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Changes coming soon to Google Play’s Terms of Service could leave some app developers with a little less money in their pockets. Well, the ones who weren’t already paying Value-Added Tax for apps sold in the European Union.
Starting January 1st, Google will make things “easier” on developers by automatically deducting VAT (which can be as much as 25%) for any and all applications sold to the EU. Previously left up to app developers to pay on their own, this is, in addition to the 30% “transaction fee” Google already takes for purchases in the Google Play Store. The changes will be reflected in the Google Play Developer Console, with Google recommending developers head there to adjust pricing accordingly.
This post was more of a PSA than anything, so developers aren’t blindsided when they see smaller revenues from apps sold to their European customers. It’s just part of doing business internationally, we suppose.
So developers will only see 45% of what the app sold for after VAT and Google takes their cut? That’s crazy.
Does Google also charge the same amount for US developers?
VAT is similar to sales tax, meaning mandatory if you sell products to end users. and it is taken from the product price = developer + 30% google so the developer gets at least 52.5%, google 22.5% and the government 25%
US doesn’t have VAT tax. But we get charged varying tax rates depending on the state you live in, but it’s not even close to 25%.
Google only charges 30%. It is the EU charging the 25% VAT tax. Yes, US developers also have to pay income tax on app sales.
there are lots of variations on VAT depending on the country in europe, for instance in france it’s 20%, luxembourg is 15% etc. So, off course, a lot of companies set their business in luxembourg to get more incomes since they provided invoices based on the VAT of the country they’re in.
This generated some stress between companies because it distorted concurrence somehow. Also lots of foreign companies decided to settle artificially un luxembourg, thus paying less tax to other countries.
The 2015 law is there to regulate the market : from jan 1st, it will be no use to settle in luxembourg to try to make more cash, every company in europe will be equal on that point, since VAT will have to be based on customer’s location.
Google is charging 30% for your app to be in their store. This new 25% is because of new EU regulations, not because Google wants to do it.
I’d love to know what Apple is doing in regards to tax issues (they’ve been scamming the system pretty hardcore with not even a slap on the wrist for years)
EU regulations state that sales tax of the country that the buyer lives in has to be applied as of January 1, 2015. This ranges from 5 to 25 percent. I am in the book business and our list price is ex VAT so there is a solution for everyone who wants to keep receiving the same net rev.
Does this also apply to in-app purchases and other purchases made using Google wallet?
What if I pay Uber through my Google account?
I can only imagine that is does also apply, but I could be wrong.
Because I think Uber was getting some flag because drivers were earning money without paying taxes over it…I suppose this would fix that, kinda
For Ireland it 23% and UK 20% each country in Europe sets its own VAT rate so it won’t be 25% for all of Europe.