Vermont Changes Tax Treatment of SaaS – Effective July 1, 2024
Co-authored by Nicholas Smetana
In mid-June, the Vermont General Assembly overrode Governor Phill Scott’s veto of legislation involving the taxation of remotely accessed computer software, commonly referred to as cloud computing (for ex., software as a service, or SaaS). The bill can be accessed here (see page 14 of .pdf, Sec. 3).
As a result, effective July 1, 2024, Vermont no longer exempts purchases of such software from sales/use tax. This is a sudden change which surprised many taxpayers. The previous exemption of such items from tax had been in place since 2015.
This change will impact not only SaaS providers with nexus in Vermont and their tax collection and remittance responsibilities, but also businesses located there in terms of payments of sales/use tax to vendors and potential self-assessments of use tax on non-taxed purchases of software for use in their business. For more information, see the state’s website here.
This legislation effectively aligns the sales tax treatment of SaaS or cloud-based remote access software to Vermont’s existing treatment of downloaded software and software transferred physically via disk, USB, or other tangible medium. In short, Vermont now subjects all pre-written software to sales tax, regardless of the method of access or delivery.
If you would like to discuss this matter, or any other state and local tax matters in more detail, please contact Leanne Scott or your BNN tax advisor at 800.244-7444.
Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.