Tennessee: The Volunteer State

Tennessee is located in the south-east of the USA and is one of the southern states. Its area of ​​110,000 km² is surrounded by eight other US states. No other US state has more neighbors, only Missouri has the same number. The Volunteer State is home to almost 6.7 million people. According to ehuacom, Tennessee’s capital is Nashville.

Businesses coming to Tennessee are looking for more than just a location to do business, they are looking for a home. This would at least be an explanation for why the “Volunteer State” is home to Jack Daniel’s, Duracell (batteries), GE (refrigerators) and La-Z-Boy (chairs). The award as the state with the best business climate in the USA (Business Facilities, 2019) completes the exciting picture of Tennessee.

The Tennessee site’s reputation for high quality of work precedes it. Companies like Nissan, General Motors or Volkswagen can confirm that this reputation has a right to exist.

Tennessee Location Map

QUALITY CRAFTSMANSHIP

“Made in Tennessee” is now considered a seal of approval in the global business community. The high quality of craftsmanship and the craftsmanship of the workforce have made the site one of the most recognized in the world.

Innovative partnerships for the workforce and groundbreaking education reform for high-demand skills were created in Tennessee. More than 88,000 students have enrolled in the Tennessee Promise, which is committed to providing high school graduates with two years of absolutely tuition-free attendance at a community or technical college. Tennessee is the first state in the US to make this pledge. It’s also a promise to current and prospective employers that when you bring your business to Tennessee, you will have the support of a committed and highly qualified workforce.

The measures introduced are already bearing fruit. The first class of Tennessee Promise students began in the fall of 2015. Graduates from that year and beyond are now a well-trained workforce. Tennessee ranks fifth nationally for population growth of the millennial workforce (US News). In the Central South, the Volunteer State is number one in workforce development (Site Selection, 2020).

STRONGHOLD FOR FDIS

Tennessee likes to boast that no other US state can match its competitiveness in attracting foreign direct investment. In fact, the Volunteer State has become home to over 1,000 overseas-headquartered companies. These companies have invested a total of almost $40 billion in capital and, among other things, created jobs for more than 155,000 Tennesseans. Companies from Germany each take second place (behind Japan) when it comes to the amount of investment and job creation.

In 2019 alone, the Tennessee Department of Economic and Community Development received 34 project commitments from foreign-owned companies, resulting in nearly 4,500 job commitments and $1.4 billion in investment. This FDI is responsible for nearly a third of all new Tennessee jobs committed in 2019 and 45 percent of all capital investment. The largest project comes from Volkswagen and involves an investment of 800 million dollars and the creation of 1,000 new jobs.

TENNESSEE INCOME TAX

Tennessee does not levy an income tax. However, there are federal income taxes to be paid.

TENNESSEE CORPORATE INCOME TAX

Tennessee charges a 6.5% corporate income tax. In addition, federal corporation tax is payable.

SALES TAX IN TENNESSEE

There is no sales tax or Value Added Tax (VAT) in the USA based on the European model. Instead, in the United States, states, counties, and municipalities levy a local sales tax on the sale of products (but not services).

Sales tax rate in Tennessee

The sales tax in Tennessee is 7% at the state level. Municipalities or districts charge an average of 2.55% sales tax. Combined, an average of 9.55% is due.

Tennessee Nexus Laws & Sales Tax

Learn more about the Economic Nexus Laws in the context of Sales Tax here.

Effective Date

July 1, 2019

Transactions included:

Sales to customers in Tennessee (excluding resales)

Treatment of tax-exempt transactions:

Exempt Sales and Exempt Services are included in the threshold calculation; Sales for resale are excluded; Sales via an online marketplace are also excluded from October 1, 2020

Reason:

Sale only

Sales/Transactions Threshold:

Before October 1, 2020: $500,000

As of October 1, 2020: $100,000

Evaluation period:

The threshold applies to the previous 12-month period

Extra information:

  • Registration Requirements: Tennessee requires remote businesses to register and begin collecting and remitting Tennessee sales and use taxes by the first day of the third calendar month following the month in which they cross the Economic Nexus Threshold. See 1320-05-01-.129(2)(b)for more details.
  • Guide for Out of State Dealers
  • HB0667
  • SB 2932
  • Hint #20-24

Tennessee Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

October 1, 2020

Economic Nexus Threshold:

More than $500,000 in retail sales to Tennessee customers in the previous or current calendar year through September 30, 2020 (threshold changes to $100,000 effective October 1, 2020). When calculating the threshold:

Remote sellers should include sales made through a marketplace through September 30, 2020, but exclude sales made through a marketplace after October 1, 2020.

Marketplace intermediaries should include all sales made through the marketplace from October 1, 2020 (excluding sales for resale).

Registration requirements:

  • Remote Multichannel Sellers: You must register and collect your Tennessee sales tax on sales that are not taxed by a Marketplace Agent once you have crossed the Economic Nexus Threshold.
  • Remote Marketplace Sellers: Effective October 1, 2020, you no longer need to register with the state even if you cross the Economic Nexus Threshold. Contact the Tennessee Department of Revenue (DOR) for more information.
  • In-State Multichannel Sellers: You must register with the DOR and collect tax on sales that are not taxed by a marketplace intermediary.
  • State Marketplace Sellers: You must register. Contact the DOR for more information.