Selling Apps via Apple

Selling Apps via Apple

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Client, whose normal business activity is something different to this, has developed something that might prove to be a money-spinner. Does anyone have advice or a link on VAT and any other tax issues surrounding the selling of Apps via Apple. Really want to check that I'm not missing anything beyond the bleedin' obvious. Thanks in advance.

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By rlangston
16th Jul 2012 09:08

Apple terms of service

There are some fairly comprehensive terms regarding collection of VAT in the terms of service which are agreed when a developer signs up to distribute an app through the app store.

This covers VAT and sales tax in any country where the app is available for distribution (as there may be liability outside the UK).  In most cases, Apple will pay the tax on the developer's behalf (this includes the EU, US and Australia for example).

Your client will of course still need to consider his UK direct tax obligations.

Strictly speaking, there is a withholding tax when Apple pays your client his share of the sales revenue.  However (assuming he is a UK resident), there is an online W8-BEN (to claim relief at source under the UK/US treaty) which he will have completed as part of the sign up process.

 

Robert Langston

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By andy.partridge
16th Jul 2012 09:23

Thanks Robert

I should add that in my haste, yesterday, I omitted to say that the client is a VAT-registered limited company. Sorry.

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By rlangston
16th Jul 2012 10:59

Commissionaire

Under the terms of service, Apple are appointed by the developer as agent or commissionaire.  For VAT purposes there is normally a separate invoice between principal (your client) and commissionaire (Apple) - which in this case I think would be a B2B supply (subject to reverse charge as Apple in Luxembourg do all of the EU distribution).

Quite how the paperwork operates (does your client need to raise an invoice to Apple?) I am not sure - but it may be set out in the terms of service somewhere.

Robert Langston

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By andy.partridge
18th Jul 2012 11:46

Thanks again Robert

The commissionaire status is quite an odd one in the sense that Apple acts as a sales agent but the customer purchases as if Apple holds title to the product.

Anyway, it seems that from an accounting perspective, the client's 'sale' is what Apple pays them and not the price the customer pays to Apple and that Apple's sales commission is not a cost in the client's books.

I have not had confirmation from the client that Apple is located in Luxembourg for VAT purposes, but assuming it is that keeps the VAT simple too.

Thanks again for your assistance. 

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By mgrimshaw
19th Nov 2012 12:30

Sales

As Robert has mentioned previously, the agreement with Apple states that they will collect and remit sales tax in Canada, US, Australia etc.

Does anybody have any guidance on whether it is possible to rely solely on this or are there any circumstances where a UK company selling to Canada for example, solely through Apple, would also need to register itself for GST.

Thanks 

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