diff --git a/src/Api/Billing/Controllers/VNext/AccountBillingVNextController.cs b/src/Api/Billing/Controllers/VNext/AccountBillingVNextController.cs
index 6c56d6db3a..241e595333 100644
--- a/src/Api/Billing/Controllers/VNext/AccountBillingVNextController.cs
+++ b/src/Api/Billing/Controllers/VNext/AccountBillingVNextController.cs
@@ -132,8 +132,8 @@ public class AccountBillingVNextController(
         [BindNever] User user,
         [FromBody] UpgradePremiumToOrganizationRequest request)
     {
-        var (organizationName, key, planType) = request.ToDomain();
-        var result = await upgradePremiumToOrganizationCommand.Run(user, organizationName, key, planType);
+        var (organizationName, key, planType, billingAddress) = request.ToDomain();
+        var result = await upgradePremiumToOrganizationCommand.Run(user, organizationName, key, planType, billingAddress);
         return Handle(result);
     }
 }
diff --git a/src/Api/Billing/Models/Requests/Premium/UpgradePremiumToOrganizationRequest.cs b/src/Api/Billing/Models/Requests/Premium/UpgradePremiumToOrganizationRequest.cs
index 7e7bf3ef3a..00b1da4bba 100644
--- a/src/Api/Billing/Models/Requests/Premium/UpgradePremiumToOrganizationRequest.cs
+++ b/src/Api/Billing/Models/Requests/Premium/UpgradePremiumToOrganizationRequest.cs
@@ -39,5 +39,6 @@ public class UpgradePremiumToOrganizationRequest
         }
     }
 
-    public (string OrganizationName, string Key, PlanType PlanType) ToDomain() => (OrganizationName, Key, PlanType);
+    public (string OrganizationName, string Key, PlanType PlanType, Core.Billing.Payment.Models.BillingAddress BillingAddress) ToDomain() =>
+        (OrganizationName, Key, PlanType, BillingAddress.ToDomain());
 }
diff --git a/src/Core/Billing/Premium/Commands/UpgradePremiumToOrganizationCommand.cs b/src/Core/Billing/Premium/Commands/UpgradePremiumToOrganizationCommand.cs
index 50f90808e2..d3e2eb899f 100644
--- a/src/Core/Billing/Premium/Commands/UpgradePremiumToOrganizationCommand.cs
+++ b/src/Core/Billing/Premium/Commands/UpgradePremiumToOrganizationCommand.cs
@@ -28,12 +28,14 @@ public interface IUpgradePremiumToOrganizationCommand
     /// <param name="organizationName">The name for the new organization.</param>
     /// <param name="key">The encrypted organization key for the owner.</param>
     /// <param name="targetPlanType">The target organization plan type to upgrade to.</param>
+    /// <param name="billingAddress">The billing address for tax calculation.</param>
     /// <returns>A billing command result indicating success or failure with appropriate error details.</returns>
     Task<BillingCommandResult<None>> Run(
         User user,
         string organizationName,
         string key,
-        PlanType targetPlanType);
+        PlanType targetPlanType,
+        Payment.Models.BillingAddress billingAddress);
 }
 
 public class UpgradePremiumToOrganizationCommand(
@@ -51,7 +53,8 @@ public class UpgradePremiumToOrganizationCommand(
         User user,
         string organizationName,
         string key,
-        PlanType targetPlanType) => HandleAsync<None>(async () =>
+        PlanType targetPlanType,
+        Payment.Models.BillingAddress billingAddress) => HandleAsync<None>(async () =>
     {
         // Validate that the user has an active Premium subscription
         if (user is not { Premium: true, GatewaySubscriptionId: not null and not "" })
@@ -134,6 +137,7 @@ public class UpgradePremiumToOrganizationCommand(
         {
             Items = subscriptionItemOptions,
             ProrationBehavior = StripeConstants.ProrationBehavior.CreateProrations,
+            AutomaticTax = new SubscriptionAutomaticTaxOptions { Enabled = true },
             Metadata = new Dictionary<string, string>
             {
                 [StripeConstants.MetadataKeys.OrganizationId] = organizationId.ToString(),
@@ -187,6 +191,16 @@ public class UpgradePremiumToOrganizationCommand(
             GatewaySubscriptionId = currentSubscription.Id
         };
 
+        // Update customer billing address for tax calculation
+        await stripeAdapter.UpdateCustomerAsync(user.GatewayCustomerId, new CustomerUpdateOptions
+        {
+            Address = new AddressOptions
+            {
+                Country = billingAddress.Country,
+                PostalCode = billingAddress.PostalCode
+            }
+        });
+
         // Update the subscription in Stripe
         await stripeAdapter.UpdateSubscriptionAsync(currentSubscription.Id, subscriptionUpdateOptions);
 
diff --git a/test/Api.Test/Billing/Models/Requests/UpgradePremiumToOrganizationRequestTests.cs b/test/Api.Test/Billing/Models/Requests/UpgradePremiumToOrganizationRequestTests.cs
index 6a8e328bf3..2d3bdb7b14 100644
--- a/test/Api.Test/Billing/Models/Requests/UpgradePremiumToOrganizationRequestTests.cs
+++ b/test/Api.Test/Billing/Models/Requests/UpgradePremiumToOrganizationRequestTests.cs
@@ -27,12 +27,14 @@ public class UpgradePremiumToOrganizationRequestTests
         };
 
         // Act
-        var (organizationName, key, planType) = sut.ToDomain();
+        var (organizationName, key, planType, billingAddress) = sut.ToDomain();
 
         // Assert
         Assert.Equal("Test Organization", organizationName);
         Assert.Equal("encrypted-key", key);
         Assert.Equal(expectedPlanType, planType);
+        Assert.Equal("US", billingAddress.Country);
+        Assert.Equal("12345", billingAddress.PostalCode);
     }
 
     [Theory]
diff --git a/test/Core.Test/Billing/Premium/Commands/UpgradePremiumToOrganizationCommandTests.cs b/test/Core.Test/Billing/Premium/Commands/UpgradePremiumToOrganizationCommandTests.cs
index 4ead5c12da..702e449746 100644
--- a/test/Core.Test/Billing/Premium/Commands/UpgradePremiumToOrganizationCommandTests.cs
+++ b/test/Core.Test/Billing/Premium/Commands/UpgradePremiumToOrganizationCommandTests.cs
@@ -151,6 +151,9 @@ public class UpgradePremiumToOrganizationCommandTests
             _applicationCacheService);
     }
 
+    private static Core.Billing.Payment.Models.BillingAddress CreateTestBillingAddress() =>
+        new() { Country = "US", PostalCode = "12345" };
+
     [Theory, BitAutoData]
     public async Task Run_UserNotPremium_ReturnsBadRequest(User user)
     {
@@ -158,7 +161,7 @@ public class UpgradePremiumToOrganizationCommandTests
         user.Premium = false;
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT1);
@@ -174,7 +177,7 @@ public class UpgradePremiumToOrganizationCommandTests
         user.GatewaySubscriptionId = null;
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT1);
@@ -190,7 +193,7 @@ public class UpgradePremiumToOrganizationCommandTests
         user.GatewaySubscriptionId = "";
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT1);
@@ -245,7 +248,7 @@ public class UpgradePremiumToOrganizationCommandTests
         _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT0);
@@ -320,7 +323,7 @@ public class UpgradePremiumToOrganizationCommandTests
         _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
 
         // Act
-        var result = await _command.Run(user, "My Families Org", "encrypted-key", PlanType.FamiliesAnnually);
+        var result = await _command.Run(user, "My Families Org", "encrypted-key", PlanType.FamiliesAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT0);
@@ -383,7 +386,7 @@ public class UpgradePremiumToOrganizationCommandTests
         _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT0);
@@ -453,7 +456,7 @@ public class UpgradePremiumToOrganizationCommandTests
         _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT0);
@@ -520,7 +523,7 @@ public class UpgradePremiumToOrganizationCommandTests
         _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT0);
@@ -589,7 +592,7 @@ public class UpgradePremiumToOrganizationCommandTests
         _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT0);
@@ -636,12 +639,12 @@ public class UpgradePremiumToOrganizationCommandTests
         _pricingClient.ListPremiumPlans().Returns(mockPremiumPlans);
 
         // Act
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
 
         // Assert
         Assert.True(result.IsT1);
         var badRequest = result.AsT1;
-        Assert.Equal("Premium subscription item not found.", badRequest.Response);
+        Assert.Equal("Premium subscription password manager item not found.", badRequest.Response);
     }
 
     [Theory, BitAutoData]
@@ -697,7 +700,7 @@ public class UpgradePremiumToOrganizationCommandTests
 
         // Act
         var testStartTime = DateTime.UtcNow;
-        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually);
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
         var testEndTime = DateTime.UtcNow;
 
         // Assert
@@ -714,4 +717,110 @@ public class UpgradePremiumToOrganizationCommandTests
         Assert.True(trialEndDateTime.Value >= testStartTime.AddDays(7));
         Assert.True(trialEndDateTime.Value <= testEndTime.AddDays(7));
     }
+
+    [Theory, BitAutoData]
+    public async Task Run_UpdatesCustomerBillingAddress(User user)
+    {
+        // Arrange
+        user.Premium = true;
+        user.GatewaySubscriptionId = "sub_123";
+        user.GatewayCustomerId = "cus_123";
+
+        var mockSubscription = new Subscription
+        {
+            Id = "sub_123",
+            Items = new StripeList<SubscriptionItem>
+            {
+                Data = new List<SubscriptionItem>
+                {
+                    new SubscriptionItem
+                    {
+                        Id = "si_premium",
+                        Price = new Price { Id = "premium-annually" }
+                    }
+                }
+            },
+            Metadata = new Dictionary<string, string>()
+        };
+
+        var mockPremiumPlans = CreateTestPremiumPlansList();
+        var mockPlan = CreateTestPlan(PlanType.TeamsAnnually, stripeSeatPlanId: "teams-seat-annually");
+
+        _stripeAdapter.GetSubscriptionAsync("sub_123").Returns(mockSubscription);
+        _pricingClient.ListPremiumPlans().Returns(mockPremiumPlans);
+        _pricingClient.GetPlanOrThrow(PlanType.TeamsAnnually).Returns(mockPlan);
+        _stripeAdapter.UpdateSubscriptionAsync(Arg.Any<string>(), Arg.Any<SubscriptionUpdateOptions>()).Returns(mockSubscription);
+        _stripeAdapter.UpdateCustomerAsync(Arg.Any<string>(), Arg.Any<CustomerUpdateOptions>()).Returns(Task.FromResult(new Customer()));
+        _organizationRepository.CreateAsync(Arg.Any<Organization>()).Returns(callInfo => Task.FromResult(callInfo.Arg<Organization>()));
+        _organizationApiKeyRepository.CreateAsync(Arg.Any<OrganizationApiKey>()).Returns(callInfo => Task.FromResult(callInfo.Arg<OrganizationApiKey>()));
+        _organizationUserRepository.CreateAsync(Arg.Any<OrganizationUser>()).Returns(callInfo => Task.FromResult(callInfo.Arg<OrganizationUser>()));
+        _applicationCacheService.UpsertOrganizationAbilityAsync(Arg.Any<Organization>()).Returns(Task.CompletedTask);
+        _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
+
+        var billingAddress = new Core.Billing.Payment.Models.BillingAddress { Country = "US", PostalCode = "12345" };
+
+        // Act
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, billingAddress);
+
+        // Assert
+        Assert.True(result.IsT0);
+
+        await _stripeAdapter.Received(1).UpdateCustomerAsync(
+            "cus_123",
+            Arg.Is<CustomerUpdateOptions>(opts =>
+                opts.Address.Country == "US" &&
+                opts.Address.PostalCode == "12345"));
+    }
+
+    [Theory, BitAutoData]
+    public async Task Run_EnablesAutomaticTaxOnSubscription(User user)
+    {
+        // Arrange
+        user.Premium = true;
+        user.GatewaySubscriptionId = "sub_123";
+        user.GatewayCustomerId = "cus_123";
+
+        var mockSubscription = new Subscription
+        {
+            Id = "sub_123",
+            Items = new StripeList<SubscriptionItem>
+            {
+                Data = new List<SubscriptionItem>
+                {
+                    new SubscriptionItem
+                    {
+                        Id = "si_premium",
+                        Price = new Price { Id = "premium-annually" }
+                    }
+                }
+            },
+            Metadata = new Dictionary<string, string>()
+        };
+
+        var mockPremiumPlans = CreateTestPremiumPlansList();
+        var mockPlan = CreateTestPlan(PlanType.TeamsAnnually, stripeSeatPlanId: "teams-seat-annually");
+
+        _stripeAdapter.GetSubscriptionAsync("sub_123").Returns(mockSubscription);
+        _pricingClient.ListPremiumPlans().Returns(mockPremiumPlans);
+        _pricingClient.GetPlanOrThrow(PlanType.TeamsAnnually).Returns(mockPlan);
+        _stripeAdapter.UpdateSubscriptionAsync(Arg.Any<string>(), Arg.Any<SubscriptionUpdateOptions>()).Returns(mockSubscription);
+        _stripeAdapter.UpdateCustomerAsync(Arg.Any<string>(), Arg.Any<CustomerUpdateOptions>()).Returns(Task.FromResult(new Customer()));
+        _organizationRepository.CreateAsync(Arg.Any<Organization>()).Returns(callInfo => Task.FromResult(callInfo.Arg<Organization>()));
+        _organizationApiKeyRepository.CreateAsync(Arg.Any<OrganizationApiKey>()).Returns(callInfo => Task.FromResult(callInfo.Arg<OrganizationApiKey>()));
+        _organizationUserRepository.CreateAsync(Arg.Any<OrganizationUser>()).Returns(callInfo => Task.FromResult(callInfo.Arg<OrganizationUser>()));
+        _applicationCacheService.UpsertOrganizationAbilityAsync(Arg.Any<Organization>()).Returns(Task.CompletedTask);
+        _userService.SaveUserAsync(user).Returns(Task.CompletedTask);
+
+        // Act
+        var result = await _command.Run(user, "My Organization", "encrypted-key", PlanType.TeamsAnnually, CreateTestBillingAddress());
+
+        // Assert
+        Assert.True(result.IsT0);
+
+        await _stripeAdapter.Received(1).UpdateSubscriptionAsync(
+            "sub_123",
+            Arg.Is<SubscriptionUpdateOptions>(opts =>
+                opts.AutomaticTax != null &&
+                opts.AutomaticTax.Enabled == true));
+    }
 }