billing-taxation

name	billing-taxation
description	Use when identifying tax, billing, and revenue recognition obligations for software products sold globally. Covers service type classification and billing codes, VAT/GST/sales tax, invoicing requirements, revenue recognition (ASC 606/IFRS 15), cloud credits and stored-value models, and money transmission risks for prepaid systems. USE FOR: sales tax, VAT, GST, billing codes, service classification, invoicing requirements, revenue recognition, ASC 606, IFRS 15, cloud credits, stored value, prepaid credits, tax nexus, digital services tax, e-invoicing, withholding tax, transfer pricing DO NOT USE FOR: payment processing compliance (use financial-regulation), consumer refund policies (use consumer-protection), contract pricing terms (use contracts), tax return preparation (consult a tax advisor)
license	MIT
metadata	{"displayName":"Billing & Taxation","author":"Tyler-R-Kendrick"}
compatibility	claude, copilot, cursor
references	[{"title":"OECD International VAT/GST Guidelines","url":"https://www.oecd.org/tax/consumption/international-vat-gst-guidelines.htm"},{"title":"IFRS 15 Revenue from Contracts with Customers","url":"https://www.ifrs.org/issued-standards/list-of-standards/ifrs-15-revenue-from-contracts-with-customers/"},{"title":"FASB ASC 606 Revenue Recognition","url":"https://asc.fasb.org/606"}]

Billing & Taxation

Disclaimer: This skill provides general educational information about legal topics relevant to software development. It is not legal advice and is not tax advice. Tax laws are complex, vary by jurisdiction, and change frequently. Always consult a qualified tax advisor and legal counsel licensed in the relevant jurisdiction before making tax or billing decisions for your organization.

Overview

Every software company that charges customers faces a web of tax and billing obligations that vary by what you sell, how you sell it, who you sell it to, and where both parties are located. Misclassifying your service type, failing to collect applicable taxes, or improperly recognizing revenue can result in back-tax liabilities, penalties, and audit exposure. Additionally, billing models that use "credits," "tokens," or "units" instead of currency can inadvertently trigger money transmission, stored-value, or consumer protection regulations.

Service Type Classification

How your product is classified determines which tax rates, billing codes, and regulations apply. The same software can be classified differently depending on the jurisdiction and delivery method.

Classification Categories

Classification	Description	Tax Treatment (General)	Examples
SaaS	Software accessed via internet, no download	Taxable in many US states + most countries (digital service)	Salesforce, Slack, GitHub
Licensed software (download)	Software delivered electronically for local installation	Taxable as tangible personal property in some states; digital good in others	Adobe Creative Suite (perpetual), desktop apps
Professional services	Consulting, implementation, custom development	Often exempt or lower rate than software	Integration services, custom dev, training
Information services	Data feeds, research, analytics	Varies widely — exempt in some states, taxable in others	Bloomberg terminal, market data feeds
Infrastructure / IaaS	Compute, storage, networking resources	Emerging rules — taxable as digital service in many jurisdictions	AWS EC2, Azure VMs, GCP Compute
Platform / PaaS