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Tax Compliance for International B2C SaaS Businesses 

B2C SaaS is the business most likely to be building tax liabilities on international sales.

Most countries in the world use have some form of VAT, GST or sales tax. And most of these make the sale of digital goods and services to end consumers taxable. For many countries (including the UK and all of the 27 EU countries) there is also no threshold. For these countries a liability arises from the first B2C sale!

As if this wasn’t challenging enough information sharing with and between tax authorities is increasing. From the first quarter of 2024 new EU regulations require payment service providers to collect and report information on cross border payments.

Tax Compliance for International B2C SaaS Businesses 
EU

Selling to the EU

The non-union EU One Stop Shop (OSS) regime simplifies VAT compliance across the EU.  Rather than registering in each of the 27 EU member states the OSS return

UK

Selling to the UK

As with the EU, the UK requires VAT to be charged from the first B2C SaaS sale to domestic customers.  In addition, all UK VAT returns now need to be filed using Making Tax Digital compliant software.

US

Selling to the United States

Sales tax in the US operates at the state level.  That means each state gets to determine their own sales tax rates and rules for when sales tax applies.  To make matters worse, taxes are also applied at local levels within states meaning there are over 12,000 different taxing jurisdictions in the US.

One positive note for SaaS businesses is that not all of the 45 US states that have a sales tax have determined SaaS services to be taxable.  ITS can help you navigate both the sales tax rules and also the solutions for automating sales tax rate calculation and return filing.

OTHER

Selling to other countries

We wish we could do everything everywhere but for some countries you will need to appoint a local advisor to file local tax returns.  ITS has a range of global contacts and it would be our pleasure to point you in the right direction if we can’t assist directly.

Ready to find out more?

It’s easy - just call, email or make an appointment today for a free, no-obligation chat. And when you’re ready to go ahead, we can set you up straight away.