SaaS Taxation: Understand How It Works

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For years, the taxation of Software as a Service (SaaS) has been the subject of discussions in the legislative and judicial spheres in our country. Initially, there were several doubts and differences of understanding surrounding the taxation of SaaS companies, including in relation to the definition of this technological solution as a service or product.

In this article we explore the main issues related to the taxation of Software as a Service (SaaS). Enjoy your reading!



What is SaaS (Software as a Service)?
Also known as cloud software, SaaS computer gambling data saudi arabia programs are those that can be used remotely through any device with internet access. It is difficult to find a company that does not depend on SaaS in its activities.

Given the differences in treatment that permeate the taxation of SaaS, it is necessary to establish a conceptual delimitation between software produced to order, that is, customized software, and off-the-shelf software, which is standardized and sold on a large scale in the market. Thus, we have the following:

the first is defined by national doctrine and jurisprudence as “a computer program produced to order to meet the specific needs of a given user”;
the second is defined as “a computer program produced on a large scale in a uniform manner and placed on the market for acquisition by any interested party in the form of multiple copies”.
How does SaaS taxation work?
There was a time when SaaS taxation was at the mercy of the understanding of the Federal Supreme Court (STJ) and the Supreme Court of Justice (STJ), according to which software developed for customers in a personalized way is a service (ISS is levied), while that produced on a large scale, called off-the-shelf software, is characterized as merchandise (ICMS is levied).

Currently, after a ruling by the Federal Supreme Court (STF), the most recent position on the taxation of SaaS came into effect, which equates “on-demand” and “off-the-shelf” software, establishing that both are characterized as services, therefore subject to ISS, which is a tax under municipal jurisdiction.

Aside from this discussion, which has long surrounded the taxation of SaaS, it is important to highlight that, usually, the taxation of a company in this segment occurs in accordance with the rules of the tax regime in which the company is inserted – Simples Nacional, Lucro Presumido or Lucro Real.