Sales tax and VAT terms for global finance teams
A comprehensive glossary of expert definitions and practical insights designed specifically for modern software and SaaS companies.
Whether you’re dealing with bundled transactions, trying to understand nexus thresholds, or managing cross-border digital service taxes, use this glossary to stay compliant and up to date while scaling globally.
Terms
Terms
Economic nexus
Economic nexus means a seller is deriving enough revenue and economic benefit from customers in a jurisdiction so as to warrant the jurisdiction imposing a sales tax obligation. Although each test can vary by jurisdiction, a typical example is when a seller has $100,000 in gross sales or 200 individual invoiced transactions in a jurisdiction. If the seller has reached the jurisdiction-specific economic nexus threshold, they are now required to register with the jurisdiction and begin collecting and remitting sales tax.
As of April 2021, all jurisdictions that impose a sales tax have enacted economic nexus provisions.
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