

Why don’t we have paid versions on the Android market? - DanielRibeiro
http://retrodreamer.com/blog/2012/03/why-dont-we-have-paid-versions-on-the-android-market/

======
mcv
Yeah, it's nuts that Google leaves it to individual developers to figure this
out. Handling stuff like this is exactly what should be part of the service
that Google is charging that 30% fee for.

I'm Dutch, and I've asked the Dutch tax service if I'd have to charge VAT if I
sold through Android Marketplace to foreigners, to EU members or to Dutchmen.
They didn't know. They suspected nobody really knew. They'd ask if there was
any policy on that, and maybe initiate policy on it. They'd get back to me,
but never did.

If I ever end up selling through the Play Store, I'll just charge some price,
and deal with any tax service when they knock on my door. I'll probably tell
my own tax service that it's all international sales unless they have more
details for me.

~~~
rahimnathwani
(Disclaimer: IANAL and this is not advice.)

\- If you're selling to customers within your own country or within the EU,
you should charge the same rate of VAT as you would for selling software to
people in your home country.

\- If you're selling to customers outside the EU, you don't need to charge
Dutch VAT

(I am assuming your business is registered for VAT, either because you wanted
it to, or because it had to by virtue of exceeding a turnover threshold.)

If you sell an app for 4.99 to an EU customer, then this implicitly includes
21% VAT. So your sale price is 4.12, plus 0.87 VAT. That's what you would show
on your VAT return.

Does Google ask you about your VAT status? Do you pay them 30% of the gross
(4.99) either way?

~~~
mcv
> If you're selling to customers within your own country or within the EU, you
> should charge the same rate of VAT as you would for selling software to
> people in your home country.

The thing is: when I'm selling through an international platform like the Play
Store, do I even know where my customers live? Well, maybe I do, but I'd much
rather do my business with Google and have them handle the second half of the
transaction for me.

I'm registered for VAT simply because I have a business that's not in health
care. As far as I know, I have to register for VAT even if I'm below the
threshold where I'd have to _pay_ the VAT.

> Does Google ask you about your VAT status? Do you pay them 30% of the gross
> (4.99) either way?

No idea, but it's an interesting question. Do I have to pay VAT over their
share of my revenue, with it coming out of my share of the revenue? That would
be odd. Yet another reason why Google should be handling this.

~~~
rahimnathwani
_Do I have to pay VAT over their share of my revenue, with it coming out of my
share of the revenue?_

As it turns out, no :)

You should set the VAT rate correctly in the Play/Wallet settings, and Google
will only charge you commission on the net price. They will remit the
collected VAT to you in its entirety.

------
billyjobob
When an EU resident buys physical goods from a non-EU country the shipment is
stopped at customs. The customer must then pay VAT (plus an importation tax)
on the value of the goods in order to have the shipment released. There is no
requirement that the _seller_ of the goods pay VAT - how could the EU hope to
enforce this across hundreds of foreign countries all with different legal
system? They simply police their own borders.

What I don't understand is how they apply this to digital goods, where there
are no borders to police? How do they even find out that digital goods are
being imported? If neither the buyer nor seller pay the VAT, how do they stop
the transaction? If the seller is located in Assfuckistan, then surely the
transaction takes place in Assfuckistan, and unless Assfuckistan has signed a
treaty with the EU to collect VAT on their behalf, why would their authorities
interfere?

~~~
gamblor956
_What I don 't understand is how they apply this to digital goods, where there
are no borders to police? How do they even find out that digital goods are
being imported?_

Audits of online stores, plus massive penalties (potentially exceeding 100%)
on the VAT and other taxes that should have been paid. Tax evasion generally
means that the statute of limitations (the period of time for which the tax
authority may still go after a taxpayer for back taxes) _never ends_ and they
can go after a taxpayer for unpaid taxes from decades prior.

 _If the seller is located in Assfuckistan, then surely the transaction takes
place in Assfuckistan, and unless Assfuckistan has signed a treaty with the EU
to collect VAT on their behalf, why would their authorities interfere?_

Under international treaties and laws, sales are deemed to occur in the
jurisdiction of the _buyer,_ not the seller. However, if the transaction is
agreed to/executed in another jurisdiction (i.e., the seller's country or a
third country), it could _also_ be subject to tax in that other country.

~~~
hayksaakian
In this case, who is evading customs? The play store or the app developer?

------
captainmuon
It's not really that hard. I only know the situation when selling from
Germany, but it should be similar in other countries.

Basically, you don't have to pay taxes in other countries, you only pay taxes
in the country your company resides in (of course there are some exceptions,
you should get a lawyer etc., but this is what I've heard in a couple of
cases).

If you make less then a certain amount, I believe 17500 € / year, you count as
a "small entrepreneur" and are not treated like a business, but as a private
person. You can sell and buy what you like and don't pay additional sales tax
to the state. You implicitly pay 7-19% sales tax when buying goods just like
any other customer.

If you are a "real" business, you don't have to pay the sales tax when buying
stuff (raw material). In practice, you can deduct it from your taxes. You have
to pay sales tax directly to the state for things you create and sell. This is
why it's also called value added tax, because its a tax on the value your
company added to the "material". In practice, if you are a software company,
you'll just have to pay a certain percentage of your income in taxes, it's not
really complicated.

The interesting part is when you do business with abroad. It _is_ really
complicated to do the customs procedures for all the different countries, but
it is much easier when you only sell digital goods, and/or sell directly to
customers.

In most cases, you just pay the 19% tax to the German government, and sell
your product to the customer, and youre fine. There are ways to avoid the
sales tax when selling to other countries, but AFAIK you have to pay some
customs fees and it starts getting complicated.

I only know the case when importing things to Germany, in that case someone
has to pay an additional import sales tax, besides the customs, but the taxes
in the country of origin can usually be waived. In case something goes wrong
here, usually the selling company isn't held liable, but the goods are stuck
in customs and the customer has to pay the import tax. This is frequently a
problem for american companies trying to sell stuff to Germany, e.g. Pebble
and Ouya had that problem. It's a nuisance, but the customs agencies are
generally very cooperative and will tell you exactly what they want you to pay
:-).

~~~
coldtea
> _It 's not really that hard. I only know the situation when selling from
> Germany, but it should be similar in other countries.

Basically, you don't have to pay taxes in other countries, you only pay taxes
in the country your company resides in (of course there are some exceptions,
you should get a lawyer etc., but this is what I've heard in a couple of
cases)._

This is so anecdotal it's useless. "This is what I've heard" doesn't really
cut it. Case in point:

> _If you make less then a certain amount, I believe 17500 € / year, you count
> as a "small entrepreneur" and are not treated like a business, but as a
> private person. You can sell and buy what you like and don't pay additional
> sales tax to the state._

That's maybe true for Germany, but sure as hell is not true in other EU
countries (I know, I have business in one).

~~~
captainmuon
It's not _just_ anecdotal. I did a lot of research on this, talked with the
German tax office and (un)employment agency, and read everything I could find
from the chamber of commerce, since I'm toying with the idea of setting up a
little business. I know a couple of people who have their own business. I have
two people in my family in the export business, and I've worked in that area a
long time ago as a summer job. So while one can hardly call me an expert, I am
pretty familiar with the procedures.

Your very right not to trust random strangers on the internet, but you
shouldn't dismiss what people say as anecdotal and useless either. My point
was just: Look, an average technical guy with no talent for burocracy can
figure out the laws in his country (in this case Germany); and in general
while laws are different in other countries, you _can_ probably figure them
out there as well.

------
k-mcgrady
>> "VAT, for example, is used in many European countries, it’s included in the
displayed purchase price, and it’s complicated."

It's not that complicated. It's basically equivalent to the US sales tax
except it's shown in the price (consumer doesn't have to calculate it
themselves). In the UK I believe you don't need to pay it until you are
earning over £69,000 per year.

Overall it seems like the problem here is how the Play Store works. With the
Play Store you are collecting direct from the purchaser. With the App Store
sales are funnelled through 5 or 6 major regions (Europe, North America etc.)
and paid out to developers. I think this solves the issue of working out tax
for every country you do sales in.

~~~
Hermel
>> It's not that complicated.

Actually, it is complicated. If you are selling a service from the US to
European end-users, you owe VAT in each European country you have customers
in. You can simplify the process with a special registration with the tax
offices in one country (e.g. Germany) and send all the owed taxes there. They
will then further distribute it to the other countries. Also note that to do
it correctly, you need to charge the right rate in each country. Generally,
every EU country has a different tax rate and every few months, it changes
somewhere. In order to be able to automate this, the EU offers an API that
returns current VAT rates.

To further complicate the issue, there are numerous exceptions. E.g. special
rates for food and touristic services, that differ from country to country.
Things are simpler when selling to companies, in which case it is the
responsibility of the importing buyer to declare VAT correctly. But to do so,
you need to ask your users whether they are companies and if yes, they have to
provide you with their VAT registration number so you can validate them.

~~~
tzs
> You can simplify the process with a special registration with the tax
> offices in one country (e.g. Germany) and send all the owed taxes there.
> They will then further distribute it to the other countries. Also note that
> to do it correctly, you need to charge the right rate in each country.

If you are selling apps or other download software to end users, I don't
believe that the last sentence applies. These are classified as sales of
services, not sales of goods, and services (with a bunch of exceptions) are
taxed at the rate of the place of the provider.

At least, this is what our UK accountants told us, as a US company with sales
in the EU. We are registered in the UK (I'm not sure exactly what kind of
entity we have there...a subsidiary, and agent, or something else) and all our
EU sales are from our UK entity. The accountants said we should charge UK VAT
rate to all customers, and we report and pay to the UK.

Note: I'm not sure exactly what our arrangement is in the UK. It is possible
that we actually have a UK subsidiary, and that is the seller for our EU
sales. This could mean that we are under different rules than a US company
accepting orders from the EU. As always, consult an expert who is familiar
with your particular situation before acting.

------
tormeh
Here's a novel suggestion: Ask the EU.
[http://europa.eu/europedirect/index_en.htm](http://europa.eu/europedirect/index_en.htm)

Also the US government might help you:
[http://export.gov/europeanunion/marketresearch/sellingusprod...](http://export.gov/europeanunion/marketresearch/sellingusproductsandservicesintheeu/index.asp)

Specific documents: US on VAT in EU:
[http://buyusainfo.net/docs/x_7292727.pdf](http://buyusainfo.net/docs/x_7292727.pdf)
EU on electronic services VAT:
[http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-...](http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/index_en.htm)
EU on VAT:
[http://ec.europa.eu/taxation_customs/taxation/vat/traders/va...](http://ec.europa.eu/taxation_customs/taxation/vat/traders/vat_community/index_en.htm)

------
TobbenTM
Perhaps worth mentioning that this article is almost two years old, and I
believe certain things have changed at google since then.

~~~
fidotron
Going by this: [https://support.google.com/googleplay/android-
developer/answ...](https://support.google.com/googleplay/android-
developer/answer/138000?hl=en&ref_topic=15867)

Even though they've moved off checkout all this does still apply.

It is absolute madness.

------
snoonan
The EU tax on digital sales really is hard to understand and comply with as a
small developer. We're also thinking of blocking EU sales until we are big
enough to afford to comply. How are people dealing with this?

~~~
mcv
Just charge whatever you need, and if they come knocking, give them whatever
they can prove they deserve. It may knock 20% off your revenue from that
market, but it's still better than 0% revenue from that market.

~~~
watwut
I would not recommend that strategy, unless you really understand all possible
consequences. The fine may much bigger then you expect and tax cheating may
earn you jail time or kill your business for good.

------
piyush_soni
To top it all it is frustrating that there is mostly no way to contact Google
directly to get an answer or make a feature request like this. If you go to
their product support forums, some support people (who are nothing but other
actual users) write canned responses which make no sense. Many times they
don't understand our issue.

------
snoonan
The EU VAT rules extend to most digital products and services for all
companies anywhere in the world. Yeah.

~~~
stan_rogers
And US income tax laws apply to citizens by birthright who have never resided
or worked in the US. Law is weird.

------
apunic
Same with iOS

~~~
corresation
Is this true? I've yet to actually sell anything on either platform, but my
understanding is that Apple is the seller of apps on the App Store, and makers
are simply publishers who effectively get a royalty check. The Google Play
store, in contrast, has Google acting as a facilitator but far more falls on
the laps of app makers.

Apple makes a 30% cut of your app, but while Google takes a 30% cut apparently
they give most if not all of this to...oddly enough...telcos? (This is still
incredibly fuzzy and I know of no sources, beyond various Google claims that
they get just a small administrative charge) That may explain the service
difference.

Recall that there was a bit of a hoopla because Google shares customer data
with app makers, because again the sale is between the app maker and the
customer (which is something that very few app buyers expect or understand).

[https://support.google.com/googleplay/android-
developer/answ...](https://support.google.com/googleplay/android-
developer/answer/112622?hl=en) \- "Distribution partners"?

