Ask Reggi Your Question Now

Reggi is the free generative AI assistance for regulatory compliance
Ask a Question

Can I offer a freemium version of my product or service in Iowa? What are the requirements?

Offering Freemium Version of Product or Service in Iowa

If you are offering a freemium version of your product or service in Iowa, you may be subject to Iowa sales tax and applicable local option sales tax. The Iowa Administrative Code does not specifically address freemium models, but it does provide guidance on the sales tax obligations of retailers, remote sellers, and marketplace facilitators [1.1](#[1.4])[1.6](#[1.6]).

Sales Threshold

If you have a physical presence in Iowa, such as property or personnel located in Iowa, you are required to collect and remit Iowa sales tax and any applicable local option sales tax, regardless of whether you meet the sales threshold [1.1](#[1.1]). If you are a remote seller, you must determine whether you meet the sales threshold based on the total of your Iowa sales through marketplaces combined with your nonmarketplace Iowa sales [1.4](#[1.4]). If you are a marketplace facilitator, you must collect and remit Iowa sales tax and applicable local option sales tax on all taxable sales made through your marketplace that are sourced to Iowa, regardless of the location or sales volume of the marketplace sellers who make sales on your marketplace [1.6](#[1.6]).

Exempt and Nontaxable Sales

If your freemium version of the product or service is exempt or nontaxable, you may not be required to register for a sales tax permit [1.5](#[1.5]). However, if you are required to collect and remit Iowa sales tax and applicable local option sales tax, you are responsible for correctly applying exemptions for tangible personal property, specified digital products, and services [1.5](#[1.5]).

Conclusion

In summary, if you are offering a freemium version of your product or service in Iowa, you may be subject to Iowa sales tax and applicable local option sales tax, depending on your sales threshold and the taxability of your product or service. If you are unsure about your sales tax obligations, you should consult with a tax professional.

Source(s):
Jurisdiction

Iowa