Sales Tax for SaaS: A Solo Founder Guide (US, EU, UK)

Short answer: As a solo SaaS founder you probably owe US sales tax in very few states, because most states only require collection once your sales into that state pass $100,000 or $500,000. Consumer sales into the EU and UK work the other way: a seller based outside those regions owes VAT from the first sale. Either register and file yourself with a tool like Stripe Tax, or hand the whole job to a merchant of record.

Figures below come from tax authorities, the Sales Tax Institute or vendors' own pages, checked 8 Nov 2026. Opinions are marked as ours.

TL;DR#

• US: Since the Supreme Court's Wayfair decision on June 21, 2018, states can require remote sellers to collect sales tax based on sales volume alone (Sales Tax Institute). Thresholds are mostly $100,000 or $500,000.
• SaaS taxability varies: Texas taxes it on 80% of the charge, New York and Washington tax it, California starts taxing digital products, including remotely accessed software, from 1 January 2027 (CDTFA).
• EU: Non-EU sellers can register once under the OSS non-Union scheme and file quarterly (European Commission).
• UK: £90,000 threshold for UK businesses, but overseas businesses register "regardless of taxable turnover" (GOV.UK).
• Tools: Stripe Tax at 0.5% per transaction where registered, or a merchant of record (Paddle, Lemon Squeezy, Polar) at 5% + 50¢ on entry plans that files for you.

Disclosure: ZeroRaised is a launch site for bootstrapped products and has no commercial relationship with any tax tool, payment provider or merchant of record named here. This is general information, not tax advice. Rules change and depend on where you and your customers are, so confirm with an accountant or the tax authority before you file.

First, decide who is the seller#

With a payment processor like Stripe, you are the legal seller, so every registration and filing is yours. A merchant of record (MoR) such as Paddle, Lemon Squeezy or Polar resells your software and remits tax in its own name. We compare the two in depth in merchant of record vs payment processor. The rest of this guide assumes you are the seller.

US sales tax: nexus, thresholds, taxability#

Economic nexus in one paragraph#

You owe sales tax in a state when you have "nexus" there. Physical presence creates it, and since Wayfair so does selling enough into the state: "Every state with a sales tax has economic nexus requirements for remote out-of-state sellers" (Sales Tax Institute). Start with your home state, then watch each threshold.

Thresholds in the biggest states#

Thresholds from the Sales Tax Institute economic nexus guide (chart dated 8/1/2026), which is a secondary source. California's threshold is confirmed by the CDTFA and Texas's by the Comptroller's remote seller page. Note that Illinois "removed their 200 transactions threshold effective January 1, 2026". Some states count only certain sales toward the threshold, so let your tax tool measure it.

Why taxability matters as much as nexus#

Crossing a threshold only matters if the state taxes what you sell:

• Texas treats SaaS as a data processing service: "Data processing services providers include sellers of software as a service". And "Twenty percent of the charge for data processing services is exempt from tax", so you collect on 80% of the price (Texas Comptroller, Publication 96-259).
• New York says "the sale to a purchaser in New York of a license to remotely access software is subject to state and local sales tax" (TB-ST-128).
• Washington lists remote access software and digital automated services among taxable digital products (WA DOR).
• California is the big change. Its current guidance says "Tax does not apply to charges for canned or non-custom programs (software) transferred to the purchaser electronically" (CDTFA). But the CDTFA also says that "Beginning January 1, 2027, sales and use tax generally applies to the retail sale of a digital product", and Senate Bill 122 expands taxable property to digital products whether transferred electronically or "Accessed remotely" (CDTFA digital products guide). Our read: if you sell SaaS into California, check the CDTFA guide now and watch the $500,000 threshold before 2027 starts.

Register, collect, file#

Once you have nexus in a state that taxes SaaS:

1. Register with that state's tax authority before you collect anything.
2. Collect at the rate for the customer's address, often including local rates.
3. File and remit on the schedule the state assigns, including zero returns.

EU VAT for SaaS#

Selling to EU consumers (B2C)#

If you are based outside the EU, the OSS non-Union scheme is for a business "who supplies services to non-taxable persons taking place in the EU" (European Commission, register for OSS). You register in one member state, charge each customer the VAT rate of their country, and file one return. The Commission says "The VAT return is submitted quarterly in the non-Union and in the Union scheme" (OSS overview), due by the end of the month after each quarter (declare and pay).

What about the €10,000 threshold founders hear about? The Commission says "The threshold of EUR 10 000 only applies to TBE services and intra-Community distance sales of goods" (TBE means telecoms, broadcasting and electronic services, the bucket SaaS falls into), for a supplier established in only one member state, and that suppliers established outside the EU with EU fixed establishments "cannot make use of the threshold" (OSS overview). Our read: if you are a US, UK or Canadian founder with no EU establishment, plan on charging EU consumer VAT from the first sale.

If you are based in one EU country, sales to consumers in other EU countries below €10,000 a year can stay at your home VAT rate. Above it, you charge the customer's country rate, usually through the Union OSS scheme.

Selling to EU businesses (B2B)#

For a business customer with a valid VAT number, the customer generally accounts for the VAT under the reverse charge. The EU's Your Europe guide says "Your customers will pay VAT on the services received at the applicable rate in their country" (Your Europe). Check each VAT number in the Commission's VIES tool at checkout, keep the result, and note the reverse charge on the invoice.

UK VAT for SaaS#

The UK threshold is £90,000: you register if "your total taxable turnover for the last 12 months goes over £90,000" (GOV.UK). That is for UK businesses. The same page says you must "register (regardless of taxable turnover)" if, among other conditions, "you're based outside the UK" and you supply goods or services to the UK.

HMRC's digital services guidance says supplies of digital services to UK consumers "are liable to UK VAT", and if you sell through a marketplace "the digital platform is responsible for accounting for VAT" (GOV.UK). The standard rate is 20% (GOV.UK VAT rates).

Our read: for a non-UK founder, one UK consumer subscription can trigger registration, a strong argument for a merchant of record at small scale.

Canada, briefly#

Canada also taxes digital services from abroad. A non-resident vendor selling taxable digital products or services to Canadian consumers must register for GST/HST, and can use the simplified regime, once those supplies exceed "$30,000 CAD over any 12-month period" (Canada Revenue Agency).

Tools and what they cost#

Stripe also offers Stripe Managed Payments, a merchant of record option at "3.5%" per successful transaction "in addition to Payments fees" (Stripe Tax pricing). For a fuller comparison of the two most popular MoRs, read Paddle vs Lemon Squeezy for indie makers.

Decision table by stage (ours)#

This is our editorial view, not tax advice.

Worked example (illustrative)#

Made-up numbers to show the arithmetic. A US founder sells a $29/mo plan: $180,000 a year from about 6,200 payments. Texas brings $35,000, New York $22,000, Washington $12,000, and EU and UK consumers $30,000.

• US: No state is over its threshold, so only the home state matters (if it taxes SaaS).
• EU and UK: Consumer sales mean OSS non-Union and UK VAT registrations from the first sale.
• Stripe Tax: If $45,000 falls in registered jurisdictions, 0.5% is $225 a year, plus time for four OSS returns and the UK returns.
• Merchant of record at 5% + 50¢: Each $29 payment costs $1.95, so roughly $12,100 a year, replacing processing fees and all filing.

Our read: the gap is real money, but card fees you would pay anyway and skipped filing hours offset much of it. Our guide on how to sell software online covers the checkout side of that choice.

Quarterly sales tax checklist#

1. Export sales by US state, EU country and UK.
2. Compare each US state with its threshold; register anywhere you crossed.
3. Confirm every zero-VAT B2B invoice has a VIES-checked number.
4. File the OSS return by the end of the month after the quarter.
5. File UK VAT and any US state returns, including zero returns.
6. Reconcile tax collected with tax remitted.

Frequently asked questions#

Do I have to charge sales tax on SaaS?#

In the US, only in states where you have nexus and where SaaS is taxable. Economic nexus usually starts at $100,000 or $500,000 of sales into a state, and SaaS is taxed in some states (Texas, New York, Washington) but not others. California is changing: from 1 January 2027 it generally taxes digital products, including software accessed remotely. Outside the US, EU and UK consumer sales usually carry VAT from the first sale for a non-resident seller.

What is the sales tax threshold for SaaS in the US?#

Each state sets its own. Per the Sales Tax Institute chart, California and Texas use $500,000, New York uses $500,000 and more than 100 sales, and Florida, Washington, Illinois and Georgia use $100,000 (Georgia also counts 200 or more sales). Illinois dropped its 200-transaction test from 1 January 2026.

Does a US SaaS company need to charge EU VAT?#

On sales to EU consumers, generally yes. Non-EU businesses supplying services to non-taxable persons in the EU can register in one country under the OSS non-Union scheme and file a quarterly return. For B2B sales to VAT-registered customers, the customer usually accounts for the VAT under the reverse charge, so check their VAT number in VIES.

Is a merchant of record cheaper than Stripe Tax?#

Usually not on fees. Stripe Tax is 0.5% of volume where you are registered, while Paddle and Lemon Squeezy charge 5% + 50¢ per transaction. But a merchant of record also registers, files and remits tax worldwide, so you pay for time saved and lower filing risk.

When should a solo founder register for sales tax?#

Register in a US state before your first sale after you cross its threshold, and register for EU OSS and UK VAT before you sell to consumers there (or use a merchant of record). Set up threshold monitoring early so the trigger does not surprise you.

Sorted your tax? Launch it#

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Sources#

• Sales Tax Institute: economic nexus state guide, last checked 8 Nov 2026
• CDTFA: Tax guide for retailers and purchasers of digital products, last checked 8 Nov 2026
• CDTFA: Wayfair use tax collection requirements, last checked 8 Nov 2026
• CDTFA: tax matrix and common transactions, last checked 8 Nov 2026
• Texas Comptroller: Publication 96-259, Taxable Services, last checked 8 Nov 2026
• Texas Comptroller: remote sellers, last checked 8 Nov 2026
• New York: TB-ST-128 computer software, last checked 8 Nov 2026
• Washington DOR: digital products including digital goods, last checked 8 Nov 2026
• European Commission: One Stop Shop, last checked 8 Nov 2026
• European Commission: register for OSS, last checked 8 Nov 2026
• European Commission: declare and pay OSS, last checked 8 Nov 2026
• Your Europe: cross-border VAT, last checked 8 Nov 2026
• European Commission: VIES, last checked 8 Nov 2026
• GOV.UK: when to register for VAT, last checked 8 Nov 2026
• GOV.UK: VAT rules for digital services to private consumers, last checked 8 Nov 2026
• GOV.UK: VAT rates, last checked 8 Nov 2026
• Canada Revenue Agency: cross-border threshold amounts, last checked 8 Nov 2026
• Stripe support: understanding Stripe Tax pricing, last checked 8 Nov 2026
• Stripe Tax pricing, last checked 8 Nov 2026
• Paddle pricing, last checked 8 Nov 2026
• Lemon Squeezy pricing, last checked 8 Nov 2026
• Polar fees, last checked 8 Nov 2026
• TaxJar pricing, last checked 8 Nov 2026
• Numeral pricing, last checked 8 Nov 2026
• Quaderno pricing, last checked 8 Nov 2026