Introduction
Effective January 1, 2025, the Louisiana state and local sales and use tax applies to the sale or use of digital products, prewritten computer access services, and information services (collectively referred to as "digital products and services"). Some of the products and services that fall within the definition of digital products and services may have been taxable under the law in effect prior to January 1, 2025. This document contains information and non-exclusive examples of digital products and services subject to Louisiana sales and use tax. If you have questions, please contact practitionerssalestax.policyinquiries@la.gov. This document will be periodically updated to provide guidance to taxpayers.
Retail Sale and Use of Digital Products
Retail Sale
A tax is imposed on retail sales of all of the following
- tangible personal property;
- taxable services; and
- digital products. 1
Sales and use tax apply to the sale of a digital product obtained or delivered electronically. This includes subscriptions, access, receipt, and streaming of digital products and services. The sales and use tax apply regardless of whether the buyer has the rights of permanent use, rights of less than permanent use, or rights of use conditioned on continued payment by the subscriber or buyer.2
Use
Tax is also imposed on the use in Louisiana oftangible personal property, digital products, or taxable services.3 Use means an exercise of a right or power to use, consume, possess, or store that is acquired by a sale for use of tangible personal property, or a digital product.4 Use does not include:
- resale of a digital product in the same form that the buyer receives or is to receive the digital product. 5
- consuming a digital product in the production of a new taxable product or service where the digital product becomes an ingredient or component of the new taxable product or service. 6
- the use or transfer of a digital product by the transferor obtained by the end user free of charge. 7
Definition of a Digital Product
- Digital audiovisual works
- Digital audio works
- Digital books
- Digital codes
- Digital applications and games
- Digital periodicals and discussion forums. 8
Digital products also include any otherwise taxable tangible personal property that is transferred electronically.
Transferred Electronically
Transferred electronically means that the product is obtained by the purchaser by any means other than tangible storage media. This includes products that are delivered digitally, streamed, or accessed. It includes products that are purchased singly, by subscription, or in any other manner, including maintenance, updates, and support. 9 It does not matter if the seller grants permanent or less than permanent use or if the transaction is conditioned upon payment. The digital product does not have to be physically transferred to the purchaser. If the purchaser can access the product, it is considered transferred electronically. 10
Digital Audiovisual Works
Digital audiovisual works are images that, when shown in succession, impart an impression of motion, together with accompanying sounds. Examples include, but are not limited to, movies, music videos, news and entertainment programs, and live events.11
Specifically, sales and use tax applies to a charge for a digital download or stream of a prerecorded motion picture, music video, news or entertainment program, live event, sporting event, tutorial, etc. A charge to download or access prerecorded audio and video content is also subject to the sales and use tax.
Example 1: A company operates a website that allows customers to purchase and view prerecorded music concerts. The prerecorded music concerts are digital audiovisual works and are subject to sales and use tax.
Streaming Audio and Video Services
A monthly charge for streaming audio and video is subject to sales and use tax. Sales, licenses, and subscriptions of digital products to end users are subject to sales and use tax, whether that use is limited to a specific time period or permanent.
Example 2: For a charge of $9.99 per month Cinemaflicks grants the consumer the right to stream and view movies and television shows on an unlimited basis. The charge for the right to stream and view movies and shows is subject to sales and use tax.
Digital Audio Works
Digital audio works are works that result from the fixation of a series of musical, spoken, or other sounds that are transferred electronically. Examples include, but are not limited to, prerecorded music, live music, readings of books or other written materials, speeches, ringtones, or other sound recording.12
Digital Books
Digital books are books that are transferred electronically.13 Examples include, but are not limited to, ebooks, online yearbooks, and digital textbooks. The sale of a textbook, whether in tangible form or delivered electronically, is subject to Louisiana sales and use tax unless a specific exemption applies. The purchase of an access code to view and/or download an electronic book is also taxable as the sale of a digital book. In each of these cases, sales tax must be charged whether the sale is made by an educational institution or a commercial vendor, unless a specific exemption applies.
Digital Codes
Digital codes are codes that provide a right to obtain one or more digital products. This includes codes used to access or obtain any digital products that have been previously purchased but does not include traditional gift cards with monetary value redeemable for non-digital products.
Digital code may be obtained by any means, including: (1) in a tangible form, such as a card, imprint or other storage product;(2) electronically through computer-mediated communications such as email, text or messaging; or (3) through subscriptions, streaming, or other access.
Digital codes include, but are not limited to, codes that can be used to obtain movies, songs or software. 14 Examples of digital codes include but are not limited to:
- A code on a paper insert in a physical movie package that can be used to redeem a digital version of the movie; or
- A code found in a digital library and in email instructions that is required to unlock a digital download of software or a game.
Example 3: A retail store sells a variety of gift cards that can be used to purchase goods, services, and digital products from other vendors. A customer purchases a gift card containing a unique code that is activated upon purchase and gives the purchaser a one-month subscription to a gaming application. The gift card can only be used to redeem the one-month subscription. The sale of the gift card is subject to sales tax because it is a sale of a digital code that can only be used to purchase digital products.
Example 4: Same facts as above in Example 3 except that the gift card can be used to purchase goods and download video games at another vendor's website. The sale of the gift card is not subject to sales tax because it is redeemable for an item other than a digital product.
Example 5: A customer purchases a $50 gift certificate from a vendor's website. The gift certificate entitles the purchaser to a limited amount of time to access video games online. Upon purchase, the customer is sent an e-mail with a unique code to use at the vendor's website to access video games online. The gift certificate is a sale of digital code and is subject to sales tax.
Digital Applications and Games
Digital applications ("apps") and games are any applications or games, including add-ons or additional content that can be used by a computer, mobile device, or tablet.15 Examples of digital apps include, but are not limited to, Tasker, Duolingo, Password Manager, Bleacher Reports, Houzz, Evite, TripIt, Headspace, and Calm.
Digital games are games played on a computer, game system, television, or mobile device. A charge to access, download, stream, or use video or online games is subject to the sales and use tax. Acharge to access, download, stream, or use virtual items, such as avatars, backgrounds, skins, renders, and in-app purchases, purchased for use in a video or online game is also subject to the sales and use tax. If games or apps are provided free of charge they are not taxed as digital products. But any add-ons or in-app purchases will be subject to sales or use tax as a digital product.
Examples of digital games include, but are not limited to, Halo, Call of Duty, Fortnite, Minecraft, Grand Theft Auto, Hearthstone, Pokeman Go, Subway Surfers, and Candy Crush.
Digital Periodicals and Discussion Forums
Digital periodicals and discussion forums mean digital newspapers, digital magazines, other digital periodicals, chat room discussions, weblogs, or other similar products. 16 Examples include, but are not limited to, digital access to the New York Times or the Wall Street Journal, digital access to the New Yorker or National Geographic, Benzinga Pro, Highstrike, Slack, and Mighty Networks.
The sale of a book, e-book, magazine, newspaper, periodical, chat room discussion, weblog, or any similar product for a charge is subject to sales and use tax whether delivered electronically or in tangible form. The sale of a newspaper distributed by the publisher at no charge is not subject to the sales tax whether delivered electronically or in tangible form.
Sales and use tax apply to access charges and subscriptions to a chat room, discussion, weblog, or any other venue that permits users to communicate electronically in real time.
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Footnotes
1. La. R.S. 47:301(10)
2. La. R.S. 47:301(31) and (32)
3. La. R.S. 47:301(19)
4. La. R.S. 47:301(18)
5. La. R.S. 47:301(10)(a)
6. La. R.S. 47:301(10)(b)
7. La. R.S. 47:301(10)(c)
8. La. R.S. 47:301(31)
9. La. R.S. 47:301(31)(a)
10. La. R.S. 47:301(32)
11. La. R.S. 47:301(31)(b)(iii)
12. La. R.S. 47:301(31)(b)(ii)
13. La. R.S. 47:301(31)(b)(iv)
14. La. R.S. 47:301(31)(b)(v)
15. La. R.S. 47:301(31)(b)(i)
16. La. R.S. 47:301(31)(b)(vi)
Originally Published by Louisiana Department of Revenue
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
