I have an android game developed using Unity3D. I simply want to implement an in-app-purchase that removes ads and gives players access to an extra level. I will be using a plug-in to implement this functionality, so that shouldn’t be a too big of an issue. However, I am having trouble understanding how to implement sales taxes to the in-app-purchase.
Anyways, according to section 3.2 of Developer Distribution Agreement (https://play.google.com/about/developer-distribution-agreement.html), I am required to determine if tax is applicable to my product, and I am solely responsible for setting applicable tax rate and declaring to/paying the appropriate authority. Now, I’ve been contacting Google regarding this issue, and their answer seems to be “here are what our official support sites say about the subject, and you are suppose to figure it out because we can’t give you any legal advice” etc.
Simply put, I am hoping that someone, with experience selling product via Google Play, could share with me how they handled sales tax when he/she was developer their first app/game/wtvr. If my understanding is true, Google basically expects a “single person developer team” to make contact with 30~40 governing bodies every month if the app does become successful, which I find hard to believe.
I’ve been sitting on a finished product for over 2 weeks now because I can’t seem to be able to get a handle on this. Please help
DISCLAIMER: I AM NOT A LAWYER. THIS IS NOT TAX ADVICE.
Yep, the whole thing is pretty retarded…
Effectively Google is selling the product (they give you the product and take your money). Legally THEY are probably responsible for the sales tax. You are getting a commission on the sale.
It gets even more interesting when they just sell a license key to enable some functionality. In that case, you already had the product (the key just enabled some functionality)… so what are you being taxed on ? There was no transfer of physical items (which is what tax laws are based on!).
You can bet this whole thing is going to blow up massively at some point… in court!
At this point, Google’s advice is appropriate : go see a lawyer
Ask an accountant. If he doesn’t know - ask a better one.
Basically Google is pretending we - the developers - are doing the sales ourselves and according to that it is as if we were selling the games to the customers directly. It means that if you are from Europe you have to pay VAT on all sales or only on sales that are to European countries (this might vary depending on country/accountant/local tax office). The amount of VAT you pay depends on your country (in case your sales are really, really high in some of the countries - then you need to pay VAT there, but unless you are the developer of Clash of Clans it shouldn’t concern you since the limit is about 10000 euro per month for most countries if I remember correctly).
If you are not from Europe then I don’t know… you probably only pay your local sales tax.
But asking an accountant is your best bet. You should probably treat IAP as sales of electronic goods to people all around the world.
No. Itunes is very easy in comparison since it’s Apple that does the sales and you don’t have to worry about anything (apart from income tax of course).
It’s worth pointing that, in the EU at least, you only have to charge vat if you are a vat register entity. The exact rules govering when a company has to register vary from country to country though. In the UK, and individual can sell privately with no vat. A company has to register for vat if the turnover for a year reaches a threshold. Vat in the EU will get a whole lot more complicated from 1st Jan, when the rules governing point of sale change.
Rhames Games, do these new rules also effect in app purchasing on Apple appstore and Amazon? I wanted to integrate IAP but now you mention this, it might get too complicated on Android.
This sounds scary and a bit insane: http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-indirect-tax-eu-2015-place-of-supply-changes.pdf
“Suppliers of such services will therefore need to determine where their customers are established or usually reside and will need to account for VAT at the applicable rate in that Member State. Therefore,
suppliers may (but see alternative below) need to register for VAT in all EU Member States where they have customers. No minimum thresholds will apply and so making supplies to just one customer in one member State will trigger a VAT registration requirement in that country.”
Unless it forces Google to change the method they are using now: "The Implementing Regulation indicates that in such circumstances a service provider which manages a portal or interface or supplies telecommunication services will be treated as acting in its own name unless it is explicitly indicated and can be clearly demonstrated, both in terms of the contract and in the information provided to the customer, that it is some other person that is supplying the service. In effect, the default position is that market place operators (and similar businesses) will need to account for VAT under the new rules. Rebuttal of the provision is possible if certain conditions are met. " - for example while Google puts in the contract that it is the developer that is doing the sales, they don’t clearly show that to the customer. Since 1st January they would have to add our name to the “buy” box in order to keep claiming we are the ones making the sales, not them.
With that said, I find it extremely hard to believe that all Android developers making those super simple games are actually taking these necessary steps. So this could only mean one of two things:
[ol]
[li]I am wrong, and most if not all Android developers comply with these laws.
[/li][li]A lot of times people ignore them, and their apps don’t get big enough for government agencies to bother with them.
[/li][/ol]
