News and Insights

Cloud Computing and Electronically Delivered Software Not Subject to Florida Sales and Use Tax

Tax Development Sep 27, 2016

The Florida Department of Revenue (“Department”) issued guidance on the sale of custom software and cloud computing subscriptions. The taxpayer in question was in a partnership with a software provider, which allowed the taxpayer to license the provider’s basic software and sell it to its customers. Prior to selling the software to its clients, the taxpayer would generally customize it. Along with the custom software, the taxpayer also sold subscriptions to the software developer’s cloud service. Customers could only access the software remotely or by electronic means.

In keeping with prior guidance, the Department found that the taxpayer’s sales of software subscriptions and cloud computing services were not subject to Florida sales and use tax.  Furthermore, the Department also found that the taxpayer’s sale of electronically delivered custom software was also not subject to tax. However, the Department further explained that if any prepackaged or canned software was sold by way of a tangible medium, it would be subject to Florida sales and use tax.

The full analysis can be found in Florida Technical Assistance Advisement, No. 16A-014, August 8, 2016.


Julie Moore