VAT for software companies
The software industry is evolving rapidly and the digital distribution of applications and software is increasing.
With many ways of monetizing, the transaction chain is making hard to apply the correct VAT treatment which might lead to inaccurate VAT calculations and allocations.
Software is taking over
With advancements in network bandwidth capabilities, streaming or downloading software is increasingly taking over physical distribution, allowing instant access to countless programs and applications. Most companies allow users to purchase and download their system services or digital products from the web. Moreover, digital distributions platforms such as Apple’s App Store or Google Play allow software developers to distribute their products worldwide using third-parties applications.
New ways of software distribution
Software was once a product that was purchased, installed and maintained but with the rise of cloud computing and its adoption, Software as a Service (SaaS) has become a popular distribution method, where all the development, maintenance and upkeep of the program is done by the original creator.
Other important development for the software industry has to do with the way companies monetize their service. In 2018, users spent more than $16 billion on non-gaming apps in Apple’s and Google’s digital stores and it may reach to more than $120 billion by 2023. Paid apps, in-app purchases, subscriptions, advertising and freemium apps are different revenue streams which will have a direct impact on your VAT position.
VAT challenges for software companies
The software industry is evolving rapidly, and the digital distribution of applications and software is increasing. With many ways of monetizing, the transaction chain is making hard to apply the correct VAT treatment which might lead to inaccurate VAT calculations and allocations.
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Streamline your VAT compliance with GVC
Global VAT Compliance has the knowledge and experience to make your company fully VAT compliant while you expand your software business all over the world.
We offer comprehensive coverage across the globe providing services in Europe, the Asia Pacific region, Middle East and South and North America. Global VAT Compliance is able to provide Fiscal Representation in countries where even for Software Company services this is required, such as Switzerland, Serbia and Albania.
GVC is up to date with all the new and ever changing regulations as so your company is complying with local tax requirements so you can focus on your business and expansion opportunities across the globe.