Paul, The EU passed a law back in 2003 that requires US based companies selling digital goods to collect VAT tax on sales to the EU (typically 15-25%). This was done to try to level the playing field with EU based companies that were subject to VAT.
In the Google agreement, it passes back responsibility for paying taxes to the developer. This would require getting the billing addresses of all customers in the EU and calculating the taxes owed. You'd need to register your company with the EU and wire them the money (the transfer costs possibly being more than you actually owe) each quarter. Given that you are a US based company, they could potentially ban you from selling into the EU for violation, but if you are big enough to care about, I think that is a good problem to have. Of course, no small company or individual delivering digital goods could survive trying to figure out all the global tax laws. Even if you comply with the EU, you may be in violation in other countries like Australia or China. So it's up to you if you want to be in full compliance around the world (and just close up shop due to the maintenance and legal costs) or if you'd rather just muddle along the best you can. Even properly collecting state sales taxes can be beyond the means for many small companies. For example, in the state of Washington, they have different sales taxes based on zip-code and county. If I were to sell an app through Android Market, I'd need 5K in CPA assistance and another 2-3K to hire a company to manage the systems. Or I could just collect the highest sales tax for the whole state and hope that an individual buying the app doesn't sue me for charging them an extra penny or two in sales tax. As developers in this rising app market phenomenon, I don't think the tax laws in most places take into account individuals operating a business having such a global reach for the selling of small amounts of digital goods. On Wed, Apr 21, 2010 at 7:51 AM, Paul <[email protected]> wrote: > I'm based in the US and if I go into my google checkout merchant > account and go into tax settings, there are only options for setting > tax rates for US states. Aren't we supposed to charge VAT taxes if we > sell ( via Android Market/Google Checkout) internationally?? > > Not that I would know how to actually pay those countries their taxes. > > Do I in fact owe taxes to other countries if I'm in the US and selling > software (apps) say to the UK? My company has physical presence in > only one US state. For sales to US customers that typically means I > only have to charge (the customer) and pay (the state) sales tax when > the "shipping address" of the customer is in the same state that my > company has a presence in. > > But how is it supposed to work for sales from US to other countries, > and where do we set this up in Google Checkout and how (if in fact we > owe those countries their tax money) do we actually go about paying > them??? > > -- > You received this message because you are subscribed to the Google > Groups "Android Developers" group. > To post to this group, send email to [email protected] > To unsubscribe from this group, send email to > [email protected]<android-developers%[email protected]> > For more options, visit this group at > http://groups.google.com/group/android-developers?hl=en -- Shane Isbell (Founder of ZappMarket) http://twitter.com/sisbell http://twitter.com/zappstore http://zappmarket.com -- You received this message because you are subscribed to the Google Groups "Android Developers" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/android-developers?hl=en
