VAT treatment Android apps

[drmrbrewer]

I am a developed with an Android app selling on the Play Store (https://play.google.com/store/apps).

I'm completely perplexed by the proper handling of VAT on the sale of these apps.

There is some stuff about this in the developer agreement,which is set out here: https://play.google.com/about/developer ... ement.html

And some more stuff in the "help" page here: https://support.google.com/googleplay/a ... 0?hl=en-GB

I'm confused. On the one hand it seems that the transaction of selling an app to an end user is a transaction between the developer and the end user, so that the developer is responsible for handling VAT appropriately, but on the other hand for some countries Google will automatically add and collect VAT and remit it to the authorities, regardless of the tax status of the developer.

I've set up a Ltd company for this purpose, and at present I'm only making very small amounts, certainly well below any VAT registration threshold. So my understanding is that I wouldn't charge VAT on things (apps) that I sell. But Google *is* charging VAT automatically for certain countries, and in particular for EU countries including the UK.

So is the transaction in that case between Google and the end user, and I am supplying the app to Google for onward sale?

I'm completely confused. How on earth do I treat VAT in these circumstances, selling apps via the Play Store in many different countries, some of which Google is adding VAT and others not?

Thanks.

[LozaACCS]

It is complex, you should really post this on the VAT section for the VAT specialists to comment.
I am coming across this issue quite often, my own view is that firstly you need to ascertain whether an app is a supply of goods or services, I understand it to be a supply of services.
You also need to establish who your customer is ie the end user or the Play Store, the contracts are usually not very clear.
Typically the customer is regarded as the Play Store or Google/Amazon etc.
This means that you make a supply of services to a business customer who is not situated in the UK, this is outside the scope of UK VAT.
Your customer must then register in any EU state where they are based according to that states VAT threshold.
The customer seems to accord to this by deducting the VAT from your remittance pretty much on a self billing basis.
If you were selling to the end user (not in business) then you would be required to account for VAT in the member state concerned, this can be done by using the HMRC MOSS facility.
It is scary since the interpretation of the contracts really requires a lawyer.

[drmrbrewer]

Thanks for this. From your post:

You also need to establish who your customer is ie the end user or the Play Store, the contracts are usually not very clear.
Typically the customer is regarded as the Play Store or Google/Amazon etc.

From the developer agreement (https://play.google.com/about/developer ... ement.html) in the Definitions:

Store: The marketplace Google has created and operates which allows registered Developers in certain countries to distribute Products directly to users of Devices.

So developers are selling directly to users, using the Play Store as a marketplace. So why are Google collecting the VAT and not the developer? The user is buying from the developer, not from Google. Rather, Google just take a percentage for having provided the marketplace to enable the transaction (indeed, the developer is issued a monthly invoice from Google based on sales made).

But then later in the agreement:

You are the merchant of record for Products you sell through the Store. For a given transaction, you are contracting with the applicable Google entity based on where you have selected to distribute your Product

And then a little later:

Where Google is required to collect and remit taxes as described in this section, Developer and Google will recognise a supply from Developer to Google for tax purposes, and developer will comply with the relevant tax obligations arising from this additional supply.

WTF? Am I being thick or is this all very confusing? Surely each and every developer shouldn't have to pay a lawyer to work out what is going on? Surely there must be some clarity given somewhere out there, because I sure ain't the only developer selling stuff on the Play Store and in this situation.

[LozaACCS]

I wholly agree, although (whilst not being a (lawyer) I would not say that shipping direct to the end user is the same as contracting with the end user.
In the absence of formal legal advice I would suggest that if the "customer" accounts for the VAT then prima facie, they should be treated as the customer.
I do not think the VAT help line will bring much clarity, in my experience they refer you to the contract, you could of course send HMRC the contract and request a ruling.

[joejoe123]

because I sure ain't the only developer selling stuff on the Play Store and in this situation.

You're not the only one Did you get any resolution on this?

I am going through pretty much the identical confusion you experienced four years ago @drmrbrewer

[Bobo]

Hi after running around on the houses on this trying to fill out a w8bene for my non vat registered uk startup where the form has tax Id mandatory, and thinking I don’t have a vat I’d to enter, I realised that what the firm actually wants under the TIN field was my company UTR number and not a vat number..