Fender rocks global tax compliance

Since the 1950s, Fender Musical Instruments Corporation has created the iconic guitars that define modern music. From garage bands to global superstars, musicians worldwide rely on Fender’s legendary Telecasters and Stratocasters. Today, Fender operates as both a traditional manufacturer selling through dealers (around 90% of its business) and an innovative direct-to-consumer brand through ecommerce and digital services.

For decades, Fender’s tax setup was straightforward — sales flowed through distributors and dealers, with 98–99% as tax-exempt B2B transactions. That changed when Fender expanded direct-to-consumer sales and launched Fender Play, its global guitar-learning platform. The ecommerce shift brought immediate complexity. Previously, Fender collected basic state rates and accepted some compliance exposure. “We realized this dramatically increases potential exposure — and customer issues,” says Ryan Jones, Tax Director at Fender.

Global VAT complexity

Fender Play’s international growth multiplied the challenge. The software-as-a-service model required VAT compliance across Europe, Australia, Japan, and New Zealand. Managing constantly changing rates and rules risked overwhelming Fender’s three-person tax team. Unlike U.S. sales tax, VAT systems differ widely by country, with unique digital-service rules, thresholds, and filing requirements.

Facing mounting challenges in 2018, Fender sought comprehensive functionality without compromises. The company needed a modern, user-friendly system capable of handling both U.S. sales tax and international VAT determination.

“We needed a full-feature system where we didn’t have to make concessions on what we were trying to accomplish,” Ryan recalls. “Avalara’s system definitely looked good. It looked like it was a more modern system to deal with, very user-friendly.”

Key decision factors included automated functionality and cost-effectiveness. The business case was strengthened since Fender was already paying for tax services. “We weren’t moving from zero cost to a system, we were moving from some cost to a different cost,” Ryan notes.

Fender integrated Avalara with its SAP ERP and ecommerce platforms, fine-tuning SAP’s existing tax-jurisdiction framework to support more complex requirements — a process made smooth through close collaboration with Avalara’s responsive support team.