Question 1

What is a Tax & Compliance Nexus and why does it matter for digital businesses?

Accepted Answer

A nexus is a sufficient connection between your business and a jurisdiction that obligates you to register, collect, and remit taxes. For digital businesses, nexus is triggered by revenue thresholds (economic nexus), transaction counts, or physical presence. Failing to register results in retroactive tax liability, penalties up to 200% of unpaid tax, and in some jurisdictions, criminal charges for deliberate evasion.

Question 2

How do I know which jurisdictions I have nexus in?

Accepted Answer

Nexus is determined by where your customers are located, not where your business is registered. For ecommerce and SaaS, track: customer billing addresses, IP geolocation, and sales volume by state/country. Economic nexus thresholds range from $100K (US states) to €10K (EU OSS). This auditor maps all 8 major jurisdictions with 2026 thresholds.

Question 3

What is the EU One-Stop-Shop (OSS) and do I need it?

Accepted Answer

The EU OSS is a single VAT registration that covers all 27 EU member states for cross-border B2C digital services. If your pan-EU B2C sales exceed €10,000 in any 12-month period, you MUST register for OSS. Below €10,000, you may charge your domestic VAT rate. Non-EU sellers are subject to the €10K threshold from the first euro.

Question 4

What documents do I need to register for sales tax in a US state?

Accepted Answer

Standard requirements: Federal EIN, state-specific registration form, estimated monthly sales projection, and a registered agent address in the state. Some states require a bond. For marketplace sellers, Amazon/eBay collect tax on your behalf but you still need registration if you have direct sales or exceed the threshold.

Question 5

How do I maintain compliance once registered?

Accepted Answer

Compliance requires: monthly/quarterly tax returns, remittance by statutory deadline, record retention for 7 years, and annual nexus reviews. SaaS businesses must also track place-of-supply rules for digital services. Use automated tax software (Avalara, TaxJar) to calculate rates in real-time and file returns automatically.

Question 6

What are the penalties for missing registration deadlines?

Accepted Answer

US state penalties: 5–25% of unpaid tax + 0.5–1% monthly interest. EU OSS: retroactive VAT on full sales + fines up to 200% per member state. UK HMRC: up to 100% of unpaid VAT for deliberate non-disclosure. Canada: 5% + 1% per month. Australia: $210 per 28-day period. Singapore: 5% + 2% per month.

Question 7

Can I use a single tax registration for all jurisdictions?

Accepted Answer

No. Each jurisdiction requires separate registration. The EU OSS is the closest to a unified system — it covers all 27 EU states with a single registration and quarterly return. For the US, Canada, UK, Australia, and Singapore, you must register individually. A tax compliance agent or automated platform is essential for multi-jurisdiction businesses.

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Tax Nexus & Compliance Questions

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