4 ms·

>> "VAT, for example, is used in many European countries, it’s included in the displayed purchase price, and it’s complicated." It's not that complicated. It's

>> "VAT, for example, is used in many European countries, it’s included in the displayed purchase price, and it’s complicated." It's not that complicated. It's basically equivalent to the US sales tax except it's shown in the price (consumer doesn't have to calculate it themselves). In the UK I believe you don't need to pay it until you are earning over £69,000 per year. Overall it seems like the problem here is how the Play Store works. With the Play Store you are collecting direct from the purchaser. With the App Store sales are funnelled through 5 or 6 major regions (Europe, North America etc.) and paid out to developers. I think this solves the issue of working out tax for every country you do sales in.

mrtksn 13y ago
In Turkey, though not in EU but an EU candidate, the biggest GSM operator founded an appstore for Nokia devices and the developers were to receive 1/8th of the selling price exactly because of the complications. It was before the iPhone era, so the appstore had an unique advantage for exposure of the mobile apps to the clients but the one of the biggest benefits was that the GSM operator was handling the billing procedure. If you were to sell the apps by yourself, other than the need to process payment, you were required to send a bill to the buyer and figure out the tax payments. If you sold your app through the GSM operator's store, they would just add the purchase to the clients phone bill and handle the taxes. Because of this service, the developers would have been earning 0,125$ from 1$ sale.
cbhl 13y ago
> It's not that complicated. It's basically equivalent to the US sales tax US sales tax is more complicated than you'd think. I recall having a very amusing conversation with an Amazon engineer about the software they procured to calculate sales tax on purchases, which promised "24/7" uptime but also required you to shut it down and run an hours-long migration every so often.
mcv 13y ago
But that's exactly the problem. The individual developer still needs to figure out whether to collect or pay anything for all those different countries. That's inefficient. Google should handle that.
DrStalker 13y ago
It's not complicated to a consumer in the UK buying something but how complicated is it for someone outside the EU to figure out and apply this to their product? And then do the same for every applicable tax in every country (including working out which taxes are applicable in the first place in a country that might not even document things in a language you can understand)
- rahimnathwani 13y ago
  then do the same for every applicable tax in every country They don't need to do it in every EU country where they have sales. They can just pick one EU country (ideally one with a low VAT rate, like Luxembourg): As regards business to private consumers (so-called B2C) sales, the single place of registration introduced under the new Directive will provide the non-EU traders with the option of discharging all VAT obligations through a single administration.[0] [0] http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/article_1610_en.htm#a1 http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-...
  - PeterisP 13y ago
    If we're talking about barriers to entry, then think about one-man shops - for a non-EU programmer, registering a legal entity in Luxembourg is neither simple nor affordable.
    - rahimnathwani 13y ago
      You can register for VAT in an EU country without registering a legal entity. For example, if you were to choose the UK, you can register as an NETP (non-established taxable person): http://search2.hmrc.gov.uk/kb5/hmrc/forms/view2.page?formId=986 http://search2.hmrc.gov.uk/kb5/hmrc/forms/view2.page?formId=... Yes, you have to do a little research. Yes, you have to fill in some forms, and pay some taxes. However, whilst you might not like the cost of the tax itself, it's hard to argue that compliance itself isn't simple and affordable.
Hermel 13y ago
>> It's not that complicated. Actually, it is complicated. If you are selling a service from the US to European end-users, you owe VAT in each European country you have customers in. You can simplify the process with a special registration with the tax offices in one country (e.g. Germany) and send all the owed taxes there. They will then further distribute it to the other countries. Also note that to do it correctly, you need to charge the right rate in each country. Generally, every EU country has a different tax rate and every few months, it changes somewhere. In order to be able to automate this, the EU offers an API that returns current VAT rates. To further complicate the issue, there are numerous exceptions. E.g. special rates for food and touristic services, that differ from country to country. Things are simpler when selling to companies, in which case it is the responsibility of the importing buyer to declare VAT correctly. But to do so, you need to ask your users whether they are companies and if yes, they have to provide you with their VAT registration number so you can validate them.
- tzs 13y ago
  > You can simplify the process with a special registration with the tax offices in one country (e.g. Germany) and send all the owed taxes there. They will then further distribute it to the other countries. Also note that to do it correctly, you need to charge the right rate in each country. If you are selling apps or other download software to end users, I don't believe that the last sentence applies. These are classified as sales of services, not sales of goods, and services (with a bunch of exceptions) are taxed at the rate of the place of the provider. At least, this is what our UK accountants told us, as a US company with sales in the EU. We are registered in the UK (I'm not sure exactly what kind of entity we have there...a subsidiary, and agent, or something else) and all our EU sales are from our UK entity. The accountants said we should charge UK VAT rate to all customers, and we report and pay to the UK. Note: I'm not sure exactly what our arrangement is in the UK. It is possible that we actually have a UK subsidiary, and that is the seller for our EU sales. This could mean that we are under different rules than a US company accepting orders from the EU. As always, consult an expert who is familiar with your particular situation before acting.
  - deleted 13y ago
    [deleted]

mrtksn 13y ago

In Turkey, though not in EU but an EU candidate, the biggest GSM operator founded an appstore for Nokia devices and the developers were to receive 1/8th of the selling price exactly because of the complications. It was before the iPhone era, so the appstore had an unique advantage for exposure of the mobile apps to the clients but the one of the biggest benefits was that the GSM operator was handling the billing procedure. If you were to sell the apps by yourself, other than the need to process payment, you were required to send a bill to the buyer and figure out the tax payments. If you sold your app through the GSM operator's store, they would just add the purchase to the clients phone bill and handle the taxes. Because of this service, the developers would have been earning 0,125$ from 1$ sale.

cbhl 13y ago

> It's not that complicated. It's basically equivalent to the US sales tax US sales tax is more complicated than you'd think. I recall having a very amusing conversation with an Amazon engineer about the software they procured to calculate sales tax on purchases, which promised "24/7" uptime but also required you to shut it down and run an hours-long migration every so often.

mcv 13y ago

But that's exactly the problem. The individual developer still needs to figure out whether to collect or pay anything for all those different countries. That's inefficient. Google should handle that.

DrStalker 13y ago

It's not complicated to a consumer in the UK buying something but how complicated is it for someone outside the EU to figure out and apply this to their product? And then do the same for every applicable tax in every country (including working out which taxes are applicable in the first place in a country that might not even document things in a language you can understand)

rahimnathwani 13y ago
then do the same for every applicable tax in every country They don't need to do it in every EU country where they have sales. They can just pick one EU country (ideally one with a low VAT rate, like Luxembourg): As regards business to private consumers (so-called B2C) sales, the single place of registration introduced under the new Directive will provide the non-EU traders with the option of discharging all VAT obligations through a single administration.[0] [0] http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/article_1610_en.htm#a1 http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-...
- PeterisP 13y ago
  If we're talking about barriers to entry, then think about one-man shops - for a non-EU programmer, registering a legal entity in Luxembourg is neither simple nor affordable.
  - rahimnathwani 13y ago
    You can register for VAT in an EU country without registering a legal entity. For example, if you were to choose the UK, you can register as an NETP (non-established taxable person): http://search2.hmrc.gov.uk/kb5/hmrc/forms/view2.page?formId=986 http://search2.hmrc.gov.uk/kb5/hmrc/forms/view2.page?formId=... Yes, you have to do a little research. Yes, you have to fill in some forms, and pay some taxes. However, whilst you might not like the cost of the tax itself, it's hard to argue that compliance itself isn't simple and affordable.

Hermel 13y ago

>> It's not that complicated. Actually, it is complicated. If you are selling a service from the US to European end-users, you owe VAT in each European country you have customers in. You can simplify the process with a special registration with the tax offices in one country (e.g. Germany) and send all the owed taxes there. They will then further distribute it to the other countries. Also note that to do it correctly, you need to charge the right rate in each country. Generally, every EU country has a different tax rate and every few months, it changes somewhere. In order to be able to automate this, the EU offers an API that returns current VAT rates. To further complicate the issue, there are numerous exceptions. E.g. special rates for food and touristic services, that differ from country to country. Things are simpler when selling to companies, in which case it is the responsibility of the importing buyer to declare VAT correctly. But to do so, you need to ask your users whether they are companies and if yes, they have to provide you with their VAT registration number so you can validate them.

tzs 13y ago
> You can simplify the process with a special registration with the tax offices in one country (e.g. Germany) and send all the owed taxes there. They will then further distribute it to the other countries. Also note that to do it correctly, you need to charge the right rate in each country. If you are selling apps or other download software to end users, I don't believe that the last sentence applies. These are classified as sales of services, not sales of goods, and services (with a bunch of exceptions) are taxed at the rate of the place of the provider. At least, this is what our UK accountants told us, as a US company with sales in the EU. We are registered in the UK (I'm not sure exactly what kind of entity we have there...a subsidiary, and agent, or something else) and all our EU sales are from our UK entity. The accountants said we should charge UK VAT rate to all customers, and we report and pay to the UK. Note: I'm not sure exactly what our arrangement is in the UK. It is possible that we actually have a UK subsidiary, and that is the seller for our EU sales. This could mean that we are under different rules than a US company accepting orders from the EU. As always, consult an expert who is familiar with your particular situation before acting.
- deleted 13y ago
  [deleted]