Vermont will impose its sales and use tax on sales of remotely accessed software effective July 1, 2024 (Bill H.887). Vermont’s governor originally vetoed the bill, but the legislature overrode the veto on June 17, 2024.
Vermont’s definition of “tangible personal property” includes “prewritten computer software,” but the legislature had enacted an exemption for remotely accessed software in 2015. The new legislation expands the “tangible personal property” definition to cover prewritten computer software “regardless of the method in which the prewritten computer software is paid for, delivered, or accessed.” Correspondingly, the new legislation repeals the 2015 exemption for sales of remotely accessed software.
Vermont’s legislature originally considered a broader bill that was intended to impose the sales and use tax on platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS) sales, as well. However, the legislature ultimately decided to adopt narrower prewritten computer software language to avoid taxing PaaS or IaaS. Notably, the legislative history includes various committee reports and presentations with examples of offerings that the presenters considered remotely accessed software versus PaaS or IaaS.
The legislation also imposes a 3% surcharge on short-term occupancy rentals and enacts various property tax increases.
Contact the Authors: Maria Eberle, Lindsay LaCava, Mark Yopp and Dmitrii Gabrielov
