When a foreign business establishes either a physical or economic nexus, it is generally required to collect sales tax in New Jersey.
Physical nexus is determined by the company’s activities or physical presence within the state. Additionally, reaching a certain sales or transaction threshold can create economic nexus obligations, requiring the business to collect and remit sales tax in New Jersey.
Next, let’s understand the physical nexus threshold for foreign businesses in New Jersey.
In New Jersey, Physical nexus is determined by the foreign company’s activities or physical presence within the state.
New Jersey retailers who meet the physical nexus requirements generally must collect state sales tax. The following are some factors that contribute to the physical nexus in New Jersey:
Next, let’s understand the economic nexus requirements for foreign businesses in New Jersey.
Economic nexus applies when a business meets specific sales or transaction thresholds in New Jersey, regardless of whether it has a physical presence. As of 2025, a remote seller establishes economic nexus with New Jersey if, in the current or prior calendar year, it:
Next, let’s understand how electronically transferred digital products are subject to sales tax in New Jersey.
New Jersey imposes a sales tax on certain digital products transferred electronically. These are referred to as specified digital products. This may include the following:
New Jersey uses sourcing rules to determine whether a sale is subject to New Jersey sales tax. For specified digital products, the key factor is the location where the product is considered delivered.
If a specified digital product is electronically delivered to a customer with a delivery location in New Jersey, the sale is generally subject to New Jersey sales tax.
If the delivery location cannot be determined, New Jersey looks to other available information. The sale may still be taxable if the seller’s business records or the purchaser’s address identify a New Jersey billing address.
These sourcing rules apply if the seller has established sales tax nexus with New Jersey through physical or economic nexus.
Example: A seller with New Jersey sales tax nexus sells a downloadable music file to a New Jersey resident who is temporarily traveling in another state. Even though the download occurs outside New Jersey, the sale is generally sourced to New Jersey based on the customer’s New Jersey billing address. As a result, the seller should generally collect and remit New Jersey sales tax on the transaction.
Many foreign companies sell their products or services online through marketplaces such as Amazon, Walmart, and eBay to customers in New Jersey. However, these foreign companies may wonder whether they need to collect sales tax or whether that responsibility falls to the online marketplaces. Next, let’s understand who is responsible for collecting sales tax when selling to customers in New Jersey via an online marketplace.