How Vertex helped SurveyMonkey to manage its international tax compliance

About SurveyMonkey

SurveyMonkey is a SaaS company providing enterprise survey software solutions with a mission to help individuals and organizations transform feedback into intelligence that drives growth and innovation. Headquartered in the US, its international head office is located in Dublin.

Its People Powered Data platform is recognized globally as helping individuals and businesses to obtain insights and business intelligence in areas from market research, audience polling, competitive analysis or customer and employee feedback. The brand has seen phenomenal success and it now has over 17 million active users, 713,217 paying customers as of Q3 2019, and over 335,000 organizations using it in 190 territories across the globe.

The Challenge

Selling both B2C and B2B digital services across different territories can be a challenge when managing tax liabilities. Tax rules are specific to each country’s individual taxing authority and with SurveyMonkey customers spanning over 190 different regions, managing tax liabilities was a time consuming task.

In the early days, SurveyMonkey took an in-house approach to manage its VAT/GST collection, filing, and remittance. This meant internal teams validated VAT/GST business numbers and reporting was collated from a variety of different systems. These were then compiled into the tax reports required for filing in the relevant taxing jurisdictions where tax thresholds were met - the entire process was a series of multiple interactions and interventions.

At the time of checkout business customers were asked to add their VAT/ GST number and the sale would then be processed excluding country VAT/ GST applying the reverse charge rule. VAT numbers were then validated by accessing the VIES database and checking the VAT number was valid for tax purposes. If the number was entered incorrectly by the customer, the team would then reach out directly to the customer to obtain the correct number.

This approach worked effectively for a period of time. However, as rapid business growth was achieved, tax obligations with different tax authorities and regimes also grew.

According to David Burke, Director of Accounting & Finance at SurveyMonkey, changes to the international tax environment, specifically on digital services driven by the G20 and OECD BEPS framework meant that VAT/GST compliance was also becoming more complex. “With 40+ countries introducing the digital VAT/GST laws and more countries implementing the new rules, we needed help to navigate this new tax environment. We also required help developing robust solutions to location-specific tax rules, and Vertex has been a great help to us on this front.”

While individual VAT/GST number validation was time-consuming in itself, the SurveyMonkey finance and accounting team were also managing and tracking their tax obligations in new countries as sales grew.

The growing success of company sales in new regions was also reflected in the growing need to track sales against tax thresholds in each region and the obligation to register for tax once these thresholds were met. It was clear that keeping up with these growing tax obligations was going to require the implementation of a scalable and flexible process that could streamline tax compliance across the sales process.

Why Vertex?

SurveyMonkey began looking for a provider who could help manage their VAT/GST transactions tax liabilities. Having evaluated a number of solutions, SurveyMonkey decided on Vertex. Burke comments: “Based on our evaluations, we felt Vertex offered a robust solution and it ticked boxes on a number of different levels. Since it’s delivered as SaaS, the solution can scale quickly, integrate into our existing systems easily and didn’t require reconfiguration, which solved another internal issue since the engineering team was fully based in the US at the time and busy developing our own products.”

A team of tax specialists at Vertex ensure that the system keeps ahead of changes to tax regulations and environments across the globe, and work locally in-country with tax specialists to determine changes or new country requirements. These changes are reflected in the solution, helping SurveyMonkey to scale quickly as new tax jurisdictions come onboard.

Business Benefits and Outcomes

The Vertex solution is now handling all aspects of VAT/GST compliance across all of the markets that SurveyMonkey operates in, outside of the U.S.

Burke states: “The solution has helped us streamline and simplify a process that could possibly be seen as complex and burdensome. Today SurveyMonkey uses Vertex's real-time customer location determination logic and then applies the VAT/GST rules per transaction. Everything is recorded and reportable in real-time at the transaction level. SurveyMonkey has used Vertex's compliant invoicing solution to implement a service allowing customers to access their VAT invoices in real-time through their SurveyMonkey account.”

The Vertex system also monitors SurveyMonkey’s non-U.S. sales against tax thresholds in each country and alerts the finance team when it is reaching a tax threshold and needs to register with the relevant tax authority for filing purposes. In addition to enabling the easy facilitation of country-specific tax reports, Vertex also applies the correct foreign exchange rate for each tax report. The system automatically applies foreign exchange rates based on the source directly specified by the taxing authority of the region.

According to Burke: “It has significantly reduced our internal costs associated with indirect tax compliance.”

The Vertex solution is also supporting SurveyMonkey’s growth goals.

Burke adds: “The Vertex team has gone above and beyond in terms of helping us across a number of different challenges, from the integration itself to onboarding new tax jurisdictions as they emerge. Vertex helps us to scale and grow as we move into new markets and assists us in achieving our growth targets in markets where indirect tax compliance may be a challenge.”