Vermont’s Exemption on Cloud Computing

Linda Epstein
October 19, 2016

This blog was last updated on June 26, 2021

Last year Vermont enacted legislation to be exempted from taxation sales of cloud computing (also known as remotely accessed prewritten software, Software-as-a-Service, “SaaS”, or ASP).

A Brief Legislative History

In 2010, Vermont issued a technical bulletin that interpreted existing law as imposing tax on prewritten software regardless of how the software was accessed. Act 143 of 2012 imposed a moratorium on the assessment of sales tax on purchases and allowed for refunds of tax paid. The moratorium expired on July 1, 2013. The Vermont Department of Taxes then issued a fact sheet outlining whether a transaction involving remotely accessed software may or may not be subject to tax. This guidance lapsed as of July 1, 2014. The Department then circulated draft regulations for comment and composed the legislation that was eventually enacted on July 1, 2015.

Cloud computing goes from taxable to exempt

Originally the Vermont Department of Taxes imposed tax on cloud computing because the state considered the charge for the right to access remotely prewritten software as charges for tangible personal property. However, the 2015 Legislation provides that software accessed solely on a cloud platform does not fall within the definition of tangible personal property. Based on the 2015 legislation it is clear Vermont now treats charges for access over the cloud as a computer service or intangible transaction, which is generally not subject to sales tax unless specifically enumerated.

Be aware…

This legislation addressed only software accessed remotely. Prewritten software in other forms — including download — would continue to fall under the definition of tangible personal property found in 32 V.S.A. § 9701(7). Vermont also continues to tax specific digital products including digital audio-visual works, digital audio works, digital books, and ringtones that are transferred electronically.

Take Action

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Linda Epstein

Linda Epstein is a Senior Tax Research Specialist at Sovos. Linda has over eight years of experience in tax research. She has worked as a paralegal for more than 20 years within the legal department at Sovos and various law firms in the Boston area. Linda has earned two paralegal certificates, one in general paralegal studies and the other specializing in corporate law. Linda has a B.S. from Lesley University and is currently earning her Masters in Paralegal Studies at George Washington University.
Share this post

Hungary Supplemental Insurance Premium Tax
EMEA IPT
July 11, 2022
Extra Profit Tax: An Introduction to Supplemental IPT in Hungary

This blog was last updated on October 28, 2024 Update 7 October 2024 by Edit Buliczka Hungarian Tax Office Updates IPT Declaration Form for 2023 The procedure necessary to correct an underdeclared premium figure in Hungary can be complicated. The complexity of a correction for return form 2320 has become even more challenging. Following a […]

2025 bond project
North America Tax Information Reporting
November 4, 2024
The Insurer’s Guide to the 2025 Bond Project

This blog was last updated on November 4, 2024 The regulatory landscape for insurance companies is undergoing significant changes with the Principles-Based Bond Project which is set to take effect on January 1, 2025. These changes, driven by the National Association of Insurance Commissioners (NAIC), will impact how insurance companies classify and value bond investments, […]

E-Invoicing Compliance EMEA VAT & Fiscal Reporting
November 1, 2024
New ViDA Proposal Set for ECOFIN Approval

This blog was last updated on November 1, 2024 The Council of the European Union has released a new proposal regarding the VAT in the Digital Age (ViDA) reform. The proposal aims to modernise and streamline VAT systems across the EU, notably e-invoicing and Continuous Transaction Controls (CTC). Members States will review it on 5 […]

what is peppol
E-Invoicing Compliance North America
October 29, 2024
What it is PEPPOL?

This blog was last updated on October 29, 2024 Peppol E-invoicing explained: What it is and how it works The global adoption of electronic invoicing is accelerating. Governments worldwide are pushing to adopt e-invoicing to digitally transform their national systems and, often, to close the VAT gap. While many countries have introduced their own e-invoicing […]

remote sellers sales tax
North America Sales & Use Tax
October 28, 2024
Will Congress Act to Simplify Remote Seller Sales Tax Collection

This blog was last updated on October 29, 2024 When the United States Supreme Court ruled in 2018, that South Dakota’s law imposing sales tax collection requirements on sellers without in-state physical presence was constitutional, it did not grant states free reign. States are still responsible for ensuring that their sales tax requirements are manageable, […]

dtc shipping laws for craft spirits
North America ShipCompliant
October 23, 2024
Why It’s Time to Reform DtC Shipping Laws for Craft Spirits

This blog was last updated on October 23, 2024 While wine lovers have enjoyed the convenience of direct-to-consumer (DtC) shipping for nearly two decades, the craft spirits market is still not afforded the same access. Outdated and restrictive spirits shipping laws have kept the spirits industry from fully leveraging the benefits of DtC shipping, leaving […]