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LLC guide

Your zero-tax LLC, VAT and US sales tax

Does your US LLC owe EU VAT or US sales tax? A clear answer for service providers, digital products and e-commerce, without the adviser jargon.

VAT and EU VAT

A value added tax on the European model does not exist in the US states. Your LLC therefore does not have to charge VAT, neither to customers in the US nor to customers outside the US.

To customers in the EU, the LLC simply issues a net invoice. If your customer asks you for a VAT number, give them your company's American tax identification number, the EIN ("Employer Identification Number"). Your customer can then book the invoice under the reverse charge procedure.

Invoices to your LLC from suppliers in the EU are also net invoices, unless the service is performed in the EU. If, for example, your LLC books a hotel in Salzburg, Austrian VAT is due on the stay.

Take care with the VAT rules when selling digital products and services to consumers in the EU (for example memberships, software or e-books from online shops): here the LLC has to register for OSS and pay VAT in the EU.

Since 2021, the same has applied to sales of physical products to consumers (not businesses) in the EU.

You cannot get around EU VAT with a zero-tax LLC!

US sales tax

In the US, prices are always shown net. Whether you eat in a restaurant, shop in a supermarket or order from Amazon US, every price you see is net. At the checkout, a sales tax is added that varies from state to state and from municipality to municipality, usually between 4 and 8%.

No sales tax is due on services, although the definition of a service varies from state to state. "Software as a service", for example, counts as a service in some states and is therefore not subject to sales tax. Other states do levy sales tax on it.

If your LLC delivers goods into the US, you have to assume that it will need to register for sales tax in the individual states once it exceeds the sales thresholds.

Of course we can help you with this and also take care of the monthly sales tax returns for your LLC. Feel free to contact us if you have any further questions about taxes, tax rates or tax numbers.

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