4 ms·

As annoying as location restrictions are, one reason is often taxation laws. I would love to offer my apps for sale in every country in the world, but as a non

As annoying as location restrictions are, one reason is often taxation laws. I would love to offer my apps for sale in every country in the world, but as a non-European, to legally sell my apps on the Google Play store in European countries, I have to apply to an EU country to establish a business nexus there, and file VAT tax returns every few months. (Yes, the EU requires non-EU businesses to remit VAT on digital software sales, they regard online sales as occurring where the customer resides.) It's a ridiculous amount of bureaucracy for a 99c app that is unlikely to earn much anyway, so right now I just exclude sales to European countries instead. There's a blog post from Retro Dreamer with more info on this, as one example of location restrictions being a result of tax laws: http://retrodreamer.com/blog/2012/03/why-dont-we-have-paid-versions-on-the-android-market/ http://retrodreamer.com/blog/2012/03/why-dont-we-have-paid-v... So don't always blame the content creator, the bottleneck might be closer to where you are. I love Berlin, but it also has some of the worst geolocation restrictions due to local laws (look into GEMA blocking music on YouTube, if you haven't encountered it yet - even if the artist wants you to listen to it, GEMA can block the song because it hasn't been officially registered with authorities yet).

Houshalter 13y ago
This is probably a stupid question but how would they go after you for not paying the tax if you don't even live in the country? Would they even be able to detect it? And is there any basis for blocking based on IP, instead of a disclaimer or some other method of identification?
- gamblor956 13y ago
  They don't, because under international tax law you generally don't owe income taxes for sales that were not made while physically out of the country attempting to levy the tax. (Sale meaning any of negotiating, signing/approving the transaction, or title of transfer occurring in the tested country.) It's a basic principle of international taxation (for reference, look up income sourcing rules if you're interested.)
- SyneRyder 13y ago
  If you don't live in an EU country, they generally can't / don't pursue you, but if you travel to Europe (as I do sometimes) they could arrest you when you cross the border. There was a case of that happening to a developer in the desktop software days, but I can't find a link to the news story now. In practice, the EU pressured US-based payment gateways into handling it on behalf of developers (which is really best for everyone, and essentially what Apple & Amazon already does today). If you don't mind ignoring EU laws, I'm sure most people on the Google Play store are also ignoring them and getting away with it. But there are lots of Nintendo IP infringements on the Google Play store as well, so the fact that it's common doesn't necessarily make it legal. For some history, there's an old Business Of Software thread on the debate, including folks like Andy Brice & Patrick McKenzie chiming in with their views: http://discuss.joelonsoftware.com/default.asp?biz.5.465929.30 http://discuss.joelonsoftware.com/default.asp?biz.5.465929.3...
gingerlime 13y ago
yes, I'm very familiar with the GEMA restrictions here in Germany, and they are just as frustrating (and just as easy to bypass, in fact with the very same method I demonstrated on the blog post).
gamblor956 13y ago
I think you need to talk to a lawyer (or a better lawyer, if this was the advice you were given.) Do you really think the indie companies behind Jungle Run or Flappy Bird, or any of those other indie mobile hits registered for VAT in every country in which their apps got sold? Hint: they did't. It would have been cost prohibitive. And if this was a legal problem, you can bet there would have been news stories about these same indie darlings getting slapped with massive fines/penalties from various countries for not registering. It's not necessary to have a business nexus to sell software into an EU country (or most countries, for that matter); nor is it necessary to file VAT returns if you are using a store such as Google Play--Google handles both for you since they, not you are the seller of record. That's part of what you pay the 30% for. It's the same with Apple and MS. The business registration and VAT filings are necessary only if you sell directly to the customers and do so by physically interacting with the customer in their country. The best way to sum up the problem with the blog post you linked is with a quote from the post itself: "Does it apply to your App? Does it apply to our games? I don’t know, I’m not a lawyer, I’m not an accountant. I can’t give you any advice, I can’t even figure it out 100% for our own case." GEMA is an issue--but GEMA isn't a tax matter, it's an IP rights matter. Due to the various WIPO Treaties, the applicability of local laws to foreign content (or vice versa) is different.
- SyneRyder 13y ago
  Google Play is not the seller of record, they only act as a payment processor (similar to Stripe or Paypal). You are responsible for paying and collecting tax. Check section 3.2 of the Google Play agreement: "Developer is responsible for determining if a Product is taxable and the applicable tax rate for the Payment Processor to collect for each taxing jurisdiction where Products are sold. Developer is responsible for remitting taxes to the appropriate taxing authority." Note: Developer is responsible, not Google. (Apple handles this differently.) As for VAT filings only being necessary for selling physical product: you need to look more closely at EU Council Directive 2002/38/EC: "From now on, these services [digital delivery of software and computer services] will be taxed in the country where the customer resides rather than where the supplier is located.... For the non-EU supplier whose EU customers are non-business individuals or organisations, there will now be an obligation to charge and account for VAT on these sales just as EU suppliers have to do." http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/article_1610_en.htm http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-...

Houshalter 13y ago

This is probably a stupid question but how would they go after you for not paying the tax if you don't even live in the country? Would they even be able to detect it? And is there any basis for blocking based on IP, instead of a disclaimer or some other method of identification?

gamblor956 13y ago
They don't, because under international tax law you generally don't owe income taxes for sales that were not made while physically out of the country attempting to levy the tax. (Sale meaning any of negotiating, signing/approving the transaction, or title of transfer occurring in the tested country.) It's a basic principle of international taxation (for reference, look up income sourcing rules if you're interested.)
SyneRyder 13y ago
If you don't live in an EU country, they generally can't / don't pursue you, but if you travel to Europe (as I do sometimes) they could arrest you when you cross the border. There was a case of that happening to a developer in the desktop software days, but I can't find a link to the news story now. In practice, the EU pressured US-based payment gateways into handling it on behalf of developers (which is really best for everyone, and essentially what Apple & Amazon already does today). If you don't mind ignoring EU laws, I'm sure most people on the Google Play store are also ignoring them and getting away with it. But there are lots of Nintendo IP infringements on the Google Play store as well, so the fact that it's common doesn't necessarily make it legal. For some history, there's an old Business Of Software thread on the debate, including folks like Andy Brice & Patrick McKenzie chiming in with their views: http://discuss.joelonsoftware.com/default.asp?biz.5.465929.30 http://discuss.joelonsoftware.com/default.asp?biz.5.465929.3...

gingerlime 13y ago

yes, I'm very familiar with the GEMA restrictions here in Germany, and they are just as frustrating (and just as easy to bypass, in fact with the very same method I demonstrated on the blog post).

gamblor956 13y ago

I think you need to talk to a lawyer (or a better lawyer, if this was the advice you were given.) Do you really think the indie companies behind Jungle Run or Flappy Bird, or any of those other indie mobile hits registered for VAT in every country in which their apps got sold? Hint: they did't. It would have been cost prohibitive. And if this was a legal problem, you can bet there would have been news stories about these same indie darlings getting slapped with massive fines/penalties from various countries for not registering. It's not necessary to have a business nexus to sell software into an EU country (or most countries, for that matter); nor is it necessary to file VAT returns if you are using a store such as Google Play--Google handles both for you since they, not you are the seller of record. That's part of what you pay the 30% for. It's the same with Apple and MS. The business registration and VAT filings are necessary only if you sell directly to the customers and do so by physically interacting with the customer in their country. The best way to sum up the problem with the blog post you linked is with a quote from the post itself: "Does it apply to your App? Does it apply to our games? I don’t know, I’m not a lawyer, I’m not an accountant. I can’t give you any advice, I can’t even figure it out 100% for our own case." GEMA is an issue--but GEMA isn't a tax matter, it's an IP rights matter. Due to the various WIPO Treaties, the applicability of local laws to foreign content (or vice versa) is different.

SyneRyder 13y ago
Google Play is not the seller of record, they only act as a payment processor (similar to Stripe or Paypal). You are responsible for paying and collecting tax. Check section 3.2 of the Google Play agreement: "Developer is responsible for determining if a Product is taxable and the applicable tax rate for the Payment Processor to collect for each taxing jurisdiction where Products are sold. Developer is responsible for remitting taxes to the appropriate taxing authority." Note: Developer is responsible, not Google. (Apple handles this differently.) As for VAT filings only being necessary for selling physical product: you need to look more closely at EU Council Directive 2002/38/EC: "From now on, these services [digital delivery of software and computer services] will be taxed in the country where the customer resides rather than where the supplier is located.... For the non-EU supplier whose EU customers are non-business individuals or organisations, there will now be an obligation to charge and account for VAT on these sales just as EU suppliers have to do." http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/article_1610_en.htm http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-...