A sales tax can be either origin or destination based. In the origin-based model, the tax is the tax rate and rules in the seller’s location, and in the destination-based model, the tax rate and rules are those in the buyer’s location. This report compares the two models.

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President Donald Trump shakes hands with President of the European Commission Ursula von der Leyen as he announces a trade deal with the EU at Trump Turnberry golf club on July 27, 2025, in Turnberry, Scotland. (Andrew Harnik via Getty Images)