Sales tax is a tax that is applied on top of the price on a product or a service. VAT is an abbreviation of Value Added Tax. The sales tax is based on the turnover. In Sweden, as an example, the VAT is either 6%, 12% or 25%. United States does not have a national VAT system instead each state applies sales tax, but not all states impose a sales tax in the US.
Goods and services tax (GST)
The GST is just another term for VAT. Most modern economies have implemented VAT today, and it is an integral part of financing the welfare systems and public healthcare.
New VAT obstacle for US B2C companies selling to EU
“US companies selling digital services into the EU will, from January 1, 2015, have to account for VAT based on where their end customer is located. This is the key change enshrined in these new rules. The low-tax rate of an EU Member State no longer comes into play – VAT will have to be levied based on where the companies’ customers are based.”
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