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The GitLab Tax Team

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Keep calm and love taxes!

Contacting the Tax Team

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.

Organisation

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. 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
Intercompany Accounting A / R   C / I
Statutory Reporting and Compliance A / R   C / I

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.

Responsibility

The scope of the Tax Function includes, but is not limited to continuous evaluation of i) 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:

Tax Procedures

As described in the responsibility section, the Tax Department supports the Finance team to reach its goals and OKR's as set by Management. To support the goals of using the GitLab Handbook as a single source of truth, some of the tax procedures have been described below. There are more to come as this is an iterative process.

Tax Procedure for Maintenance of GitLab's Corporate Structure

Maintenance of Corporate Structure covers the following procedure

  1. Management decides to change the corporate structure (e.g. for purpose of setting up an entity, merger, acquisition, other);
  2. Director of Tax reviews possibilities and confirms with external consultant;
  3. Director of Tax suggests roadmap for the request to change the corporate structure;
  4. Director of Tax requests for proposal for services from third party service providers;
  5. Director of Tax gathers input from stakeholders;
  6. Director of Tax discusses input with third party service provider;
  7. Director of Tax submits issue in gitlab.com to start contract approval process;
  8. Director of Tax starts and manages project.

GitLab's corporate structure per October 2021 is as follows:

Establishment of a NewCo

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

Subsidiary Board Meeting Schedule

  1. Meetings for the respective Board of Directors for each direct and indirect subsidiary of GitLab Inc. are held quarterly and they are all remote; everyone joins with their own video conference setup from a separate location, unless prohibited by local law.
  2. Meetings are scheduled on/around the Thursday 7 weeks after the end of the quarter, assuming availability of the respective directors of the subsidiaries.
  3. The 2021 schedule of subsidiary board meetings is as follows:
  1. The 2022 schedule of subsidiary board meetings is as follows:

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:

Timeline

  1. The subsidiary’s corporate secretary is the DRI for scheduling the Subsidiary Board meetings and updating the dates on this page.
  2. The subsidiary’s corporate secretary reaches out before the meeting to collect questions from the board members and prepares and shares the agenda.
  3. The subsidiary’s corporate secretary sends notice to the board within the timeframe required per each subsidiary’s governance documents.
  4. Presentations for the subsidiary board meeting should be ready 10 days prior to the meeting.
  5. Once approved, the subsidiary’s corporate secretary distributes the subsidiary board materials 3 days before the meeting to the applicable board members for the subsidiary. All presentations and content should be finalized at this time with no further changes.
  6. The subsidiary’s corporate secretary is responsible for linking all materials in the agendas for each session of the board meeting. Materials should always be linked in the agenda and shared with the appropriate attendees.
  7. The day before the meeting, the subsidiary’s corporate secretary ensures that the “introduction” section of the agenda is up to date with the latest attendees. The Director of Tax also ensures that the agenda document is locked to further questions 24 hours before the meeting is set to begin. Questions can still be raised verbally during the meeting.
  8. The subsidiary’s corporate secretary is responsible for ensuring that the Board meeting runs according to the time allotted.
  9. The subsidiary’s corporate secretary is responsible for maintaining the minutes of the meeting and submitting for subsidiary board approval.
  10. The subsidiary’s corporate secretary ensures that PDF versions of the materials including presentations, exhibits, approved minutes, and administrative materials are securely stored on Google Drive labeled with the date of the meeting.

Agenda

  1. Prior to distributing the Board deck, the subsidiary’s corporate secretary groups questions together in the agenda by function. Questions can be added to the agenda up to 24 hours before the meeting starts. After this point, the agenda will be locked.
  2. Board materials are presented during subsidiary board meetings. This includes:
    • The Board deck (excluding the appendix or any pre-read slides) and highlighting the items requiring the subsidiary board approval, if any. Five to eight minutes will be allocated for this.
  3. Questions can be asked throughout presentations, but 30 minutes at the end will be allocated just for discussion.
  4. At the conclusion of the General Session, all attendees other than the members of the subsidiary board depart and the full subsidiary board shall meet for a Closed Session.

Board Deck

  1. Slides should convey a high-level overview as opposed to operational updates and should not include embedded links.
  2. Put information on public web pages such as /strategy as much as possible.
  3. Sensitive information goes into the administrative deck managed by the Director of Tax.
  4. Font size should be minimum 16pt, footnotes excluded. We want to make sure everything can be read.
  5. Every slide should have a title which provides the key takeaway from that slide.

Tax Procedure for Compliance with Transfer Pricing

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:

  1. Tangibles: e.g. finished goods, raw materials, fixed assets
  2. Intangibles: e.g. IP, know-how, trademark, trade name
  3. Financing: e.g. loans, guarantees
  4. Services: e.g. management, research & development, general & administration, distribution, sales & marketing

Intercompany Transactions at GitLab

At GitLab the supply of tangibles is non-existent while the other transaction categories are available. Intercompany transactions between the entities are provided in the table below:

Entity Intangible Financing Management DS&M R&D G&A
GitLab Inc.   X X X X X
GitLab Federal LLC       X    
GitLab Japan       X    
GitLab South Korea       X    
GitLab BV X X   X   X
GitLab IT BV         X  
GitLab UK Ltd       X X  
GitLab GmbH       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 Singapore PTE Ltd       X    

Transfer Pricing Concept

Distribution, Sales & Marketing

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:

  1. An amount necessary to allow the GitLab entities to earn a net operating profit equal to 2.5%
  2. In the event that net profit is below 2.5% of its net sales;
    • remuneration shall be waived and GitLab BV shall pay a marketing subsidy so that the net operating profit of the other GitLab entities is 2.5% of sales, or
    • advances from GitLab BV to other GitLab entities shall be forgiven to produce the net operating profit of 2.5% of sales

Research & Development

For consideration of R&D services GitLab BV the arm's length remuneration is determined at cost-plus 6% on R&D costs.

General & Administration

For consideration for G&A services recipient entities will pay an arm's length remuneration of cost-plus 2.5% on G&A costs.

Intercompany Settlement Procedure

This process is currently being reviewed.

Tax Procedure for Reporting Indirect Taxes to Tax Authorities

GitLab's entities are subject to statutory reporting requirements of indirect tax in their home countries (i.e. GST and VAT).

USA Territory

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).

Canada Territory

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.

International Territory

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:

  1. Calculate VAT on Sales
    • Tax Accountant pulls the transactions from Avalara
    • The report from Avalara generates the taxable sales
    • The report from Avalara generates the VAT/GST on Sales amount
  2. Calculate VAT on purchases
    • Tax Accountant exports VAT on Purchases ledger from Netsuite
    • Tax Accountant requests copies of all invoices relating to purchase transactions with the Accounting team
  3. Tax Accountant shares reports and documentation from steps 1 and 2 above with tax consultant
  4. Tax consultant drafts VAT return
  5. Draft VAT return is reviewed by Tax Accountant
  6. Tax Accountant approves or rejects draft
  7. Rejection > start with step 4 // Approval > Director, Tax gives final approval for submission
  8. Tax consultant files VAT return
  9. Tax consultant provides copy of VAT return filed to Tax Accountant
  10. Tax consultant informs VAT payable amount to Tax Accountant
  11. Tax Accountant informs AP team to lodge payment into banking system
  12. Standard approval flow for payment is adhered to
  13. Upon approval the VAT due is wire transferred directly to the Tax Authorities (except for Germany, auto debit)

Tax Procedure for Reporting Taxable Gains on Option Exercises

  1. Options are exercised by following this procedure
  2. CFO provides options exercise file on monthly basis to Payroll & Payments Lead
  3. Payroll & Payments Lead ensures wage tax compliance for employees per country as defined in the table below
  4. Employee receives gain from exercise according to the common monthly salary payment procedure

Access this page for a country-by-country tax analysis when exercising GitLab stock options.

Tax Procedure for Corporate Income Taxes to Tax Authorities

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:

  1. Data request from the Tax Consultant to the Tax Team
  2. International Tax Manager and Tax Accountant follow up on data request and provides data to Tax Consultant
  3. Tax Consultant prepares Corporate Income Tax Return
  4. Draft Corporate Income Tax Return sent by Tax Consultant to International Tax Manager
  5. International Tax Manager reviews Corporate Income Tax Return and informs Director of Tax
  6. Director of Tax reviews Corporate Income Tax Return and upon approval requests approval from CFO
  7. Upon approval of by the CFO the International Tax Manager confirms the Tax Consultant to file Corporate Income Tax Return with the local Tax Authorities
  8. Tax Consultant files Corporate Income Tax Return with the local Tax Authorities
  9. Upon receipt of Assessment Notice - if applicable - Tax Consultant informs Tax Team, tax team reviews the assessment notice
  10. Tax Accountant ensures payment of the Assessment Notice in case of amount payable
  11. GitLab AP team lodges payment into banking system
  12. Standard approval flow is adhered to for payment

Tax Procedure for the R&D Wage Tax Credit in the Netherlands ("WBSO")

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.

  1. GitLab appoints a dedicated engineering manager to oversee all R&D activities in the Netherlands
  2. The dedicated engineering manager drafts the project description for eligible activities and estimates the R&D hours
  3. The project description is reviewed by an external consultant, Finance and People Group.
  4. Upon approval of the project description the external consultant files the application with the Netherlands Enterprise Agency
  5. When the Netherlands Enterprise Agency approves the application for the WBSO, a grant letter is sent to GitLab BV
  6. The grant letter has to be shared with the Dutch payroll agent
  7. The Dutch payroll agent applies the WBSO in the monthly basis payroll
  8. GitLab BV's employees working on the eligible projects have to keep track of their hours spent on the project in the hour tracker
  9. The hour tracker needs to be monitored on monthly basis by Finance in order to prevent an overclaim or underclaim of the WBSO

Tax Procedure for Adding a New Tax Location (all actions on Tax Accountant)

  1. Open an issue in the tax team VAT/GST epic, with the below information:
    • Description of the new tax location;
    • What triggered the tax to be collected;
    • Billing entity (current or new);
    • Review local invoice requirements (coordinate with Finance Systems Administrators any required changes) and add to the invoice templates repository;
    • Provide the deadlines for the Avalara start date;
    • Will there be any fillings related to the tax? If yes, provide the schedule.
    • Tag the Tax, Billing and Sales teams.
    • Confirm in the issue, by Avalara due date, that tax collection has started.
  2. Share the issue in the #tax, #finance and #sales-support Slack channels.

Tax Procedure for Making US Corporate Tax Payments

Open an inssue in the tax team CIT Estimates/Prepayments epic, with the below information:

Withholding Tax Management

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.

Indirect Taxes Management

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 GitLab 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:

As resident:

As non-resident:

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.

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