Which sales tax to charge when dropshipping

Hi,

I have a question about which tax to charge customers when dropshipping.

If my company is based in Denmark, but I am selling to US consumers, do I charge them the sales tax in their state, or the sales tax in my dropshipper's state?

Also, how do I pay this tax back to the US authorities if I do not have a US tax id? Or do I need to get that in order to sell at all?

Thanks for your help!

Claus

Hi Claus,

Welcome to the forum!

Since you're based in Denmark, you will not be charging sales tax to customers in the US. You only charge customers with sales tax if they're located in Denmark as well.

Sales tax is used to help develop government funded facilities like national parks, public libraries, etc. That's why you don't charge sales tax to your customers in the US as they pay taxes to the US, and not in Denmark.

With this saying, you don't need a US sales tax ID. If a dropship supplier requires you to have one, you can provide them with something equivalent in Denmark like VAT.

Hope this helps.

Hi Rhea,

That is a great help, thanks :) Does that mean I need to charge Danish tax and pay sales tax in Denmark? Or does it just mean that no sales tax is paid at all?

Best regards,
Claus

Hi Claus,

No sales tax requirements at all. The only tax requirments you will have to meet are your local tax requirements. If you're unsre of what they amount to, just contact your local authority in regards to your taxation requirements, but no issues at all in regards to a sales tax for selling into the USA from Denmark.

Cheers

That is fantastic :) Thanks so much :)

Taxation can be a daunting topic, but knowing more about taxation can free you from unwanted obligations. Good thing about your concern is that there is no sales tax requirements, just Import duty & taxes when importing into Denmark. You can read more about this on this site:

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