Washington: The Evergreen State

Washington State is located in the Northwest of the United States. The western border is the Pacific Ocean, to the north is the Canadian border, to the east is Idaho, and to the south is Oregon. The area is a good 180,000 km² and is characterized by a sharp contrast between the coastal and mountainous regions in the west. In the east of the state, the areas are mostly dry. The majority of the 6.7 million inhabitants are concentrated in the 150-kilometer-long Puget Sound bay. According to ehuacom, there are also the capital Olympia and the most populous city Seattle.

Thanks to prudent state leadership and a fast-growing economy, the opportunity to invest in Washington has never been better. Investors can start their own companies or invest in companies across the state that are rapidly recovering from the global pandemic, growing and expanding exponentially. Washington not only prides itself on, but deserves, its reputation as a world-class commercial center focused on exports and international business.

“The Evergreen State” can call itself the home of many global players such as Amazon, Microsoft or Boeing. Altogether, more than half a million companies are either headquartered in Washington or have an office here.

Washington Location Map

BUSINESS FRIENDLY CLIMATE

In the past, Washington was best known for airplanes, today almost every industry is represented in the “evergreen state” from high-tech to manufacturing and life sciences to maritime professions.

The state offers various competitive advantages, including industry-specific tax incentives. The tax structure favors successful, growing companies because they can retain a larger share of profits.

Washington has received several awards as an excellent location. For example, in 2018 and 2019, it ranked first in the “Best State Economy” category (WalletHub) or took the top spot as “Best Places for Business and Careers” (Forbes 2018). The state also has the best broadband connection in the country (Technet), as well as the cheapest kilowatt-hour price for industrial electricity.

The above aspects serve as reasons why several of the best-known brands, most innovative companies and smartest startups choose Washington as their location.

MODERN CREATIVE ECONOMY

Rural communities are increasingly becoming havens for tech-enabled startups, from games and mobile apps to big data, as broadband rolls out across the country. The Puget Sound region has become an information and communications technology epicenter, second only (to Silicon Valley) in size and scope.

There are a number of local companies that have become international leaders in their industries. Two of them, Amazon and Starbucks, are named as representative. Many companies such as Facebook, Google or Apple, who do not want to forego Washington’s pioneering spirit and ideas, settle here.

As a result, new industries have emerged, such as commercial space travel, artificial intelligence, virtual reality and robotics.

READY FOR THE FUTURE

The global pandemic and accompanying economic downturn in 2020 demonstrated what Washington leaders already knew: diversification is a key to resilience. While a number of industries such as tourism or aerospace struggled, others such as life sciences or technology continued to thrive. They are responsible for the rapid recovery and make an important contribution to long-term prosperity.

Washington State will continue to be synonymous with corporate success and economic growth. The combination of a highly qualified workforce, cheap energy and an inspiring lifestyle offer entrepreneurs many opportunities to realize themselves.

INCOME TAX IN WASHINGTON

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

CORPORATE INCOME TAX IN WASHINGTON

Washington does not collect a corporate tax. However, corporation tax has to be paid in the federal government.

WASHINGTON SALES TAX

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 Washington

The sales tax in Washington is 6.5% at the state level. Municipalities or districts charge an average of 2.73% sales tax. Combined, an average of 9.23% is due.

Washington Nexus Laws & Sales Tax

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

Effective Date

October 1, 2018

Transactions included:

– Cumulative gross receipts from retail sales and taxable services in the state through December 31, 2019.

– Cumulative gross annual income in Washington as of January 1, 2020.

Treatment of tax-exempt transactions:

Exempt Sales and Exempt Services are included in the threshold; Resales are also included from January 1, 2020

Reason:

Sale only

Sales/Transactions Threshold:

$100,000

Evaluation period:

The threshold applies to the previous or current calendar year

Extra information:

  • Through July 1, 2019, remote sellers with US state sales between $10,000 and $100,000 and fewer than 200 transactions have a choice: collect and remit sales tax or meet the use tax reporting requirements for non-collecting sellers. Effective July 1, 2019, the tax reporting option for unclaimed sellers will be removed.
  • Washington also enforces the Economic Nexus for its Business and Occupation (B&O) tax on gross receipts.
  • Registration Requirements: A remote business must register to collect and remit Washington sales tax on the first day of the month beginning at least 30 days after the threshold is exceeded. See Registration Requirements for Out-of-State Businesses formore information.
  • remote seller
  • Registration Thresholds

Washington Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

January 1, 2018; new requirements from October 1, 2018 and July 1, 2019

Economic Nexus Threshold:

More than $100,000 in retail sales shipped to Washington in the current or previous calendar year. The threshold changes to more than $100,000 in cumulative gross income in Washington effective January 1, 2020. Remote sellers should include sales through a marketplace in the calculation of the threshold. Marketplace intermediaries include all sales made through the marketplace when calculating the threshold.

A notice:

Through June 30, 2019, remote marketplace brokers and remote sellers with Washington taxable sales between $10,000 and $100,000 must make an election to register and collect and remit sales tax in Washington or use the notification and Comply with reporting requirements for non-collective sellers. Effective July 1, 2019, the reporting option for not recording sellers will no longer apply.

Registration requirements:

  • Remote Multichannel Sellers: You must register with the Washington Department of Revenue (DOR) and collect Washington sales tax on sales that are not taxed by a marketplace intermediary once you have crossed the Economic Nexus Threshold.
    • For sales made through a bulk marketplace, use the “Retail Sales Tax Collected by Facilitator” statement.
  • Remote Marketplace Vendors: You must register with the Washington DOR once you have crossed the Economic Nexus Threshold.
    • For sales made through a bulk marketplace, use the “Retail Sales Tax Collected by Facilitator” statement.
  • In-State Multichannel Sellers: You must register with the Washington DOR and collect taxes on sales that are not taxed by a marketplace intermediary.
    • For sales made through a bulk marketplace, use the “Retail sales tax collected by Facilitator” statement.
  • State Marketplace Vendors: You must register with the Washington DOR.
    • For sales made through a bulk marketplace, use the “Retail Sales Tax Collected by Facilitator” statement.
    • Marketplaces must collect all other applicable taxes on behalf of marketplace sellers effective January 1, 2020.