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FastSpring Senior Director of Tax Rachel Harding contributed to this article. Read a customer success story that utilized Rachel’s extensive tax expertise here.
When we ask our customers, “Why did you choose a merchant of record (MoR) over a traditional PSP?,” one of the most common responses is the ease of tax compliance — the ability to “set it and forget it.”
But tax is far from a static topic. In fact, it shapes economies and influences global commerce. That’s why we continuously monitor tax regulations worldwide — tracking threshold changes, new legislation, and tax rate adjustments — so that our platform remains compliant and seamlessly supports your business.
One of the key areas of tax compliance we manage is VAT (value-added tax) on sales of digital services. Many countries issue separate guidance to regulate the supply of digital goods and services, when provided by a foreign company. (Sometimes this is referred to as ESS, or electronically supplied services regulations.) And the tax treatment can differ from rules followed by a resident company. It’s important to understand the nuances to remain tax compliant.
These regulations often broaden the scope of transactions subject to VAT and can include services such as:
- Streaming platforms (e.g., Netflix, Spotify).
- Online advertising (e.g., Google Ads, Facebook Ads).
- Cloud computing services.
- eLearning platforms.
- Software and app subscriptions.
Other requirements can include engaging a local representative to act on your behalf, triggering income tax nexus (in addition to VAT nexus) and may even require you to settle any outstanding balances prior registration. But each country has a unique approach to global tax compliance.
Upcoming Regulations
On January 17, 2025, the Philippines extended its VAT legislation to cover digital services supplied by foreign companies to consumers in the Philippines. They’ve issued several interim deadlines, but the important date is June 1, 2025. Companies should register and be ready to collect 12% VAT at the very latest by June 1, 2025.
We’ll be ready — will you?
Want a Payments Platform That Will Worry About Taxes for You?
You can stay up to date by reading complex tax regulations — or you can partner with FastSpring. As your global commerce partner, we stay ahead of these changes so you can focus on growing your business without tax-related worries.
For more details on tax compliance with FastSpring, visit our tax documentation or reach out to FastSpring Support.
About FastSpring
FastSpring is how SaaS, software, digital products, and video game companies sell online in more places around the world. We handle every payment need — from subscription management to tax collection, remittance, and more — so your business can go farther, faster. We’re also the leading merchant of record for global software companies, powering over a billion dollars in worldwide transactions every year. We’ll manage your checkout, VAT and sales taxes, compliance, and more, freeing you to focus on what you do best: building great software.
Set up a demo or try it out for yourself.
