new VAT law in EU from 1 Jan 2015 and small enterprises in EU (especially Germany)

Hi all,

As Google already informed us, there is a new VAT law in EU. Starting from 1 January the VAT for buying electronic goods in EU will be paid in the buyer’s country, not the seller’s. This has few implications to the developers in EU that I’d like to discuss with you. I’m gonna share my findings on the topic so far.

  1. Google starts deducting automatically the VAT of every item sold in EU and remitting that VAT to the country of the buyer’s finance authority (see Google example before/after 1 Jan here:

  2. Seller (e.g. developer) receives no more VAT in the payments and is no longer responsible to remit it to its local finance authority.

So far so good. However, most EU countries have also rules for VAT exempt. For example, in Germany small enterprises (Kleinunternehmer) with annual turnover less than EUR 17500 are free from registering for VAT (Kleinunternehmerregelung). I believe most of us (Developers) doing legal business have exactly that small enterprise to declare the incomes.
Now the problem - VAT will be always deducted by Google, even for small enterprises not registered for VAT. The latter has been confirmed by Google’s accounting experts as I asked them how they will handle the VAT after 1 January 2015.

So, what are the options for the small enterprises (Kleinunternehmer)?

  1. Register for VAT and register a company in all EU countries where apps are being sold, or
  2. Register for VAT and apply for MOSS rule (BZSt-Portal: Internetauftritt des Bundeszentralamtes für Steuern - Mini-One-Stop-Shop).
    In any case, registering for VAT seems to be mandatory and would make the accounting way more complicated.
    If you don’t register for VAT, Google will remit VAT for any app you sell in any EU country and some day the finance authority will knock on your door and ask why you are not registered for VAT.

Wouldn’t all this be a killer for the small developers in EU that are trying to run their small business legally?

Let me know your opinion on that, or if my assumptions from above are wrong, please correct me.


Since Google is handling the VAT, I don’t think you have to bother with it. Meaning you don’t have to be registered for VAT because it’s Google who is paying the VAT, it’s Google who has to be registered for VAT and pay it (since it’s not exempt) using MOSS or otherwise. The way I see it you invoice Google for the service of selling your apps and that is it - just like you do with Amazon/Apple right now.

But don’t quote me on this, ask a knowledgable accountant. And I believe we won’t know the details until January - and it should be enough time to react.

(I’m from Poland, but our VAT law will be very similar)

Thanks, all this is correct.
And currently we get 70% of every transaction and Google takes 30% (in case we are not registered for VAT).
The bad news is that with the new rule Google will still take its 30% of every transaction and in addition it will deduct the VAT from every transaction depending on the country of the buyer. Then the developer will no longer get 70%, but around 50% depending on the VAT deducted. And there is no way to take the VAT back from all 27+ EU countries…

I contacted Google regarding this question, asking them who is the seller (Google or the Developer?) and whether or not the VAT will be on Googles behalf.
Regarding to who is the seller (even after Jan 2015):

"Regarding your question, you will still be the seller of your applications. Google will just be responsible for determining, charging, and remitting VAT for all Google Play Store digital content purchases for EU customers."

Regarding VAT in 2015:

"For clarification, Google will remit VAT on your behalf. This means that all information will be associated with your account. If you need to edit your VAT ID, you may do so by logging into your merchant account. Go to "Setting" tab and click "Legal profile"."

So it is Google who remits the VAT, but it is still “your” VAT.

There is no way for this to work in my country tax laws. I am reading through the VAT changes right now and they are the seller even if they claim they are not. There is no way for Google to pay VAT for someone on his sales, that would be ridiculous. It wouldn’t even be reverse charge because they claim they are not party of the transaction.

PS. Amazon states similar things from what I remember and yet you can invoice them for the sales (they state we are sellers but they are remmiting the taxes) - which is confirmed by my country tax offices (they show Amazon and Apple as examples opposite to Google Play). (EDIT: this is wrong, the wording of Amazon distribution agreement is different enough that it is clear they are doing the sales, not us)

I thought that the new VAT laws would allow them to remit taxes that way.

So you are saying that starting with Jan 2015 we should start invoicing Google for sales?
Just to be sure, until Jan 2015 you can’t invoice Google right? You should invoice the individual users/buyers. Is that correct?

I don’t. I don’t know what to do. I hope it will be as easy as invoicing them. The only way I see they could pay taxes for us is by paying them on their VAT ID by MOSS or individually for each country (you can’t report VAT for someone else - unless I am wrong here, but that would be quite bizarre and easy to abuse) and then report the transaction between them and you (using theirs and yours VAT ID) - that transaction would be “invoicable” with 0% VAT as electronic service. If there is a way for them to report by MOSS the VAT of OUR sales then my country documentation on it doesn’t state it anywhere and there is no legislation prepared for dealing with that.

Just to be sure, until Jan 2015 you can’t invoice Google right? You should invoice the individual users/buyers. Is that correct?

Yes, before January 2015 you can’t invoice them for sales, that one thing is sure. How exactly you deal with the sales depends on your country.

To be honest right now I would prefer if they just left things as they are and leave - the MOSS is not that complicated, I could manage, it would be better than current confusion.

PS. I was wrong - Amazon clearly states they are the selling party “Any Amazon Party selling Apps is responsible for collecting and remitting any taxes” where Amazon Party is described as one of the many Amazon subsidiaries like Amazon Media EU S.a.r.l…

I just mailed them again and now they seem to contradict what they said earlier:

I think you were right all along then! :slight_smile: Google should probably stop saying that the developer is the seller from 2015!

What country are you from? Anyway, it shouldn’t be that different from Portugal. Do you mind sharing how you deal with invoicing at the moment?

Thanks. That is much clearer. I think their support might not know much more than we do though. :stuck_out_tongue:

I’m from Poland. Right now:

  • sales from Google Play - I have to make a list of all sales and give it to my accountant each month, I pay 23% on that (I could skip VAT for sales outside EU probably but I decided it is too risky because the information about where the buyer is from might not be enough for my tax office)
  • all the rest - invoices with 0% VAT reverse charge - the EU ones are then reported by my accountant quarterly to some EU VAT register or something. I am not sure I invoice all Amazon sales well because I am never sure what to do with - since they send me money for sales there from USA stating Amazon Inc. (so I am not sure if they are from that Amazon Media Sarl or from Amazon Inc.).

So, why they demanded adress from devs who sells apps? Looks like they aren’t entirely sure what they are doing :wink:

Well, this is a difficult question.
In some EU countries you are obliged anyway by law to have your address on a visible place (Impressumspflicht in German speaking countires).

There are still many developers who haven’t entered their addresses in GP yet. And I haven’t heard about any negative consequences.
You may check for example the apps in GP called Google Maps, Google Earth, YouTube. Their developer hasn’t entered its address yet. Looks like that developer doesn’t conform to the rules :slight_smile:

Thanks. I have a similar setup :slight_smile:

By the way, I asked them again how can I be the “seller” in 2015 if they are the ones remitting VAT. The answer:

I’m still confused on how can they be remitting VAT and not be the legal seller. But there’s probably some tax rules that allow that (?)
Anyway, I think that we should start invoicing Google in 2015, right? Otherwise it would be confusing/hard to justify to the local tax authorities why we will not be paying VAT.

I will definitely invoice Google for 2015 sales, there is no other way to deal with this. And I believe them admitting they are the “intermediary” is enough from what my accountant says - before they weren’t an intermediary, they were only a transaction service like Paypal.

Right, that makes sense!

So Google will become like Apple - i.e. the seller ?

Why be just an “intermediary” if they are already doing the bulk of everything else ? Or is it to stop liability if the developer is a malware developer or something ?

If Google is being the seller for EU - then why is it different for elsewhere ? Why not just become seller for whole world and avoid all the complications for the developer ?