Tax registration thresholds by country: Is your business compliant?

Key takeaways

• Over 100 jurisdictions now require non-resident sellers to register and collect VAT or GST on digital sales, and more than half of them are developing countries.

• Thresholds are not comparable between markets. Every region has its own threshold, and this can cause confusion when trying to sell to all markets and manually track yourself.

• Some markets add conditions on top of the threshold. In the EU and UK, for example, the published threshold only applies to businesses established there, so a seller without a local presence can owe tax from its first sale.

What is a tax registration threshold?

A tax registration threshold is the point at which selling into a market creates an obligation to register for indirect tax, charge it on sales, and file returns. Every market sets its own limit, measures it over its own period, and counts a different set of sales toward it. Crossing one is rarely announced. The obligation simply begins, and it applies from that date whether or not the seller noticed. This can open your business up to financial liabilities if not tracked properly. Knowing each country's policies, and tracking how close you are to each threshold, is frustrating work.

Indirect tax is generally charged where the customer is located rather than where the seller is based. In the 174 countries that operate VAT or GST, the threshold is usually expressed as turnover over a defined period, and once a business passes it, registration becomes a requirement.

How do thresholds work?

Some markets measure gross sales, including sales that are exempt or zero-rated. Others measure taxable turnover only. Regimes aimed at digital services often count sales to consumers only and leave business-to-business sales out of the calculation. Sales made through a marketplace may still count toward the seller's own threshold.

Select regions use a rolling 12 month time period, meaning the taxable window moves forward every month rather than resetting annually. Others measure in-country sales across either the current or preceding calendar year. These are just two examples. There are many, and finance teams have other priorities they'd rather focus on than managing all these differences.

Who thresholds apply to

A published threshold usually applies to businesses established in that market, and sellers based elsewhere are treated differently. Unfortunately, different regions treat this differently with variances between established versus non-established businesses, residents and non-residents, overseas suppliers, and so on. Where a seller is based can change the threshold entirely. Some markets apply the same limit to everyone, others set a lower limit for overseas suppliers, and some give non-established sellers no threshold at all.

The following chart shows region-by-region tax thresholds, who is affected, and the time frame measured:

 Sources for the table: HMRC, the Australian Taxation Office, the European Commission, IRAS and the Sales Tax Institute.

What a missed threshold actually costs

In most countries, your tax obligation begins on the date the threshold was passed, not when you noticed it. This lag is what makes it expensive. Once the threshold passing is detected, it is likely too late to pass along those taxes to your customers. This administrative oversight then becomes a direct margin loss on sales that have already been invoiced and collected. Compound this across all the regions you sell into, and significant financial implications can arise if not properly managed.

What happens after you cross a threshold

Crossing a threshold sets four obligations in motion, in this order:

1. Register in the market, which can take several weeks and in some markets requires a local representative.

2. Charge the correct rate from the effective date of registration, which may be backdated to the crossing.

3. Issue invoices that meet each market's requirements, which differ in content, format and language.

4. File returns on the local cycle and keep records for the local retention period.

On top of that, late registration can trigger a penalty in addition to the tax due, and interest owed usually runs from the original due date.

How businesses track thresholds

Although every business follows its own standard operating procedures, there are some common approaches, with varying levels of manual effort.

• Periodic manual review. Sales are exported by customer location and compared against each market's limit (usually quarterly). This is typically manageable in two or three markets, but once that number grows, it can become problematic as reviews often occur after the fact.

• Reporting built on billing data. Sales are reported by country, state, or province straight from the system that already issues the invoices. That removes the manual export, but someone still has to read the report and know each market's limit.

• Automated threshold monitoring. Sales are measured against each market's registration limit continuously, and an alert is raised as a limit approaches. Monitoring tools flag the limit rather than register on your behalf, so registering remains the business's burden.

Regardless of which approach you use, you need your sales by customer location, measured over the period each market actually uses, and visible before a limit is crossed rather than at year-end.

How Airwallex Billing helps businesses automate tax thresholds

Airwallex Billing automatically calculates and applies the correct tax at the point of billing, reducing manual effort and compliance risk while helping businesses expand into new markets. Threshold monitoring tracks sales against each market's registration limit and gives an early warning as one approaches, so registration happens on time. Most tax tools sit on top of a payment provider, whereas with Airwallex, tax is built directly into the billing workflow, across invoicing, subscriptions and checkout. Learn more about Airwallex Billing.

Frequently asked questions

Does a business need a local entity to register for VAT or GST?

No. Most markets allow non-resident registration, and several require it. Australia applies its AUD 75,000 threshold to non-residents, and in the European Union and the United Kingdom a seller with no local establishment is generally required to register from its first taxable sale.

Do business-to-business sales count toward the threshold?

It depends on the market and the type of sale. Regimes designed for digital services frequently count sales to consumers only. Where the reverse charge applies in the European Union and the United Kingdom, a registered business customer accounts for the tax instead of the seller, but that does not by itself remove a registration requirement.

Is there a threshold for selling digital services into the European Union?

For a seller established outside the European Union, no. The EUR 10,000 figure applies to sellers established within the Union. A non-EU business selling digital services to EU consumers registers from its first sale and can report through the non-Union One Stop Shop scheme rather than registering in each member state.

What happens if a business registers late?

The tax is generally owed from the date the obligation began. Because that tax was never charged to customers, it comes out of the seller's margin, and a penalty and interest are usually added on top.

Do US economic nexus thresholds include exempt sales?

Economic nexus is the US version of a registration threshold, set state by state, and the answer varies by state. Some states measure gross sales, which can include sales that are not themselves taxable, so a business can cross a threshold on exempt revenue. Each state's definition should be checked rather than assumed.

How often do these thresholds change?

Regularly. The United Kingdom moved from GBP 85,000 to GBP 90,000 in April 2024, the European Union's small enterprise scheme took effect in January 2025, and at least seven US states removed transaction count tests between January 2025 and August 2026.

Sources

OECD, VAT policy and administration. https://www.oecd.org/en/topics/vat-policy-and-administration.html

OECD, Consumption Tax Trends 2024. https://www.oecd.org/en/publications/consumption-tax-trends-2024_dcd4dd36-en.html

GOV.UK, VAT Notice 700/1: who should register for VAT. https://www.gov.uk/government/publications/vat-notice-7001-should-i-be-registered-for-vat

Australian Taxation Office, How Australian GST works. https://www.ato.gov.au/businesses-and-organisations/international-tax-for-business/gst-for-non-resident-businesses/how-australian-gst-works

European Commission, VAT rules for electronic commerce. https://taxation-customs.ec.europa.eu/taxation/vat/vat-e-commerce_en

Council Directive 2006/112/EC, Article 283, via EUR-Lex. https://eur-lex.europa.eu/eli/dir/2006/112/oj

Sales Tax Institute, Economic Nexus State Guide. https://www.salestaxinstitute.com/resources/economic-nexus-state-guide

Inland Revenue Authority of Singapore, Goods and Services Tax. https://www.iras.gov.sg/taxes/goods-services-tax-(gst)