FastSpring Tax Engine
The tax landscape is always changing, so our tax specialists are constantly looking for ways to improve our platform and make it easier to sell in today's global market.
Starting May 1, 2021, FastSpring is releasing a series of product enhancements and tax calculation changes that will improve the way we calculate taxes on your behalf. We’ve also improved our tax selection tools to help sellers quickly and efficiently classify their products.
Why we are updating our tax engine
Using industry-leading proprietary and third-party tools, our tax experts monitor global regulations to ensure your business is protected and compliant. FastSpring uses product tax categories to accurately calculate how much to tax customers for your products and services. Accurate tax classification is critical for tax compliance to ensure that we are not over or undercharging taxes on transactions and decreases audit liability.
Because there are more than 11,000 tax jurisdictions in the US alone, determining the taxability for your products and services can be one of the more tedious and time-consuming parts of tax compliance. Choosing the right tax code without being a tax expert is no easy task, so we released a product tax category and a Tax Category Selection Helper to help you select the correct product code.
Several countries have also announced plans to change the way they tax digital goods and services. In response, we'll be launching Value Added Tax (VAT) collections in several new jurisdictions this summer to keep you compliant in these locations. These countries will include Chile, Mexico, Indonesia, and a few others.
- Improved accuracy of product tax classification. We expanded support for more categories that apply to digital products and updated our questionnaire to make it easier to determine the correct product tax categories for your products and services.
- Tools for faster product classification. We created a Tax Code Selection Helper and added the ability to apply a single default tax category to all the products in a Store to streamline product classification for our Sellers.
What is needed from SellersTo avoid the risk of over or under-charging your buyers on taxes, please make sure your products are mapped to the correct product tax category:
- Contextual platform instructions (if you log in via app.fastspring.com)
- Classic platform instructions (if you log in via springboard.fastspring.com)
If you have already categorized your products, there is no further action needed from you at this time. You can review and edit product tax categories at any time directly in the FastSpring platform using the instructions in our documentation.
What is changing
On May 1, 2021, we went live with our new tax engine to provide the most accurate tax calculations for your products and services. We also increased the number of product categories that we support to improve tax classification, and added the ability to apply a single tax category to all the products in your Store.
After the changes take effect on May 1, some of your customers may pay more or less tax for your products and services based on three factors:
- Product tax category
- Buyer’s location
- Applicable tax laws
Overall, these changes will only impact 3% of current subscriptions on the FastSpring platform. However some transactions may have a noticeable impact on the customer, so we have prepared a short response below for you to reference.
What to tell customers if they ask about the changes
This year, several countries and jurisdictions around the world are changing the way they tax digital goods and services, and that includes the products we sell that you’ve come to rely on.
Since we are not tax experts, we partner with FastSpring tax specialists to ensure we accurately calculate and collect taxes, so you never overpay on transactions.
The changes we are making to the way we collect taxes this year will ensure we stay compliant with changing global tax regulations and you can keep enjoying the products and services we sell for a long time to come.