For international SaaS businesses entering the U.S. market, tax compliance can be surprisingly complex. Unlike countries that apply a single national tax system, the U.S. relies on a decentralized approach—each state sets its own rules, rates, and definitions of what’s taxable. That means what applies in California may not apply in Texas or New York. Things can get decidedly sticky if you’re doing business here, from abroad.

If you’re selling cloud-based software to U.S. customers, it’s essential to understand how sales tax works across state lines—and where your business might have obligations. In this guide, we’ll walk through the fundamentals of U.S. SaaS tax compliance for global sellers and highlight the steps you need to take to stay on the right side of the rules.

Here’s what we’ll cover:

Article Index

  1. The Global SaaS Marketplace
    Understanding the expanding reach of SaaS and why global tax compliance is a strategic necessity.
  2. VAT, GST, and Sales Tax—Same Idea, Different Execution
    A comparison of tax systems around the world and how U.S. sales tax differs significantly from VAT and GST.
  3. Nexus: The Rulebook for U.S. Sales Tax
    Explains the concept of nexus and how economic thresholds trigger tax obligations in the U.S.
  4. Why Global SaaS Tax Compliance Gets Complicated
    Outlines the challenges businesses face when managing tax compliance across multiple jurisdictions.
  5. Staying Compliant Without Losing Sleep
    Options for SaaS companies to manage compliance.
  6. Key Takeaways: Global Tax, Local Rules
    A summary of best practices for handling SaaS tax compliance when expanding into new markets.

Would you like more information? Let’s talk. Reach out to us at info@milesconsultinggroup.com.

1. Welcome to the Global SaaS Marketplace

SaaS is booming. These days, customers can sign up for your product with a credit card and an email address. But as your customer base grows across continents, so does your tax responsibility.

Global tax compliance isn’t just a box to tick—it’s a strategic imperative. Whether you’re collecting VAT in Europe or GST in Australia, staying compliant keeps you on the right side of tax authorities and preserves your reputation with customers.

But what happens when you enter the U.S. market? Things can get even more complicated.

2. VAT, GST, and Sales Tax—Same Idea, Different Execution

If you’re doing business in the EU, the UK, or Australia, you’re probably familiar with VAT (Value-Added Tax) or GST (Goods and Services Tax). These are credit-based systems: businesses charge tax on sales but can usually reclaim tax on purchases. It’s structured, centralized, and relatively predictable.

Now, cross over to the U.S., and things take a turn.

Instead of VAT or GST, you’re dealing with sales tax. It’s not federal—it’s state-driven. That means 50 different states (and thousands of local jurisdictions) with their own rules, rates, thresholds, and filing requirements.

Also, there’s no reclaiming input tax. The U.S. system leans on exemptions, not credits. So, if you’re selling B2B, your customers might be exempt—but they’ll need to provide valid resale or exemption certificates. No certificate? You collect the tax. And when it comes to B2C sales, it’s almost always taxable.

We have our own handy, comprehensive breakdown of SaaS tax by state.

3. Nexus: The Rulebook for U.S. Sales Tax

Here’s where things get even trickier: nexus.

In U.S. tax speak, nexus means a sufficient connection between your business and a state. It used to be about physical presence—offices, employees, inventory. But since 2018’s South Dakota v. Wayfair decision, economic activity counts too.

Translation: If you cross a state’s sales or transaction threshold (often $100,000 in revenue or 200 transactions), you have nexus—and tax obligations—in that state.

4. Why Global SaaS Tax Compliance Gets Complicated

Managing global SaaS tax compliance is a full-time job. Here’s why:

  • Every jurisdiction is different. What’s taxable in one place might be exempt in another (again, our SaaS sales tax by state will give you a full breakdown).
  • Rules change constantly, especially in digital services and SaaS.
  • Customers expect clarity. If you charge them tax incorrectly—or fail to explain why—it reflects poorly.
  • Non-compliance isn’t cheap. Penalties, interest, backdated taxes… plus the cost of an audit or investigation.

5. Staying Compliant Without Losing Sleep

So, what’s a growing SaaS company to do? Navigating global tax compliance doesn’t have to keep you up at night. You have two main options: handle it in-house or enlist the help of the experts.

  • In-house: This can work for smaller teams or businesses operating in just a few markets. However, managing tax compliance internally requires a skilled, tax-savvy team, staying on top of ever-changing tax laws, and implementing robust reporting systems to ensure everything is accounted for correctly. If your business is expanding rapidly or entering new jurisdictions, this approach can quickly become overwhelming.
  • External Tools & Advisors: Most global SaaS companies eventually turn to automation—tools that can streamline the calculation, collection, and remittance of taxes in real time. These platforms integrate seamlessly with your billing system, apply the correct tax rate for each jurisdiction, and help you manage filings effortlessly. Many also assist with exemption certificate collection and validation. While these tools significantly reduce the manual burden, they still require ongoing monitoring to ensure accuracy and to manage any exceptions that might arise.

But here’s the key takeaway: While automation is incredibly effective, nothing beats the human touch.

At Miles Consulting, we know that tax compliance can be daunting, especially when you’re on the other end of the globe, navigating multiple regions in the U.S. with different rules. That’s where we come in. Our team of experts is here to support you, offering tailored guidance to ensure you stay compliant without the hassle. Automation and technology are valuable tools, but human expertise is indispensable when it comes to complex compliance challenges. Let us take the weight off your shoulders—our team will help you stay ahead of the game.

For personalized assistance with your US SaaS sales tax strategy, no matter where you are in the world, contact Miles Consulting.

6. Key Takeaways: Global Tax, Local Rules

Here’s the cheat sheet for SaaS businesses expanding across borders:

  • Understand what tax applies where: VAT/GST outside the U.S., sales tax inside.
  • Track where you have nexus: Especially in the U.S., monitor thresholds and stay proactive.
  • Don’t assume exemptions are automatic: Especially with B2B sales, documentation is everything.
  • Invest in technology: Manual processes don’t scale.
  • Work with advisors: Tax is too complex (and risky) to go solo in new markets.

Going global is exciting—but staying compliant is essential. A smart tax strategy protects your business, your customers, and your bottom line.