also called VAT · GST · goods and services tax · IVA
A consumption tax added to the price of goods and services in many countries.
A consumption tax added to the price of goods and services across many countries, collected in stages along the way but ultimately paid by the buyer. Sell online and you may have to register for it and charge it in your customers' countries even if you are based nowhere near them. It works differently from sales tax, added only once at the final sale, but for a shopper both just make things cost more at the till.
Someone running a small online business selling to customers in Europe discovers they are supposed to register for and charge VAT in those countries, despite living elsewhere entirely. Ignoring it, they build up a liability in a market they never physically set foot in, all triggered by where their customers were.
Online sellers may have to register for and charge it in customers' countries even without being based there.
The difference is the whole point, so here is each one in a line.
Both are consumption taxes on purchases but work differently.
Sales tax, common in the United States, is added once at the final sale to the consumer, while value-added tax, used in many other countries, is built into the price and collected in stages along the supply chain.
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