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iPhone apps and taxes

02-22-2010, 06:29 AM
#1
Joined: Jul 2009
Posts: 25
iPhone apps and taxes

I know this might be different in some countries. But if you are registered as a company, would you need to pay taxes for the income you generate from app sales?

If I buy a bottle of coke here, I pay 19% of that as taxes to the supermarket, not to coca cola. So should I calculate taxes for the total price of the app or does apple already handle it?

Any other tips and advice about taxes are more than welcome (it tends to get confusing to me).

2D / 3D Artist available
Portfolio: http://www.decentdesign.nl
02-22-2010, 06:41 AM
#2
Quote:
Originally Posted by Kwakkie View Post
I know this might be different in some countries. But if you are registered as a company, would you need to pay taxes for the income you generate from app sales?

If I buy a bottle of coke here, I pay 19% of that as taxes to the supermarket, not to coca cola. So should I calculate taxes for the total price of the app or does apple already handle it?

Any other tips and advice about taxes are more than welcome (it tends to get confusing to me).
Standard disclaimer is that EVERY country is different, and you better see an Accountant if you don't want to get a visit from a bunch of guys in suits.

I'm pretty sure you're not from the USA if you have an almost 20% tax on Coca Cola, so any specific stuff I could say will be worthless in your country, but here's the generic version for you:

Your "company" sold apps and made money from them. That's income. Maybe you bought a Mac, iPod, and the $99 dev program certificate. Those are your expenses. Basically your (income - expenses) = amount you'll be taxed on. As I said, do not take any advice for what you actually owe from the internet. See an accountant.

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02-22-2010, 01:07 PM
#3
Joined: Jul 2009
Posts: 25
You are completely right! I was kind of sleepy when I posted this and didnt really think straight. Thanks, I am get in touch with my legal person

2D / 3D Artist available
Portfolio: http://www.decentdesign.nl
02-22-2010, 05:07 PM
#4
I see that you are from Europe (like myself).
We have a pretty "uniform" way of taxing things.

First, the 19% you pay is called VAT. Your sales on the App Store are exempt from that VAT, since Apple already collects it and remits it.

In the Netherlands, things are pretty much the way as described above.
Income - Expenses = Profit, and you pay a tax on that profit.

Here is a "trick" you can do, to get away in cheap and easy way (and it's ethical).

Sign a contract with your company as a person. You sell the IP to your company for the exact same amount you receive from Apple. This way your company doesn't have a profit. So no taxes.

On the other hand, you as a person pay the taxes for income generated from IP. Taxes on income generated from IP, are very simple to file in Europe. In my case, it's a simple one page form to fill in, one visit to the tax office and you're done.
You still pay pretty much the same taxes, but you get away with a lot of paper work which can cost you.

I have a few contracts which have taxes witheld in the US and recognized here. That always takes me into negative tax territory (I have to reclaim tax instead of paying). With these contracts, I simply don't file the taxes, wait for 6 months to pass and I receive a nice fine at home, along with the tax forms filled in automatically on my behalf. The "fine" I paid last time was about 2 dollars. I rather pay that $2 and don't bother with any forms, waste time, etc.

Last, but not least, pay a visit to your local tax authorities (it's what I did). They have a legal obligation to properly assist you, free of charge. They tend to give the best advice possible
02-22-2010, 06:26 PM
#5
Joined: Sep 2009
Location: UK / Toronto
Posts: 602
Quote:
Originally Posted by exosyphen View Post
Sign a contract with your company as a person. You sell the IP to your company for the exact same amount you receive from Apple. This way your company doesn't have a profit. So no taxes.
Ah, no taxes, you're correct, but you'd still need to fill out all the paperwork for the company, right?

Quote:
Originally Posted by exosyphen View Post
pay a visit to your local tax authorities (it's what I did). They have a legal obligation to properly assist you, free of charge. They tend to give the best advice possible
Things sound good in the rest of Europe, it's not like that in the UK, unfortunately! I've never found the tax service the best source for advice; they exist only to get our taxes, not tell us how to get around them. Best thing to do is find an accountant. They'll save you more than you'll end up paying them, even if they cost you 100 per hour!
02-22-2010, 09:18 PM
#6
Joined: Nov 2008
Location: Munich, Germany
Posts: 754
Send a message via Skype™ to mobile1up
Quote:
Originally Posted by exosyphen View Post
Sign a contract with your company as a person. You sell the IP to your company for the exact same amount you receive from Apple. This way your company doesn't have a profit. So no taxes.
err. company taxes are better than personal taxes - especially in Sweden.

i distribute my games through a company i registered - it means any proceeds i have i can use to deduct the purchase of hardware (macbook, ipod's etc) related to the projects. if you spend what you earn; then you have zero taxes. if you just collect and keep it for yourself - you'll pay tax regardless.

there is no way to avoid taxes - it is that simple.

// Aaron Ardiri
Mobile 1UP is a proud indie developer - support us!
developer of Caveman / Caveman HD and GW Series
02-22-2010, 09:21 PM
#7
Joined: Nov 2008
Location: Munich, Germany
Posts: 754
Send a message via Skype™ to mobile1up
Quote:
Originally Posted by exosyphen View Post
I have a few contracts which have taxes witheld in the US and recognized here. That always takes me into negative tax territory (I have to reclaim tax instead of paying). With these contracts, I simply don't file the taxes, wait for 6 months to pass and I receive a nice fine at home, along with the tax forms filled in automatically on my behalf. The "fine" I paid last time was about 2 dollars. I rather pay that $2 and don't bother with any forms, waste time, etc.
this is bad advice.

it is better to do things right and have a clean slate than end up being blacklisted like this by the taxation authorities. sure; it saved you hours and it cost you only $2 - but what about the rest of your life having to deal with constant scrutiny from the taxation authorities?

spend the money; hire and accountant - declare things right. if you do not make enough from the games to make this worth while - then maybe it is time to consider an alternative career or even just get a normal 9-5 job

// Aaron Ardiri
Mobile 1UP is a proud indie developer - support us!
developer of Caveman / Caveman HD and GW Series
02-23-2010, 04:08 AM
#8
@mobile1up:

I am not advocating tax reduction/evasion. There are simple means for smaller developers to get away cheaper.

As for the my "not filing", I do that because it's redundant anyway in the given context. Why do you think they just mail me forms and "fine" me with 2 dollars? Because those taxes are already recorded for and paid. My presence is required to confirm and sign something I already know.

As mentioned, I do that for a certain type and part of my income. The authorities know that it's redundant bureaucracy there, and that's why nothing happens.

I won't get blacklisted since the forms already exists in their system, and the money is already paid. The fact that I fill in a second form to agree or disagree with that, it's pointless.

Trust me, fines for not paying taxes are HUGE here. I was 3 days late with my car tax and ended up paying 3% more.

---

We still suffer from a lot of redundant bureacracy and that's why nothing happens. Because things are OK to begin with, so nobody will hunt me for the extra papers.

It was similar with speeding tickets. After paying them, you had to visit the police station and give them a proof of payment. I didn't do it the last time, and nothing wrong happened. I checked myself with the authorities and I am in perfect standing. No outstanding taxes, fines or anything else.

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