Tax & Structuring
VAT, GST and sales tax
Indirect tax is an operating question. It asks where a supply may be taxed, separately from where the company or the founder is resident.
VAT, GST and sales tax are not one tax with three names. Each is a local system for taxing supplies.
Income tax and corporate residence ask who is taxed on profit. Indirect tax asks how a sale of goods or services is taxed as it is made. A business can meet one question and still have the other.
Company structure sits on company structuring. The wider income-tax picture is on international taxation. This page does not say whether a named country requires registration.
Indirect tax
What these taxes are for
They tax consumption, usually through the business that makes the supply. The business may have to register, charge the tax, file returns and keep records. Whether that applies depends on the country and the supply.
VAT
A value-added tax charged through a chain of supplies. Businesses may charge it, reclaim some of it, and file returns. The rules are local.
GST
A goods and services tax used in some countries for a similar kind of indirect tax. It is not a renamed VAT from another country.
Sales tax
Often charged at the point of sale, commonly to the customer, under the rules of a state or country. Collection and registration can differ from VAT.
Labels
Why the names are not interchangeable
Teams often use “VAT” as a shorthand for any sales tax. That shorthand hides the local rule. A GST return in one country is not a VAT return in another, and a US-style sales tax is not either of those.
Use the name of the tax in the country you are asking about. If you do not yet know which tax applies, that is the question to take to an adviser — not a reason to pick the familiar label.
Place
Where an indirect-tax question can arise
These are the facts that usually need to be on the table. None of them, alone, is a registration decision.
Customer location
Where the buyer is can matter, especially for services and digital supplies. It is not the only test.
Movement of goods
Import, export and where stock sits can raise a question even when the invoice is issued somewhere else.
Place of supply
Each system has its own way of deciding where a service is treated as supplied. Ask which rule is being used.
Local establishment
A company, a fixed place, or people on the ground may change who registers and who charges the tax.
Platforms
A marketplace may collect some indirect tax. That does not automatically cover every supply the business makes.
The invoicing entity
The company named on the invoice should be the one that made the supply. A convenient entity is not a tax answer.
Operating model
Situations that should prompt the question
The list is not a test. It is a set of moments when indirect tax is easy to leave until later, and costly to reconstruct from invoices alone.
- Selling goods to customers in another country
- Selling digital services or software across borders
- Importing stock into a country where you sell
- Invoicing from one company while the work happens in another
- Selling through a marketplace as well as directly
- Hiring in a country where the business also sells
Limits
What does not settle the indirect-tax question
Other parts of the operating model are necessary. They answer different questions.
Company formation
Incorporating a company does not decide where its supplies are taxed.
Employer of Record
An EOR may employ a person locally. It does not register the client for VAT, GST or sales tax, and it does not set the client’s indirect-tax position.
A bank account
Where money is received is a banking fact. It is not, by itself, the place of supply.
Corporate residence
Where the company is tax resident is a separate question from where a supply may be taxed.
One global rate
There is no single rate, threshold or registration rule that travels with the business.
Hiring through an Employer of Record is compared separately. Selling into a country is not the same decision as employing someone there.
Records
What to be able to describe
An adviser needs the pattern of supplies, not a single invoice. These are the points worth having in one place before the conversation.
- Which legal entity issues the invoice
- Where the customer is, and whether the customer is a business or a consumer
- Where goods are stored, shipped and imported
- Whether a platform collects any of the tax
- Which countries have already been identified as places to ask about
- Which registrations, if any, are already in place
Before you rely on a setup
Questions to ask
These are questions for an adviser who can look at the countries and the supplies. The answers are not on this page.
01Which tax is actually in question: VAT, GST or sales tax?
Ask for the name of the tax in that country. Do not treat the three labels as the same rule.
02Where is this supply treated as made?
Ask which place-of-supply rule is being applied, and to which facts. This page does not apply a country’s rule.
03Is the customer a business or a consumer?
Ask whether that distinction changes who charges the tax, who reports it, or whether a reverse charge may be relevant.
04Do the goods cross a border, or sit in another country?
Ask about import, customs and where stock is held, separately from the invoice address.
05Does a marketplace already collect any of this tax?
Ask what the platform collects, for which supplies, and what remains with the business.
06Which entity should be on the invoice?
Ask whether the company that contracts, the company that is paid, and the company that should register are the same.
07Does a local establishment change the answer?
Ask whether people, a premises or a local company changes registration. An Employer of Record is not that answer by itself.
08What has to be filed, and from when?
Ask about registration, returns and record-keeping once a country is in scope. Thresholds differ and are not stated here.
09What if we later open our own local company?
Ask what changes for invoicing, registration and the supplies already being made.
Explore tax & structuring
Go deeper into a related topic
- International taxationResidence, source and why more than one country may look at the same profit.
- Company structuringWhere a company is formed, managed and owned.
- Double-tax treatiesHow two countries may allocate income-tax rights. Indirect tax is a separate regime.
- Running a business across bordersCompany, people, banking and tax as one operating model.
Tools
Related tools
These tools help with records and comparisons. They do not calculate tax.
Take the supplies, not a slogan, to an adviser
Registration, rates and filing dates depend on the country and the sale. WiT Access does not determine them.
WiT Access provides general information. VAT, GST and sales tax depend on the country, the supply and the facts. Nothing here is a registration decision, a rate, or tax, legal or accounting advice.