How are taxes calculated without a physical location?

[Baxa]

If I don't have a physical location anywhere how are taxes calculated?

[Victor]

Hi @Baxa,

Although this may depend on where in the world you are based, if you are running your business from your home then your home address will likely be deemed as a physical location from a tax perspective. The address you use when you sign up for your Shopify store will be listed as a location in your tax settings, along with any others you choose to add.

Can you tell me in which country you are based, please? I'll then be able to offer more guidance and resources with regards to setting up your taxes within Shopify.

[Baxa]

I'll be operating from Azerbaijan

[Victor]

Hi @Baxa,

Okay, thank you. Do you know yet where in the world you're looking to sell to?

In terms of being based in Azerbaijan, you'll want to refer to your country's local business and taxation laws and determine what your obligations are from a tax perspective. Even if you don't intend to sell locally, you may still be required to register for sales tax.

If you are unsure of your obligations you can look into hiring a Shopify Expert who specializes in sales taxes.

[Baxa]

I want to sell both in the USA and to the rest of the world.

[Victor]

Hi @Baxa,

Okay, great. I would recommend spending some time looking into the various tax registration laws for the countries and regions you wish to sell to, as they will vary and have different thresholds with regards when you need to register and start registering for sales tax. For example, in the United States sales tax registration is done on the state level, and each state will have different laws about what sellers need to register. Economic tax nexus laws means you may eventually need to register for sales taxes in certain states even if you don't have a physical presence there.

You then have regions like the European Union where sales tax laws are very different. You'll also want to consider the various costs of shipping around the world in terms of shipping fees, taxes, and duties. I'd recommend checking out our Ultimate Guide to International Commerce article featured on the Shopify Blog to learn more about selling around the globe.

[Ufrancis84]

That’s interesting ofcourse you can!