Do I need to collect VAT or sales tax at checkout
You must collect VAT or sales tax at checkout when you have an obligation in the buyer’s jurisdiction, typically created by registration, nexus, place-of-supply rules, or economic thresholds. For most B2C cross-border sales, VAT is charged at destination, and many U.S. states require destination-based sales tax once economic nexus is met. Collecting and clearly displaying taxes upfront reduces checkout friction, aligns totals with customer expectations, and improves conversion by matching familiar, trusted payment flows.
FAQ
### How do I know if I must collect VAT or sales tax at checkout?
Determine whether you have nexus or a registration obligation in the destination, verify product taxability, and review sourcing rules and thresholds. For cross-border sales, confirm applicable VAT schemes and place-of-supply requirements, and maintain documentation supporting your tax treatment.
### Will showing taxes during checkout improve conversion?
Yes. Displaying a clear, tax-inclusive total before payment reduces surprises, increases trust, and lowers abandonment, particularly for international buyers who expect full landed costs upfront.
### Do local payment methods matter when collecting taxes at checkout?
Yes. Offering familiar, country-specific payment methods and presenting the total in local currency reinforce trust, support accurate tax presentation, and reduce drop-off by aligning with expected checkout flows.
### What if I cannot collect taxes at checkout?
Inform customers that taxes and duties may be collected on delivery, provide estimated amounts when possible, and explain potential carrier fees to reduce refusals, delays, and support issues.
