Fortunately, as a global creator, you can manage taxes independently (with our help) without needing a Merchant of Record like Paddle, Gumroad, or Lemon Squeezy. However, it’s worth having at least a basic understanding of how these taxes work. That’s why we created this guide — to clear up any doubts and make these complex tax matters more approachable! 🙂

What is consumption tax?

Consumption tax is a charge accompanying us at every step — when buying your favorite coffee, paying for groceries, a trip, an e-book, or a Netflix subscription. We’re all its “victims” — almost every transaction is subject to some form of consumption tax, and its amount depends on the rate and product price.

Consumption taxes take various forms depending on the country, and their names may differ. You’ll encounter VAT (Value Added Tax), popular in EU countries, GST (Goods and Services Tax) in Australia, Canada, or Singapore, and sales tax in the U.S. Though they differ in rules and rates, their main goal is to burden the consumer at the time of purchase.

For you as a digital creator, consumption tax is crucial. Whether you sell e-books, online courses, or software, you must remember to add it to your products. Then, acting as an intermediary, you must remit the collected taxes to the tax offices. Soon, you’ll learn how to simplify all this, but first…

Let’s take a closer look at VAT, GST, and sales tax! But before that, let’s explain what a tax jurisdiction is, as it determines which rules and tax rates apply to your transactions. Let’s dive in! 🙂

Tax jurisdiction - What is it and why does it matter?

Tax jurisdiction is an area that has its own tax regulations. Each place can have different rules — setting its own rates, deciding which products and services are taxable, exempt, or zero-rated, determining registration thresholds, etc.

Tax jurisdictions establish their own:

• tax rates - the amount of tax you must pay,
• types of products and services - which are taxable, exempt, or have a zero rate,
• registration thresholds - which determine at what sales level you must register as a tax payer,
• filing deadlines - how often you need to submit tax returns.

[fs-toc-omit]What does this mean for you?

As a creator, you must comply with tax regulations in every country where your customers are located, not just where your business is registered. If you sell e-books or online courses to customers from Spain, Finland, and Alaska, you must adhere to the tax rules in each of those regions. This particularly means calculating and collecting tax based on the buyer’s country and settling with the tax office there.

💡Fortunately, we help you with this at Easytools! If you enable the Easybilling option, we automatically calculate the tax at checkout and provide you with a report, which you or your accountant can use to file your return.

💡You can also use recommended companies that will assist you comprehensively with registration and tax filing in countries where you exceed tax thresholds.

[fs-toc-omit]Why is this important?

Failure to comply with regulations can lead to penalties and legal issues. If you don’t register for tax in a timely manner and fail to charge tax to your customers, and the tax office starts investigating your business, you’ll have to not only pay back taxes but also interest. Additionally, you might face financial penalties. Understanding and applying local tax regulations helps avoid these troubles and ensures compliance with applicable laws.

💡 In practice, many companies openly admit they haven’t paid taxes, reaching astronomical revenue thresholds (in the hundreds of millions). Recently, one was sold for $500 million while having completely unaddressed tax issues. It’s true that, for now, countries aren’t actively enforcing their dues, especially from small creators (some even arbitrarily waive small obligations). However, it doesn’t mean this system won’t tighten in the coming years. If you haven’t addressed this issue yet, you might not need to panic too much right now — but it’s definitely worth taking care of in the future, especially since the possibilities for verifying online transactions are constantly increasing.

It’s not as difficult as it might seem 🙂 In many jurisdictions, such as the U.S., there are high registration thresholds that are hard to exceed. Meanwhile, in Europe, thanks to VAT OSS, you can report sales from 27 EU countries with a single quarterly return. Plus, there are dedicated accounting tools to help you manage taxes — from calculating the correct tax amount, collecting payments, to issuing proper invoices. Easytools also supports you in this!

[fs-toc-omit]Time for details!

Now that you have a general understanding of tax jurisdiction and the consequences of not charging and remitting taxes to the appropriate authorities, let’s look at specific types of taxes that may concern your business — VAT, GST, and sales tax.

[fs-toc-omit]What is VAT (Value-Added Tax)?

VAT, or Value Added Tax, sneaks into every transaction. What does this mean exactly? Value added is the difference between the price at which you sell a good or service and the costs of producing it. In short, VAT is charged at every stage where a product or service gains value.

💡Imagine you’re creating an e-book. You hire a graphic designer to prepare professional illustrations and a cover. Thanks to the designer’s work, your e-book becomes more attractive, allowing you to sell it for a higher price. That difference in value added by the designer is the value added.

As a digital creator, you add VAT to the final price of the product that your customer pays, and ultimately, they pay the VAT (though you must report and remit it). VAT is not, as some claim, neutral for businesses. It actually raises the product price, thus affecting conversion. There’s a significant correlation between the creator earning less as the tax rates increase.

But there’s good news. The VAT you paid at earlier stages of producing your product or service can be deducted from the VAT you collect from customers. Remember the designer who created illustrations for your e-book? You received an invoice from them and paid VAT? That paid VAT is called input VAT. Meanwhile, the VAT your customers pay is referred to as output VAT. At the end of the reporting period, you can deduct input VAT from output VAT and remit the difference to the tax authorities.

VAT operates in many jurisdictions worldwide, including:

• European Union
• United Kingdom
• Norway
• Switzerland
• Bosnia and Herzegovina
• Iceland
• Argentina
• Chile
• Ecuador
• Thailand
• Vietnam
• United Arab Emirates

VAT rates vary by country, ranging from 17% to 27% in the EU. In Switzerland, which is not part of the EU, the standard VAT rate is 7.7%.

[fs-toc-omit]What is GST (Goods and Services Tax)?

GST is very similar to VAT because, like VAT, it is a consumption tax. The ultimate cost of the tax is borne (in theory) by the consumer, not the business. As the seller, you act as an intermediary: you charge the tax and collect it from your customers, then remit it to the appropriate authority at the established rate.

Currently, GST is in effect in 8 countries worldwide:

• Australia
• Canada
• India
• Maldives
• Malaysia
• New Zealand
• Papua New Guinea
• Singapore

Of course, GST tax rates vary by country; for example, in Australia, GST is 10%, while in New Zealand, it’s 15%.

The ability to deduct GST works similarly to VAT — businesses can deduct GST paid when purchasing goods and services needed to operate their business. However, to take advantage of this right, you must meet specific conditions. For example, you can only deduct Australian GST if you register for tax in the standard, not simplified, mode.

[fs-toc-omit]GST, HST, PST, QST, and RST: Canadian consumption tax

GST is a federal consumption tax applicable across Canada. In addition, some provinces introduce their local taxes. For instance, PST, or provincial sales tax, which ranges from 7% to 10%. Some provinces apply PST, while others have their own versions of the tax. Quebec has introduced the Quebec Sales Tax (QST), while Manitoba has a retail sales tax (RST).

Tax rates in Canada are somewhat varied. The 5% GST applies in Alberta, British Columbia, Manitoba, Quebec, Saskatchewan, and Yukon. In Ontario, there’s a 13% HST, while 15% applies in New Brunswick, Newfoundland, and Nova Scotia.

Provinces handle this double taxation in two ways:

• combined tax – five provinces have combined GST with local taxes to create HST, meaning there’s one simplified tax rate;
• separate tax – in some provinces, in addition to GST, you must add the aforementioned PST, QST, or RST; each of these taxes has a separate registration and filing process.

[fs-toc-omit]What is sales tax?

Sales tax in the United States, known as sales tax, is a consumption tax paid at the final purchase of a product by the consumer. In the U.S., there is no national sales tax. Instead, each state and local authority has the ability to set its own regulations and tax rates. And, well, they love to take advantage of that.

As a result, there are over 12,000 tax jurisdictions. Yes, you read that right — TWELVE THOUSAND! This makes compliance with tax regulations complicated. But only seemingly! In the following sections, we’ll explain what tax thresholds are and why we love them! 🙂 Now, let’s return to taxes for a moment.

In the U.S., 45 states and the District of Columbia collect state-level sales tax, while 5 states do not impose such a tax at all. These are:

• Alaska
• Delaware
• Montana
• New Hampshire
• Oregon

38 states also have some form of local sales tax. The tax then has several “levels” — state and local. This results in varying tax rates in the U.S., ranging from 0% to as high as 12%!

💡Worth noting: Most states use a destination-based tax, meaning they consider the customer’s location when determining the tax rate. However, a few states use a origin-based tax. In this case, you charge tax based on the rate applicable in your business location.

In a few states, digital products are generally not taxable, including Florida, Illinois, Massachusetts, or Michigan. However, it’s wise to be cautious, as both Michigan and Massachusetts tax video games and software if they are downloaded.

Phew, complicated enough, right? But we’re getting to the best part.

Why you’ll love tax thresholds

Tax thresholds are a true lifesaver for digital creators. Thanks to them, in most jurisdictions, you can avoid charging tax to your customers. Sounds great, right? Let’s take a closer look!

A tax threshold is the sales amount you must exceed in a given country to trigger the requirement to register for tax purposes.

Only when you do so must you start charging the appropriate tax (on subsequent transactions), collecting it from your customers, and remitting it to the tax offices. But if you don’t reach that amount — you don’t have to worry about any tax!

This means less “paperwork” on one hand, and on the other, your customers pay less for your products. As a result, you have truly competitive prices and a chance for better sales performance.

[fs-toc-omit]Tax thresholds in the U.S. and Canada

In the United States, tax thresholds are quite high. The typical tax registration threshold is 200 transactions or $100,000 in sales in the previous or current calendar year. In some states, these limits are even higher — for example, in California, the threshold is as high as $500,000! Thresholds are set separately in each state, so exceeding them isn’t an easy feat.

If you exceed the tax threshold, you must register for tax in that state, meaning you become responsible for collecting sales tax. This phenomenon is known as "nexus," specifically “economic nexus,” because it pertains to your economic activity. In practice, nexus means that your business has a sufficiently close connection with that state to be obligated to comply with its tax regulations.

In Canada, the tax threshold is CAD 30,000, but some provinces have their own regulations. For instance, in Saskatchewan, there’s no tax threshold, and you must register for PST from the first transaction, while British Columbia has its own tax threshold of CAD 10,000.

[fs-toc-omit]Tax thresholds in Europe

In the European Union, you must charge tax from the first transaction; however, you can base the amount and method of reporting on the annual sales threshold of €10,000 (excluding VAT).

What does this mean? If your sales are below this amount, you can charge the tax rate applicable in your country rather than in your customer’s country. You treat every foreign sale as a domestic sale. Only after exceeding this amount do you have the obligation to register for tax purposes in the countries where you sell your products and charge the VAT rate applicable in your customer’s country.

Example: You’re based in France, and your customers are from Hungary. If your sales do not exceed €10,000, you can charge the VAT rate applicable in your country, which is 20%, instead of the 27% applicable in Hungary.

Tax thresholds also exist in some European countries, such as:

• Norway – NOK 50,000
• Andorra – €40,000
• Bosnia and Herzegovina – BAM 50,000
• Iceland – ISK 2,000,000

In Switzerland, the tax threshold is CHF 100,000, but it applies to total sales worldwide.

The United Kingdom has not introduced tax thresholds, meaning you must register for VAT from the first transaction.

💡At Easytools, there’s a feature that allows you to disable sales to countries with immediate tax obligations. This guarantees peace of mind because you don’t have to worry about registration and taxes from the start. Usually, these are rather exotic countries where you’re not selling your products anyway or they constitute a margin — no need to stress about it. The only exceptions are Europe (OSS) and the UK, where it’s worth considering registration first. We have appropriate guides, and it’s not that difficult. Plus, we can recommend companies that will handle everything for you.

[fs-toc-omit]Tax thresholds in other parts of the world

Tax thresholds exist in many jurisdictions around the world. Of course, the limits vary, but if you record sales below a certain amount, you can avoid the procedures related to registration and tax reporting.

• Australia – AUD 75,000
• Egypt – EGP 500,000
• Indonesia – IDR 600,000,000
• Japan – ¥10,000,000
• Malaysia – MYR 500,000
• New Zealand – NZD 60,000
• Singapore – SGD 100,000
• Thailand – THB 1,800,000

Tax thresholds greatly simplify matters, as it turns out that very often you don’t have to charge tax on your products at all. In reality, sometimes it’s just a matter of keeping track of your sales in a given jurisdiction to ensure they don’t exceed that amount. This way, you don’t have to worry about taxes. Even if you do surpass the limit, filing for all those transactions isn’t as daunting as it might initially seem.

💡 In practice, Easytools keeps track of these thresholds for you! We meticulously tally sales to each country and compare them with tax thresholds. When you approach the thresholds, we notify you via email, allowing you to either register and remit taxes or exclude that country from sales for the rest of the year. We also have a feature that allows you to automatically disable sales in countries where you’re close to exceeding the thresholds. Total comfort!

💡 Should you worry about losing sales by excluding countries? From our experience, not really. The consequence of excluding a country is simply that it disappears from the list in the cart, not that it’s blocked altogether.

[fs-toc-omit]Merchant of Record and tax thresholds: An imperfect relationship

Many creators, fearing tax compliance, use the services of a Merchant of Record (MoR), such as Lemon Squeezy, Paddle, or Gumroad. In this model, the MoR sells your products and handles all taxes for you. Sounds wonderful, right?

The problem is that once you understand tax thresholds, you realize that this way, you earn less. MoR has long surpassed tax thresholds in all jurisdictions because they operate on behalf of thousands of sellers.

Now imagine you sell your products solely within the U.S. or another country with tax thresholds, and you don’t exceed the limits. You don’t need to register for tax, charge tax, file returns, or remit collected funds. Simpler and more profitable, right?

Sure, using MoR services can be justified in some cases, but if you, as an individual seller, don’t exceed tax thresholds, why would you even consider using MoR services?

If you want to read more about this topic and see a specific example of how much less you’d earn with MoR, check it out here.

‍

So far, we’ve covered a lot. Let’s summarize briefly before moving on to the next topic:

✅ As a creator, you can sell your products and services worldwide, but you must add consumption tax to your product prices.

✅ Consumption tax operates under different names — VAT, GST, sales tax. The rates of these taxes vary depending on the country/tax jurisdiction.

✅ Generally, you should add the tax rate applicable in your customer’s country. The collected tax must then be remitted to the appropriate tax authority.

✅ There are certain rules that exempt you from charging tax, such as tax thresholds. If you don’t exceed them, you don’t have to add tax to prices.

Now it’s time to look at how registration, filing returns, and remitting taxes work — moving on to the slightly duller part. Well, unless you enjoy filling out forms.

Tax registration

Registering for taxes in many countries is now convenient because the entire process can be done online. This is a huge relief — everything can be done quickly and without leaving home 🙂 You don’t have to worry about tedious formalities or visits to offices (who likes that?), as you can register in the comfort of your own office.

💡We collaborate with companies that can handle this process for you for a small fee. They will not only register you for tax but also file it and submit returns. If you exceed thresholds in multiple countries, you’re likely earning enough to justify the expense of such a professional service. However, if you prefer, you can do everything yourself.

[fs-toc-omit]Registering for VAT OSS in the EU

This is probably one of the few registrations you’ll want as a creator. You’re likely planning to exceed thresholds in the EU. Remember the €10,000 limit? If you exceed it, you have two options:

• register for tax in every country where you sell and report VAT there (we don’t want that),
• register for the VAT OSS system to report sales across the entire European Union with one quarterly return.

Registration for VAT OSS is voluntary. You decide whether to take advantage of the simplified procedure or report your sales separately in each country. You can also register before exceeding the threshold, which is a good solution if you know you’ll surpass the limit and want to avoid keeping track, or if the VAT rates in the countries where you have customers are more favorable.

💡We recommend doing just that — registering for OSS right away, even before starting sales. If you exceed the €10,000 threshold without registration, it will be more complicated later.

With VAT OSS, you report and pay VAT in one member state instead of registering and filing returns in each country where you make sales. If your business is based in one of the member states, you should register for VAT OSS in your country (EU procedure). If you are from outside the EU, you can choose any member state to register (non-EU procedure).

💡 The state where you register is called the identification state, while the states where you sell are called consumption states.

💡 For non-EU businesses, it’s generally recommended to register with the Irish tax authority, which has a simple process and well-functioning online applications, plus everything is in English.

The registration procedure will differ by country, but in every case, you’ll need to provide basic information about your business, including your tax ID, company name, business address, contact details, and bank account number for settlements with the tax office.

⚠️ Worth noting: In the EU procedure, no new VAT number is assigned; your existing national identification number is used. In the non-EU procedure, the country where you register will assign you a unique VAT identification number.

You can also appoint a representative to act on your behalf, but the registration process and filing returns quarterly isn’t that complicated. Especially since systems like Easytools provide you with all the necessary information, and all you need to do is fill out the return based on that data and make one payment.

We’ve described the VAT OSS registration process in this guide.

[fs-toc-omit]Registering for VAT in the UK

Another registration worth considering from the first transaction is in the UK. The UK’s exit from the European Union caused some confusion, including regarding tax matters. Fortunately, the UK introduced online registration, which is available at: https://www.gov.uk/log-in-register-hmrc-online-services.

HM Revenue & Customs (HMRC) allows:

• online registration,
• registration by traditional mail to HMRC.

You can also appoint an agent, employee, or another authorized person, even a friend, to handle this for you, but we recommend doing it yourself, as, like with VAT OSS, the tax reporting process in the UK isn’t complicated.

The registration application takes just a few minutes. It consists of 6 steps, and if you’re using someone’s assistance, there will be an additional section where they will need to provide their information. During registration, you’ll need to provide basic information about your business, choose SIC codes that best describe what your business does, describe the types of goods and services you sell, provide your website address, and attach documents confirming your identity.

HMRC usually takes about a week to process your application. You should receive confirmation in your online account. After registering for VAT, you’ll receive a 9-digit VAT registration number, which you must include on all invoices you issue, information about the deadline for submitting your first VAT return and payments, and confirmation of the registration date.

You can find more about this topic under this link. We describe the registration process in detail.

[fs-toc-omit]Registering for sales tax in the U.S.

The United States is a more complicated topic because not only does each state have its own regulations, but local authorities, such as counties, also establish their own procedures and taxes.

Fortunately, individual states have high thresholds, up to $500,000 in California, and some states like Delaware don’t have any sales tax at all. If you average it out, in the entire U.S., you can earn several million dollars a year and not need to register for sales tax.

The U.S. is working towards implementing a system that would simplify registration and reporting for sellers. Currently, you can register simultaneously in all 24 states covered by the streamlined SSUTA (Streamlined Sales Tax Registration System) through a single registration process. Likely, more states will join this system in the near future.

Unfortunately, the system has a significant drawback. If you register for SSUTA, you’ll also need to pay taxes in states where you haven’t exceeded the threshold, meaning where you don’t have nexus. SSUTA doesn’t care about that — if you register, you must report tax in all 24 states.

However, the registration thresholds are so high that U.S. taxes shouldn’t be a concern for you. And don’t get us wrong — it’s not that we don’t believe in your products or services, or your potential for high profits.

However, $100,000 in every state is indeed a significant challenge. Besides, if your customers are scattered across the U.S. and you’re not focusing on one specific location, it’s unlikely you’ll exceed the thresholds anytime soon, and they reset every year.

[fs-toc-omit]Tax permit - Sales tax license

Let’s say you’ve exceeded the threshold. First, you need a valid sales tax permit in the U.S. You can obtain it online, and you’ll likely receive the permit number immediately, or at the latest, within 10 business days. During registration, you’ll need to provide contact information, your social security number, and your business structure.

Once you have the permit, you can start charging tax.

You can find information about taxes in the U.S. under this link.

Here, we briefly describe all 50 states.

[fs-toc-omit]Registering for GST in Canada

In Canada, you need to register for GST/HST, and additionally, if you have customers in one of the 4 provinces that have introduced local taxes, you must register separately in their systems. We’re talking about British Columbia, Saskatchewan, Quebec, and Manitoba.

You can register online everywhere, and details can be found on the government website here.

You can use simplified registration for GST/HST, and you don’t need a Canadian bank account; you can even pay the tax in euros! The downside of simplified registration is the inability to claim a refund for the tax paid. But if you live outside Canada and don’t buy anything in that location, it probably doesn’t matter, right?

Below you’ll find links where you can learn about the registration processes:

• British Columbia
• Manitoba
• Saskatchewan
• Quebec

As in other cases, you typically need to provide basic information about yourself, your business, the products you sell, and the services you provide. The Canadian system does not require you to hire a local tax representative. You can do everything on your own.

[fs-toc-omit]Registering for GST in Australia

Australia has introduced two registration methods for foreign sellers — simplified and standard. The first is designed for sellers from other countries, but — like in Canada — you won’t be able to claim input tax credits. However, if you don’t incur any costs in Australia, it probably doesn’t matter, right?

At the very beginning, you need to create an account at AUSid, which will allow you to register, report, and pay GST. After creating an account, log in to the non-resident online services. Then, using AUSid, you can register for simplified GST.

The registration process is very straightforward and requires you to provide minimal information; you don’t even need to prove your identity. After successful registration, you’ll receive an Australian reference number (ARN), which will be your identifier in the system.

[fs-toc-omit]Tax Registration in other parts of the world

Tax registrations look quite similar in other regions of the world. Generally, you can register for tax purposes online, although in many places you can also do it via email or even traditional mail. Of course, the latter option is inefficient and simply lengthy, but it’s good to have a choice, right? 😀

After registration, you generally receive a tax identification number — depending on the location, it will have a different name and format. Countries also offer easy and convenient access to portals where you can find everything you need to fulfill your tax obligations — primarily the ability to fill out and submit tax returns, as well as manage account data.

Unfortunately, in some places, tax authorities require you to hire a local tax representative. These include:

• Albania
• India
• Japan
• Serbia

How to properly calculate and collect tax?

As mentioned earlier, for digital products and services, you need to charge the tax rate applicable in your customer’s country. Of course, under certain conditions, because — as you already know — if you don’t exceed tax thresholds, you don’t have to add any tax.

💡 If you haven’t exceeded thresholds in a given country, Easytools will automatically apply a zero tax rate for your customers. Only after exceeding the threshold will we start charging the appropriate tax.

Charging the correct rate can be challenging in locations where multiple tax levels apply, i.e., in addition to the national or state consumption tax, you must also add local taxes. Did you think of Canada? Quite right. As you remember, in addition to GST, there are provincial taxes that you must include in the final sale price.

Fortunately, it’s not that difficult if you use Easytools. Based on your customer’s location and the type of product, the system automatically calculates the appropriate tax rate. You don’t have to worry about what tax to charge a customer from Taiwan, Austria, Slovakia, or Iceland.

In the cart, customers can also decide whether they are making a private purchase (B2C) or a business purchase (B2B). In this case, tax law works a little differently — in B2B transactions, the so-called reverse charge is typically applied.

💡 Reverse charge is a mechanism used in B2B transactions that shifts the responsibility for tax reporting from the seller to the buyer. This means the seller doesn’t charge tax on the invoice, and the buyer self-reports it according to the regulations in their country. This mechanism is often used in international transactions, particularly within the European Union, but it’s also applicable in other regions of the world, such as Asia.

If a customer wants to make a business purchase, they must provide the appropriate tax identification number, and the system will check if it’s valid and correct. This way, you avoid problems and errors that could cost you extra money and time. Why? If a customer enters an outdated, incorrect, or fake tax ID, and it’s not verified, and the transaction proceeds under the reverse charge mechanism, you’ll likely have to cover the tax for the customer later.

💡At Easytools, we use several tax ID verification systems, such as VIES in the European Union. We automatically verify your customers’ business data in many locations and also fill in their address details in the cart, so they don’t have to complete them themselves, increasing conversions.

[fs-toc-omit]Proof of location

Many tax jurisdictions require sellers to collect proof of their customers’ location. You must prove that you correctly charged 20% VAT to a French customer.

Such regulations apply, for example, within the European Union. In this case, you must collect two pieces of evidence of location; these can be the customer’s billing address, the location of their bank, IP address, or the country that issued their credit card. If you haven’t exceeded the previously mentioned €10,000 sales threshold, you can collect only one piece of evidence, but it cannot come directly from the customer; it must come from a third party, such as a bank. You must keep proof of location for up to 10 years!

💡 In our case, fortunately, Stripe, as the payment provider, handles this. The location proofs are also stored in the Stripe panel. An additional proof is also remembered in the cart.

Such obligations are imposed by many jurisdictions — Canada, Australia, Switzerland… Even if some country doesn’t require you to keep this documentation, it’s still wise to remember it.

[fs-toc-omit]Transaction documentation: What you need to prepare?

Besides collecting proof of your customers’ location, you must remember to issue the appropriate sales documents — invoices or receipts. This is a crucial part of your business, as it documents the sale and helps avoid errors that could lead to tax audits or financial penalties. It’s worth ensuring their accuracy and storing them according to legal requirements.

Not all countries require issuing invoices. Many tax jurisdictions allow issuing receipts if the transaction value doesn’t exceed a specific amount. For example, in the UK, you can issue a receipt if the product costs less than £250, and in Ireland, less than €100.

💡Invoices and receipts are two different documents and serve different purposes. An invoice can include much more information, such as detailed customer data. You can issue an invoice before receiving payment, while a receipt is issued only after the customer pays for the product or service. Invoices are documents based on which businesses can deduct the tax paid.

What should be included on an invoice? It depends on the requirements of the tax jurisdiction, but certain information is essential on every document, regardless of whether you’re selling your product to a customer in Japan or the Netherlands.

An invoice should include:

• your company name and address,
• your tax registration number,
• the buyer’s name and address,
• the customer’s tax identification number, if it’s a B2B transaction,
• a unique invoice number,
• the date — usually the date the invoice is created,
• a list of products and/or services, listed one below the other, preferably including prices and taxes,
• the amount of sales tax,
• the total invoice amount,
• payment terms, e.g., due date, payment method,
• discounts.

Invoices and receipts are essentially proof that you sold a product or service and charged the appropriate VAT, GST, or sales tax.

💡If you use Easybilling, we will automatically issue an invoice compliant with regulations, and even take care of translating it for your customer. You can also easily download a report containing a summary of all invoices, as well as PDF files. We will also help prepare a summary of invoices that your accountant can import into the tool they use to file taxes.

[fs-toc-omit]Do you need to keep documentation?

Maintaining records isn’t just a matter of good organization. It largely ensures peace of mind in case of any audits by tax authorities. If you keep all the proof of your customers' locations and documents confirming sales, you can sleep soundly.

Moreover, maintaining records isn’t really up to you; many tax jurisdictions require you to keep them for a specified time. For example, you must keep VAT OSS records for 10 years, while in Canada, it’s 6 years.

Keeping records isn’t as challenging as it might seem, because when someone buys your product or service, they receive a digital receipt or invoice, and this gets recorded in the system. Reports can also be archived. You also automatically gather proof of location since the customer provides this information at checkout during their purchases. You just need to store it all and make it available if needed.

We’ve come a long way, haven’t we? The last two important topics left are filing returns and paying taxes.

Tax returns

In all this tax machinery, you’re essentially just an intermediary responsible for calculating, collecting, and remitting the tax to the appropriate authority. Of course, you need to fill out the appropriate return and indicate how much you sold, how much tax you collected from your customers, and how much of that amount you need to remit.

Many jurisdictions have implemented quarterly reporting for foreign entities. This means a bit less bureaucracy. After all, it’s always better to file 4 returns than 12… Some countries also give you the option to choose — you can report monthly, quarterly, or annually. In the latter case, you usually must meet specific requirements, e.g., in the UK, you can only file annually if your estimated taxable turnover is £1.35 million or less.

We personally recommend quarterly reporting — it’s convenient and allows you to track sales and taxes more closely. Tax authorities also prefer this type of reporting and encourage sellers to choose this option.

[fs-toc-omit]VAT OSS tax returns

How often you need to file returns depends on the country where your business is registered. Generally, returns are filed quarterly, but at least once a year.

The European Union has specified what a VAT OSS return should include. Of course, forms may differ slightly depending on the country of identification. However, in every case — regardless of the name or format — the return will include details about supplies and services in each state, the balance of output VAT due for each country where you made sales, and the total amount of VAT due across all those countries.

⚠️ IMPORTANT: Even if you didn’t make any sales or provide services during a given reporting period, you still have to submit a return. This is called a “zero return.”

All returns in the VAT OSS system are submitted online, and the system calculates how much VAT you need to pay. Afterward, you only need to make one payment — to the country of identification, which will distribute the amount of VAT you paid to the respective consumption countries.

When filling out the return, you must use one specific currency. Generally, you should use euros, but countries that haven’t adopted it may require you to submit the return in their local currency.

💡You’ll receive the data to fill out the return as a report if you use Easybilling. It will detail how much sales you made to each country during the quarter. You just need to copy that data into the return. Then, you pay the total calculated VAT amount to one account. That’s it!

[fs-toc-omit]VAT returns in the UK

In the UK, you can submit returns monthly, quarterly, or annually. HMRC encourages foreign sellers to use the quarterly system. Typically, returns are submitted within 1 calendar month and 7 days after the end of the reporting period. For example, a tax return for the 1st quarter, which ends on March 31, must be submitted by May 7.

Just like with the European Union, you must also submit a return in the UK, even if you didn’t make any sales during the reporting period. We call this a “zero return.”

You can submit the VAT return online. You need to fill it out in British pounds (GBP). Even if you sell your products in another currency, such as EUR or USD, these transactions must be converted to GBP. You also need to make the tax payment to HMRC in GBP.

After submitting your return, you’ll receive a reference number confirming that the return has been filed. You’ll also receive payment instructions in your account.

[fs-toc-omit]Sales tax returns in the U.S.

In the United States, you must fill out tax returns in every state where you’ve exceeded the tax threshold and have nexus. Even if you didn’t make any sales, but you’re registered for tax, you must submit a zero return.

As with tax rates, returns differ by jurisdiction. However, there are some common elements:

• the total of all taxable sales,
• the sales tax collected on those transactions,
• your business tax ID.

Filling out the forms typically takes just a few minutes because — if you use platforms like Easytools — we gather all the data for you. All you need to do is enter it into the appropriate fields, submit the return, and then make the payment.

Returns are filed monthly, quarterly, or annually. Each state sets its own deadlines. When you register for tax purposes, you’ll be informed about how frequently you need to submit returns. If you don’t have high revenues, your frequency will likely be lower. Typically, monthly returns are required from companies generating really high profits. The frequency of filing returns can change; it is not a lifelong commitment.

[fs-toc-omit]GST returns in Canada

If you use simplified GST/HST, you must file returns quarterly. You have one month from the end of the reporting period to do so. You can submit the return online using GST/HST NETFILE. If you are registered for normal GST/HST, the frequency of filing returns depends on your revenue.

In your tax returns, you’ll report:

• the GST/HST collected or owed from your sales,
• any adjustments or refunds for overpaid tax,
• uncollectible amounts that you report as losses, e.g., if a customer didn’t pay their invoice.

As a rule, returns and payments should be in Canadian dollars, but you can apply to pay the tax in a foreign currency — U.S. dollars or euros.

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We’ve just covered another hefty dose of information, right? Let’s summarize the key takeaways, as we did before:

✅ If you sell your products in countries without tax thresholds or if you exceed the tax threshold, you must register for tax purposes.

✅ You can register online and manage settlements with local tax authorities through your online account.

✅ Generally, you’ll need to file quarterly returns, although some jurisdictions also allow annual and monthly reporting.

✅ In your returns, you report the sales amount and the tax (VAT, GST, sales tax) paid by customers, which you then need to “return” to the appropriate tax authorities.

✅ You must maintain detailed documentation, including keeping proof of your customers’ locations, as well as invoices and receipts.

We hope that you haven’t gotten a headache from the overload of information and that what we’ve described here has helped you understand how — in general terms — taxes work worldwide and what obligations you have from this title 🙂

If you’re now wondering how to handle all this on your own, we assure you — it’s doable, and it’s really not that hard.

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How to keep track of your tax obligations?

Tackling tax matters is indeed a significant challenge, but Easytools with Easybilling will help you with practically all the crucial elements:

• automatically calculate the appropriate tax rate based on your customer’s location,
• issue invoices and receipts compliant with the requirements of individual tax jurisdictions and automatically send them to customers,
• automatically verify the tax identification numbers from customers who want to make B2B transactions,
• collect and store proof of location (alongside Stripe),
• inform you about exceeding tax thresholds,
• send alerts about tax changes so you stay updated.

💡Additionally, Easytools has a range of other convenient features, such as automatically disabling sales to countries where you’re close to exceeding the threshold, as well as excluding sales to countries with immediate tax obligations (i.e., where there are no thresholds).

By choosing Easytools, you can comfortably manage this topic on your own. You don’t need the services of a Merchant of Record, because thanks to tax thresholds, you’re exempt from collecting tax in many locations, including throughout the U.S.

And selling in Europe? It’s not a trip to the moon — the VAT OSS system allows you to report transactions across the entire European Union with a single quarterly return.

Of course, there may be exceptional situations, such as wanting to obtain tax exemption because your goods or services qualify for such exemption. For example, educational services, under certain conditions, are exempt from VAT in the UK. But this isn’t secret knowledge — you can read about it on government websites, and in case of doubts, send a message to the tax authority or call their hotline.

You can also use one of the companies we recommend that will handle everything for you.

[fs-toc-omit]This article is not legal advice

This article is for educational purposes only and does not constitute legal or tax advice. The information contained in the text aims to provide general guidance and knowledge on topics related to law and taxes. For professional advice tailored to your individual situation, we recommend consulting a tax advisor.

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