VAT stands for Value Added Tax. VAT is a type of transaction tax levied on goods and services in more than 170 countries around the world. It is an “indirect” or “consumption” tax meaning that the tax is not paid by the business making the sale but by the consumer.
Different VAT rules apply to your business depending on where your company is located and what kinds of goods or services you sell. Cross-border sales of digital goods and services, like SaaS, to customers located outside of where your business is located, are subject to a different VAT ruleset than the local VAT rules which apply when you sell to customers in your business’ home country.