Vermont SaaS Sales Tax: Remote Access Prewritten Software Is Taxable
Vermont changed its sales tax treatment of prewritten computer software effective July 1, 2024.
All sales of prewritten computer software are subject to Vermont sales and use tax, including software:
- purchased on storage media;
- downloaded to a computer system;
- accessed remotely through the Internet.
For SaaS businesses, this means that remote access alone does not make software non-taxable.
Prewritten Computer Software Is Taxable
Vermont taxes all sales of prewritten computer software.
Example:
Standard software subscription USD 500/month
If the software is standardized and provided to multiple customers, it generally qualifies as prewritten computer software.
The transaction is generally taxable.
Remote Access Software Is Also Taxable
Before the 2024 change, Vermont had exempted prewritten software accessed remotely and not downloaded.
That changed under Act 183 of 2024.
Effective July 1, 2024:
Prewritten software accessed remotely via the Internet is taxable.
Example:
Cloud CRM subscription USD 800/month
Customer:
- accesses software online;
- does not download a copy;
- uses hosted software functionality.
If the platform is prewritten computer software, the transaction is taxable.
Delivery Method No Longer Controls Exemption
Vermont now taxes prewritten software regardless of delivery or access method.
| Delivery or Access Method | Vermont Tax Treatment |
|---|---|
| Storage media | Taxable |
| Downloaded software | Taxable |
| Remote access via Internet | Taxable |
SaaS providers should not assume that cloud delivery creates an exemption.
SaaS Businesses Should Identify Prewritten Software
SaaS companies commonly provide:
- cloud software access;
- subscription software;
- hosted applications.
The key question in Vermont is:
Does the SaaS product qualify as prewritten computer software?
Standard SaaS Platform
Software used by multiple customers generally resembles prewritten software.
Custom Software
Software developed specifically for one customer requires separate analysis.
Common Vermont SaaS Compliance Issues
Applying old remote-access rules
Before July 1, 2024, remotely accessed and non-downloaded prewritten software had been exempt.
That exemption no longer applies under the new rule.
Assuming SaaS is automatically exempt
SaaS that qualifies as prewritten computer software is taxable.
Ignoring the effective date
The rule applies effective July 1, 2024.
Incorrect billing configuration
SaaS providers should ensure billing systems can identify:
- Vermont customers;
- prewritten software;
- remote access subscriptions.
Compliance Tips for SaaS Businesses
Businesses selling SaaS or software products in Vermont should:
- Determine whether the product is prewritten computer software;
- Apply the July 1, 2024 effective date;
- Avoid relying solely on remote access or no-download status;
- Configure Vermont sales tax correctly;
- Maintain contracts, product descriptions, and invoices.
Conclusion
Vermont now taxes prewritten computer software regardless of delivery or access method.
Key rules:
- Prewritten software on storage media: Taxable;
- Downloaded prewritten software: Taxable;
- Remotely accessed prewritten software: Taxable;
- SaaS that qualifies as prewritten software: Taxable.
For SaaS businesses, the key issue is whether the product is prewritten computer software, not whether it is delivered through the cloud.
Sources
Vermont Department of Taxes — Prewritten Computer Software https://tax.vermont.gov/business-and-corp/sales-and-use-tax/prewritten-computer-software