The tax department is responsible for GitLab’s overall tax strategy including all components of tax compliance, tax planning and accounting for income taxes. Tax regulations taxation differ between countries, which can make this area complex. The tax team is here to support you, make it simple for you and guide you through the landscape of taxes. In case you have any ad-hoc questions please feel free reach out on the #tax channel on Slack. For the sake of clarity please do not use it to seek tax advice for personal matters. We will try to do our best to answer your questions on taxation of your #stock options though. For any in-depth discussions please reach out to the team.
The Tax Department is part of the Finance team and headed by the Director of Tax. The Director of Tax reports to the Chief Financial Officer. For more information please check GitLab’s Org Chart. In addition, the employees responsible for entity finance functions have a ‘dotted’ lines towards the Director of Tax. The table below provides an overview of the responsibilities of the tax function in a RADCIE-model:
|RADCIE Model||Director of Tax||Controller||Everyone|
|Tax Planning||A / R||C / I|
|Tax Returns||A / R||C / I|
|Tax Risk Management||A / R||C / I|
|Tax Reporting||A / R||C / I|
|Tax Accounting||A / R||C / I|
|Tax Payments||A / R||C / I|
The Accounting and External Reporting Manager has the responsibility to deal with statutory tax reporting. However, the Accounting and External Reporting Manager informs the Director of Tax and keeps the Director of Tax up to date on tax related subjects. In order to ensure the uniform taxation of GitLab and to avoid adverse consequences and tax risks, the Director of Tax is empowered to make recommendations for GitLab. This applies to all areas of taxation, e.g. Corporate Income Tax, Transfer Pricing, Value Added Tax, GST, Tax Accounting, Tax Audits, et cetera.
The scope of the Tax Function includes, but is not limited to continuous evaluation of i) GitLab's effectiveness of GitLab’s tax planning, ii) GitLab's tax risk management and iii) GitLab's tax risk controls; while supporting the Finance team’s stated goals and objectives. In exercising its activities the responsibilities of the Tax Department can be described as follows:
As described in the responsibility section, the Tax Department supports the Finance team to reach it goals and OKR's as set by the Management. To support the goals of using the GitLab Handbook as source of truth, some of the tax procedures have been described below. There are more to come as this is an iterative process.
Maintenance of Corporate Structure covers the following procedure
GitLab's corporate structure per June 2021 is as follows (countries and incorporation dates included):
GitLab Inc (USA 2014-09-10) ├── GitLab Federal LLC (USA 2019-01-04) ├── GitLab GK (JP 2019-11-18) ├── GitLab Korea Limited (SK 2020-02-27) └── GitLab BV (NL 2014-02-19) ├── GitLab IT BV (NL 2019-08-07) ├── GitLab UK Limited (UK 2016-08-31) ├── GitLab GmbH (DE 2017-08-09) ├── GitLab PTY Ltd (AUS 2018-08-06) ├── GitLab Canada Corp. (CA 2019-07-08) ├── GitLab France SAS (FR 2021-05-27) ├── GitLab Ireland Limited (IE 2020-07-30) └── GitLab Singapore Holding PTE LTD (SG 2020-12-10) └── GitLab Singapore Subsidiary (to be incorporated)
What are the prerequisites for a decision to establish a NewCo in a country where GitLab does not have a corporate footprint yet? It basically comes down to a combination of two factors:
Local presence is a result of organic and exponential growth of the GitLab team. At a given point in time the workforce in a country has grown to a substantial level where the demand for an entity is getting too large to ignore.
Sales revenue from certain territories where GitLab is active, can also lead to a demand from the business to establish an entity. A clear reason from tax risk management is to prevent that GitLab runs a permanent establishment risk in any of the territories.
To monitor developments and keeping stakeholders informed, weekly cross-functional meetings are held with Legal, Payroll, People Ops and Tax. FP&A is included about planned hiring for new markets.
Subsidiary Board Meeting Process
The corporate secretary for each subsidiary board shall ensure that there are separate calendar invites for all attendees within each session, all including exact session start and end times, the appropriate Zoom link, and links to the notes doc, agenda and any supplemental materials:
One of the consequences of GitLab's global footprint is that intercompany transactions are conducted between GitLab entities. For instance, finance team members in the USA support the German entity with daily activities; or backend engineers support development of GitLab's IP that is owned by GitLab BV. International tax law requires that intercompany transactions are performed at arm’s length. At arm's length means that GitLab's companies should agree on terms and conditions of these services that independent enterprises would also apply (i.e. pay for use of services, goods or intangibles). Intercompany transactions can be grouped into four categories:
At GitLab the supply of tangibles is non-existent while the other transaction categories are available at GitLab. The intercompany transactions between the entities are provided in the table below:
|GitLab Federal LLC||X|
|GitLab South Korea||X|
|GitLab IT BV||X|
|GitLab UK Ltd||X||X|
|GitLab PTY Ltd||X||X|
|GitLab Canada Corp||X||X|
|GitLab Ireland Limited||X||X|
|GitLab France SAS||X||X|
|GitLab Singapore Holding PTE Ltd||X|
GitLab BV owns the IP and therefore all GitLab entities that resell GitLab's products and services are required to pay an arm's length remuneration to GitLab BV. The remuneration is determined as follows:
For consideration of R&D services GitLab BV the arm's length remuneration is determined at cost-plus 6% on R&D costs.
For consideration for G&A services recipient entities will pay an arm's length remuneration of cost-plus 2.5% on G&A costs.
Each calendar month the intercompany transactions between GitLab entities are settled in accordance with GitLab's Transfer Pricing Concept.
GitLab's entities are subject to statutory reporting requirements of indirect tax in their home countries (i.e. GST and VAT).
In the USA the filing of Sales & Use Tax returns is managed via Avalara software. Avalara AvaTax automatically calculates sales and use tax for transactions, invoices, and other activities registered on Zuora. State returns are automatically filed by Avalara. Quarterly analysis is performed to check taxable nexus in each state (e.g. depending on ths state, nexus arises economically by volume of transactions, or physically by employees being resident of that state or sales representatives traveling through that state).
GitLab Inc. is registered as non-resident for GST/HST, PST, and QST purposes. As such Avalara AvaTax automatically calculates sales and use tax for transactions, invoices, and other activities registered on Zuora. Customers that have provided their TQ number to GitLab should not be charged with QST. QST returns are filed quarterly. See below section for a process description.
All non-US entities are supported by local tax consultants to prepare and file indirect tax returns. The Netherlands, United Kingdom, and Australia have a quarterly reporting cycle. Germany requires a monthly reporting cycle. The GitLab Controller keeps track of the reporting deadlines. The procedure for filing the statutory indirect tax returns is as follows:
Access this page for a country-by-country tax analysis when exercising GitLab stock options.
All GitLab entities have engaged tax consultants in their country of establishment that prepare and file Corporate Income Tax returns. The filing statutory filing deadlines in the countries of establishment are as follows:
|Entity||Filing Deadline||Final Payment Deadline||Estimated Instalments Deadline|
|GitLab, Inc.||15 April||By the 15th day of the 12th month of the tax year||Equal estimated instalments due on the 15th day of the 4th, 6th, 9th, and 12th month of the tax year|
|GitLab Federal LLC||See above||See above||See above|
|GitLab Japan||Within two months after the end of company's accounting period||Within two months after the end of company's accounting period||Within two months after the end of the sixth month of the corporation's accounting period|
|GitLab BV||Five months after the end of the company's fiscal year||Within two months of the date of the assessment notice||N/A|
|GitLab IT BV||See above||See above||See above|
|GitLab GmbH||July 31||Stated on the assessment notice||Quarterly instalments due on the tenth day of March, June, September, and December|
|GitLab Ltd||January 31||Depends on profitability > e.g. when annual taxable profit exceeds 1.5m GBP, Ltd is required to make quarterly instalment payments||Idem dito|
|GitLab Pty Ltd||15th day of the 7th month following the end of the income year||1st day of the 6th month following the end of the income year||Monthly or quarterly|
|GitLab Canada Corp||Six months after the end of the fiscal year||Two months after the end of the fiscal year||Monthly|
|GitLab South Korea||Within three months after the end of the fiscal year||Along with the filing of the return||N/A|
The procedure for filing the statutory corporate direct tax returns is as follows:
In the Netherlands a tax credit applies to qualifying research and development activities ("WBSO"). In order to qualify for the WBSO companies need to file an application with the Netherlands Enterprise Agency. In order to qualify, it needs to be proved that the R&D activities meet the following conditions:
When the application is approved, the R&D tax credit can be deducted from the wage tax due through the monthly basis payroll. The process for the WBSO from filing the application to applying the deduction in the payroll are described below.
Open an inssue in the tax team [CIT Estimates/Prepayments] (https://gitlab.com/groups/gitlab-com/-/epics/1268) epic, with the below information:
The payment for the use of GitLab's software can be subject to withholding tax. Paragraph 6.7 of GitLab's terms and conditions prescribe that the customer will pay any required withholding itself and will not reduce the amount paid to GitLab on account thereof.
Fees under this Agreement are exclusive of any and all taxes or duties, now or hereafter imposed by any governmental authority, including, but not limited to any national, state or provincial tax, sales tax, value-added tax, property and similar taxes, if any. Fees under this agreement shall be paid without any withholding or deduction. In the case of any deduction or withholding requirements, Customer will pay any required withholding itself and will not reduce the amount to be paid to GitLab on account thereof.
The payment for the use of GitLab's software can be subject to any indirect taxes, taking into consideration the local indirect tax requirements. Please be aware that GiLab might charge any related indirect taxes, without prior notice, as a consequence of a required tax registration obligation for GitLab. Based on the local regulations, output indirect taxes charged by GitLab are generally claimable as input tax on the customer’s indirect tax return.
Please be aware Gitlab is currently collecting indirect taxes in the following locations:
Please be aware the calculation of all indirect taxes is done by our tax engine, Avalara (Avatax). Indirect taxes are calculated based on the "Sold-To" location provided by the customer during the sales process. Any adjustments to the indirect taxes amounts are done on a invoice/credit-memo generation basis, therefore, only a credit and rebill from an originating transaction will create adjustments to indirect taxes (via the Avalara platform).
Paragraph 6.7 of GitLab's terms and conditions prescribe that the customer will pay any required taxes itself and will not reduce the amount paid to GitLab on account thereof. Fees under this Agreement are exclusive of any and all taxes or duties, now or hereafter imposed by any governmental authority, including, but not limited to any national, state or provincial tax, sales tax, value-added tax, property and similar taxes, if any. Fees under this Agreement shall be paid without any withholding or deduction. In the case of any deduction or withholding requirements, Customer will pay any required withholding itself and will not reduce the amount to be paid to GitLab on account thereof.