Note: It’s your responsibility to consult with local tax authorities or a tax professional to verify that you charge your customers the correct tax rates, and to ensure you file and remit your taxes correctly.
A tax jurisdiction is an area subject to its own tax regulations. A tax jurisdiction can be a country, region, group of countries, province, state, city, county, district or any other area with a designated authority for tax purposes.
In the United States, there are thousands of jurisdictions applying sales or use tax. A jurisdiction may impose their own registration requirements, even for businesses without any physical presence in the jurisdiction. Based on the type of product being sold and the sales or transaction volume in a given jurisdiction, a company could be expected to register in that jurisdiction.
For example, a business in New Jersey is selling digital products to customers across the US, Australia, Europe and India. US states have different nexus requirements. If they reach an economic nexus threshold for sales in another state, they could be expected to register in that state and collect tax on sales to customers in that state.
Australia has a 75000AUD registration threshold, so the business would only be expected to register there once they reach the threshold. The European Union and India do not have any threshold to trigger a registration requirement. The business would be expected to register in the EU and India before making any sales there.
The good news is that Quaderno keeps track of these requirements for you. Quaderno notifies you if you reach an economic nexus threshold in a US state or a registration threshold in a jurisdiction outside the US so you know when you could be expected to register in another jurisdiction. You’ll also find a thresholds report in your account.
Important: Before collecting tax in any jurisdiction, a business would need to be registered with the tax authority in that jurisdiction. For example, before collecting sales tax in Texas, a business would first need to register for a sales tax permit in Texas. Before collecting VAT in the EU, a business would need to be VAT registered.
In Quaderno, you can add all the jurisdictions where you’re registered to collect taxes in the Jurisdictions page. Quaderno will use these settings to calculate tax and generate your reports.
While Quaderno provides you with reports and tools to help you stay tax-compliant, it’s ultimately up to you to ensure your account and jurisdictions are configured correctly.