29/04/2026
Ever wondered why the U.S. uses sales tax while Europe relies on VAT?
Understanding the difference between sales tax and VAT is essential for anyone doing business across the U.S. and the EU. While both are consumption-based taxes, they work very differently in practice.
In the U.S., sales tax is collected only at the final point of sale, which can lead to complications in the supply chain if sellers cannot prove that their buyers are not end users. Sales tax is supposed to be collected and remitted only at the final point of sale, but some studies estimate that up to 40% of the total sales tax revenue comes from taxes levied on B2B transactions.
In the EU, VAT is charged at every stage, but businesses can deduct the VAT they pay – making it economically neutral for B2B transactions.
For companies operating in Hungary, this means they will be charging VAT, tracking it on all invoices, and they will be able to deduct the VAT content of purchases from the VAT they would need to pay based on their sales. Modern accounting tools help, but compliance still requires attention.
If you choose to work with us, Helpers keeps you updated on these rules so you can stay compliant and focus on running your business.
👉 Read more: https://helpersfinance.hu/what-is-the-difference-between-sales-tax-and-vat/