Chargebee Avalara Integration Guide [2026 Updated]

If you manage subscription billing with Chargebee, manually handling sales tax across different states and countries can quickly become a significant compliance challenge. Connecting it to Avalara solves this by automating real-time tax calculations directly on your invoices. This guide provides a step-by-step walkthrough for setting up the native integration, covering common issues and sharing best practices to keep your tax compliance running smoothly.

Why Connect Chargebee and Avalara?

Subscription-based businesses, especially SaaS companies, often sell to a geographically diverse customer base. Each location comes with its own set of tax rules, rates, and reporting requirements. Keeping up with these changes manually is not only time-consuming but also creates a high risk of errors that can lead to audits and penalties. The integration between Chargebee and Avalara is designed to eliminate this manual burden.

Chargebee excels at managing the entire subscription lifecycle—from sign-ups and recurring billing to dunning and revenue recognition. Avalara specializes in tax compliance automation, maintaining an extensive, up-to-date database of global tax rates and rules. When you combine them, you create a powerful, hands-off system where accurate sales tax is calculated and applied to every invoice automatically. This lets your team focus on business growth instead of tracking tax jurisdiction updates.

The primary benefits include:

• Automated Tax Calculations: Whenever an invoice is generated or a subscription is renewed in Chargebee, the integration instantly calls Avalara to fetch the correct tax rate based on the customer’s address, applying it directly to the charge.
• Improved Accuracy and Compliance: Avalara’s tax engine accounts for complex rules related to product taxability (e.g., SaaS vs. digital services), jurisdiction boundaries, and tax holidays, significantly reducing the chance of miscalculation.
• Simplified Exemption Management: If you serve tax-exempt customers like non-profits or government agencies, the integration can verify their exemption certificate status within Avalara and ensure no tax is applied.
• Scalable Operations: As your business expands into new markets, the integration scales with you. There's no need to manually add new tax rates; simply ensure the new regions are configured in your Avalara account, and the system handles the rest.

Before You Begin: Integration Prerequisites

To ensure a smooth setup process, make sure you have the following pieces in place before you start the integration:

• An Active Chargebee Account: Your Chargebee plan must support third-party integrations. This is typically available on their performance and higher-tier plans.
• An Avalara AvaTax Account: You need an active subscription to Avalara's tax calculation service, AvaTax.
• Avalara Account Credentials: From your Avalara dashboard, you will need your Account Number and License Key. Avalara also provides separate credentials for its Sandbox (testing) and Production (live) environments, so be sure to note which is which.
• Configured Tax Jurisdictions: Within your Avalara account, you must configure the states, provinces, or countries where you have nexus (a legal obligation to collect and remit tax). Avalara will only return tax calculations for jurisdictions you've activated.
• Clean Customer Address Data: The accuracy of Avalara's calculations depends entirely on the customer address data in Chargebee. Ensure your customer records contain complete and accurate addresses, including street, city, state/province, ZIP/postal code, and country.

A Step-by-Step Guide to the Native Chargebee-Avalara Integration

Chargebee's native connector is the most direct and reliable way to link the two platforms. The setup happens entirely within your Chargebee dashboard and doesn't require any custom code. We highly recommend starting with Avalara's Sandbox environment to test the connection before moving to your live production account.

Step 1: Locate the Avalara Integration in Chargebee

Start by logging into your Chargebee account. From the main dashboard, navigate to the settings menu. Go to Settings > Apps & Integrations > Third-Party Integrations. In the integrations marketplace, find Avalara in the "Tax" category and click on it to open the configuration panel.

Step 2: Authenticate Your Avalara Account

In the Avalara configuration screen, you'll need to enter the credentials you gathered earlier. Chargebee allows you to set up both a test and a live environment.

• Test Mode: First, select "Use test account" and input your Avalara Sandbox Account Number and Sandbox License Key. This lets you test the full workflow without affecting your real accounting data.
• Live Mode: Once testing is complete, you will switch to "Use live account" and enter your Production Account Number and License Key.

After entering the details, click "Connect." Chargebee will validate the credentials with Avalara to confirm the connection is successful.

Step 3: Configure Your Tax Settings

Once connected, you will see a series of options for how the integration should behave. These settings are important for getting accurate tax calculations.

• Choose a Company Code: If you run multiple business entities from a single Avalara account, select the correct company code to use for transactions originating from this Chargebee site. If you only have one, the default will work.
• Enable Address Validation: It's highly recommended to enable this feature. When activated, Chargebee sends customer addresses to Avalara for validation against its database, correcting minor errors like ZIP codes or street name abbreviations. This significantly improves calculation accuracy.
• Tax on Invoices: You have the option to let Chargebee calculate tax based on an estimated rate or exclusively rely on Avalara. For compliance, choose "Use Avalara for completed real-time calculation." Also, enable the "Commit tax transaction in Avalara" setting. This creates a permanent record of the tax calculation in your Avalara account, a necessary step for reporting and filing.

Step 4: Map Product Tax Codes and Manage Exemptions

Different products and services are taxed differently. For example, in some states, SaaS is non-taxable, while in others it's fully taxed. You need to assign the correct tax codes to your products in Chargebee so Avalara knows what rules to apply.

• Product Tax Codes: Go to your product catalog in Chargebee. For each plan or add-on, you'll find a field for "Avalara Tax Code." You can input Avalara's standard codes here (e.g., `DC010000` for SaaS). If left blank, Avalara uses your Company-level default.
• Tax Exemption: To handle tax-exempt entities, use Chargebee's "AvaTax Use Code" custom field for customers. When a customer provides an exemption certificate (which you should manage in Avalara CertCapture), you can add the corresponding use code to their customer record in Chargebee. During tax calculation, Avalara will recognize the code and apply the exemption.

Step 5: Test and Go Live

With your configuration complete in the Sandbox environment, it's time to test comprehensively. Create a few test customers with addresses in different jurisdictions where you have nexus. Create new subscriptions for them, generate invoices, and simulate a renewal.

Review the generated invoices in Chargebee to confirm that:

• Tax is being applied as expected.
• The tax amount is correct for the given address.
• No tax is applied to customers with an exemption code.

Once you are confident everything works correctly, return to the integration settings, switch to your live Avalara Production credentials, and save the configuration. Your tax automation is now active for all live transactions.

Common Issues and Troubleshooting Tips

Even with a straightforward setup, you might encounter a few hiccups. Here are some common problems and how to solve them.

• Incorrect Tax Rates Are Applied: This is nearly always due to an incomplete or inaccurate customer address. Check the customer's shipping or billing address in Chargebee. A missing ZIP code or a misspelled city can cause Avalara to return an incorrect result or no tax at all. Use the address validation feature to minimize this.
• The Integration Fails to Connect: If Chargebee displays an authentication error, double-check that you've entered the correct Avalara Account Number and License Key. Also, ensure you are not mixing up Sandbox and Production credentials.
• Tax is Not Calculated on Some Invoices: This could happen for several reasons. First, confirm you have configured nexus for that customer's state or country in your Avalara account. If nexus is not declared, Avalara will not calculate tax. Second, check if the customer has an exemption/use code applied by mistake.
• Exemption Certificates are Ignored: Verify that the exemption use code in Chargebee exactly matches the `Entity/Use Code` assigned to the certificate in Avalara. Also, ensure the certificate itself is valid and has not expired. The management of certificates happens in Avalara, not Chargebee.

Final Thoughts

Integrating Chargebee with Avalara is a decisive step toward automating your compliance workflow, giving you a scalable and accurate way to manage taxes for your subscription business. By following the steps outlined here, you can set up a reliable system that removes guesswork and minimizes risk, allowing your team to focus on serving customers instead of worrying about tax regulations.

Even with powerful automation tools, complex tax questions will inevitably arise, like understanding nexus triggers in a new state or clarifying the taxability of a new service you plan to offer. When you need fast, verifiable answers, we built Feather AI to instantly provide audit-ready responses with citations from the IRC, IRS guidance, and state tax codes, ensuring you can make informed decisions with confidence.