The Highlights
- Several EU countries maintain digital services taxes on US tech platforms.
- These DSTs have sparked an ongoing dispute between the U.S. and the EU.
- The most visible direct impact of this dispute for American sellers is the introduction of digital services fees by Amazon and potentially more surcharges by other companies like Meta.
The ongoing tensions between the United States and the European Union over Digital Services Taxes (DSTs) have made cross-border tax compliance for ecommerce a hot topic. Several EU members maintain small DSTs on revenues from digital advertising, sales, and other services, which in turn has a trickle-down impact on U.S. businesses.
What are the current tax reporting requirements for the digital economy, and how does all this impact U.S.-based sellers? Find out everything you need to know with this RJM Tax Exemption guide.
The DST Dispute
Countries like France, Austria, Spain, and Italy introduced digital services taxes as an interim way to tax digital revenues within their borders, sparking digital services tax compliance challenges.
Why were these taxes introduced?
Many EU states believe that existing sales tax rules fail to capture value from user data and online activity accurately. The U.S. believes these taxes are discriminatory because they disproportionately affect U.S. businesses.
| Country | Digital Services Tax Rate |
| Hungary | 7.5% |
| Austria | 5% |
| France | 3% |
| Italy | 3% |
| Portugal | 3% |
The U.S. Response
The U.S. response has occurred in waves since the start of 2025. This includes actions like:
- Withdrawing from OECD Pillar 1 negotiations for a global framework to replace DSTs
- Launching Section 301 investigations into countries levying a DST
- Discussions to heavily tax tech companies based in the EU (these tariffs aren’t currently in place)
As a whole, the U.S. position demanding greater EU market access and the elimination of these DSTs has raised questions about digital services tax compliance for small businesses in the U.S.
Direct Impacts on U.S. Ecommerce Sellers
So what will cross-border tax compliance for ecommerce businesses look like in 2026 and beyond?
Increased Platform Fees + Pass-through Costs
Major marketplaces and advertising platforms subject to DSTs often pass down this burden to users.
- Amazon levied a digital services fee of 2-3% in October 2024 on certain selling and fulfillment fees for sales in regions with DSTs, including France and Spain. This effectively adds 2-3% to operational costs for small businesses operating in the region.
- Advertising platforms like Google and Meta may similarly levy a surcharge on ads targeting DST countries. This would raise customer acquisition costs and require better planning for digital services tax compliance for small businesses.
The net effect is that margins may erode for U.S.-based businesses. Mid-sized businesses, in particular, may be more affected if they rely on high-volume, low-margin products.
Heightened Compliance Uncertainty
With the current digital economy tax reporting requirements being up in the air, there’s a lot of uncertainty around future retaliatory actions. Renewed 301 probes into EU countries levying a DST increases the likelihood of future tariffs on EU goods.
While that wouldn’t directly affect U.S. businesses, it could prompt retaliatory tariffs from the EU. If this happens, it could impact EU market access for American companies and digital services tax compliance on marketplaces like Amazon.
Cross-Border Tax Compliance Strategies for Ecommerce Businesses
Monitor Platform Changes
Platforms affected by DSTs may continue to modify their fees. As an ecommerce seller, you should use tools like Amazon’s seller dashboard and Automated Pricing Tool to track and adjust for these fees (where necessary).
If you’re unsure about how/if this impacts your sales tax filing obligations, speak to a tax expert immediately.
Use the OSS Scheme
EU VAT is still a pillar of digital services tax compliance for American businesses. While this remains unchanged by the DST dispute, you should make sure you’re using the OSS scheme to simplify your tax obligations where you can.
This scheme allows U.S.-based businesses to register in one EU state to report and pay VAT on all distance sales and digital services across all 27 EU members.
Stay Informed on Trade Developments
While it’s virtually impossible to predict the future course of this dispute, you should be doing your best to track new developments as they happen so you can react in time. Follow the RJM Tax Exemption blog to stay one step ahead with proactive tax compliance solutions.
Master Digital Services Tax Compliance with RJM
Cross-border tax compliance for ecommerce businesses has never been more challenging as we head into 2026. RJM Tax Exemption’s proactive tax strategies keep you ahead in a dynamic market, steering clear of penalties and red tape. Find out how you can simplify your cross-border tax needs with a free consultation.
Frequently Asked Questions
Do U.S.-based sellers have to pay digital services tax when selling directly to EU customers?
Generally, no. DSTs are designed to target large multinational platforms like Amazon or X.
Will the EU impose tariffs targeting U.S. sellers?
There’s currently no reason to believe they will. Even though the U.S. has launched Section 301 probes on certain EU countries, digital services tax compliance for small businesses will likely stay unchanged unless the trade war escalates. Track digital economy tax reporting requirements by following RJM!
What should U.S. ecommerce sellers do about VAT when selling to EU countries with digital services taxes?
DSTs don’t affect VAT. As a U.S.-based ecommerce seller, your VAT obligations are separate from DSTs.
