Google Play Store paid apps - tax issues to consider for non-US developer

Been away for a while.

I maybe publishing a paid app soon. I have signed up and been approved for the Merchant Account etc.

First question is on the Physical Address requirement - how flexible is Google on it’s earlier requirement that it not be a post office box etc. Because I remember there was a developer backlash about not wanting to give out home addresses (many are at home). And I have seen many developers who give post office box type addresses when you look at the apps on Google Play.

Second question is on taxation - in the Merchant Account - Settings - Payment Settings - there is an entry:
United States tax information: Status
Which when you click on “Submit tax information” (which is essentially an online W8-BEN form - that non-US developers routinely fill out for the various ad networks to assert that they are not U.S. entities etc. and that U.S. taxes should not be withheld).
After this it changes to:
United States tax information: Business

The questions is - should one have filled out the W8-BEN form (essentially that is what it is) - or is it the right thing to do for a non-U.S. developer (even though there maybe users from the U.S. who buy their app).

This whole business of developers being personally responsible for taxation per-country (for the 200 countries of the world) is another example of Google lack of care - contrast this with Apple Store where everything is handled by Apple. Now it may be that Google has done this to avoid paying taxes (and making apps expensive) - and by offloading it to developers’ shoulders it essentially reduces tax bracket (if developer is poor) - but also it maybe introducing barriers to governments scrutiny of who is making what on Google Play. However, eventually governments will want that information and Google will relent - and then there will be hordes of developers who have mistakenly or “not being bothered with it” just been clueless about what the whole taxation obligation on them was …

So as a non-U.S. developer, should one have filled out the W8-BEN form (I don’t see a way to unfill it though so this is a moot question :-)) - or is it ok to do so even though some users maybe from u.s. who buy the app.

Secondly how does one figure out/handle the burden of taxation (ok EU is now exempt since Google is now being forced by EU to handle it, but what about the other countries). And specifically what about the U.S. ?

Thanks.

Any suggestions ?

Thanks.

If you don’t fill W8-BEN google may withold 30% of your earnings I think.

This whole business of developers being personally responsible for taxation per-country (for the 200 countries of the world) is another example of Google lack of care

It is, but since January 2015 they’ve been forced to take responsibility - at least for European countries but it seems they also cover for example Brazil and some other country too. I treat them as I do ad networks right now - assume they are responsible. It’s a miniscule part of my income so in worst case scenario I will just pay some fee if my tax office disagrees with me on this.

Secondly how does one figure out/handle the burden of taxation (ok EU is now exempt since Google is now being forced by EU to handle it, but what about the other countries). And specifically what about the U.S. ?

You basically just pay your local income tax on the sales. You ignore other countries’ taxes. If you live in EU it gets a bit more complicated because people are not sure what to do with VAT (how to report it / not report it) and how to treat the sales after 1st January (who is the seller - Google or you in EU and outside EU).

Thanks Magnesus for the suggestions.

So this would suggest the following guidelines for non-U.S. developers:


Setting up W8-BEN for non-U.S. developers:

Merchant Account - Settings - Payment Settings:

There is a line there:
United States tax information: Status

Below this line, click on the “Submit tax information” link (which is essentially an online W8-BEN form - that non-US developers routinely fill out for the various ad networks to assert that they are not U.S. entities etc. and that U.S. taxes should not be withheld).

After you have done that it changes to:
United States tax information: Business

Now you have filled out the W8-BEN form effectively and Google will not charge 30% withholding tax.

Sales Tax per country:

Google says on the Merchant Account - Settings - Sales Tax webpage that:

Quote:
Due to changes in VAT tax laws that took effect on January 1, 2015, the merchant (you) is no longer required to manage VAT taxation for consumers in EU member states. Google will collect the VAT taxes from EU consumers on behalf of the merchant. The merchant can still manage tax rates for non EU countries.

This means Google will deduct not only it’s 30% of the price paid by the user for itself, but also cut 30% of the total sales price so it can be paid (by Google) directly to the EU countries.

If you click on Show just below the European Union section, it will show the per-country sales tax - with Luxembourg at the lowest rate of 17% and Hungary at the highest rate of 27%. U.K. is at 20%.

By default other countries are not set up - this means there is no separate sales tax calculation. Anything that the user pays - the standard 30% cut of that is taken by Google again. But the rest is turned over to you as the developer. And now it is your responsibility to figure out if Canada, the U.S., or the Other Countries and Regions need to have a sales tax figure entered there.

Now this means that you maybe potentially liable for taxes to Canada, U.S. and other countries (other than EU which have already been taken care of).

Practically however it may be that a small developer may not have the resources to go chasing after each country - and the default behavior may become a mass “amnesia” about sales tax for other countries. This despite the fact that the user has signed a W8-BEN form saying they are not doing business in the U.S. - but by that I assume it means that the developer is not a company incorporated in the U.S.

This is either a very clever way by Google to evade taxes - since the alternative would be to do EU-like calculations at the Google end (just like Apple does for the Apple Store). The idea being that not paying taxes may help the ecosystem - however I am of the view that it adds confusion to the ecosystem - as it saddles developers with a responsibility or a sword that is dangling on their heads (for example what if a non-U.S. developer visits the U.S. and is accosted for tax evasion - in the age of absence of habeus corpus this would be dangerous for visitors to the U.S.). The alternative would be a few dollars here and there - and I am guessing developers would be HAPPIER if they just paid the taxes (and Google was taking care of it - as they are having to do by the EU).

Perhaps Google is hoping that “in practice” what will happen is that some government agency will come after them - and THEN they will cave in and add the tax collection services (as is being done for EU now). However, this leaves a very bad taste in the mouth - that Google is somehow “corrupt by nature” or not wanting “to do the right thing” from day one, or behaving like street hoods trying to eke out a living in the shadows.

Hopefully that is what will happen - that governments will eventually all wisen up and ask Google for similar consideration (as has been done for the EU). The alternative is that governments could ask Google for lists of developers - which Google at that point will gladly turn over (being the wimps that they are) - and then the developers will be liable on a case by case basis - or it could be used to punish developers from certain countries or on a case by case basis or on the basis of their last name or the color of their skin or whatever.

The question that arises is - what kind of semi-corrupt thinking kids are running the executive positions at Google that they could not see that the greater uncertainty is a “bad thing” - and doing things the right way would have been best all along ?

Hi. I want to ask you a question. After Google charges 30% for them and the VAT of my country, will send me the rest of the amount in my bank account. Do i have to pay taxes again into my country for taht amount or i can download any document that will certify that i have pay taxes?