• Sweden edition
 
Swedish app developers to pay VAT twice

Swedish app developers to pay VAT twice

Published: 01 Oct 2011 10:11 GMT+02:00
Updated: 01 Oct 2011 10:11 GMT+02:00

As of October 1st, the Swedish developers will in effect have to pay VAT twice - once within Sweden and a second time in the country where the app is purchased, if they sell the apps via an intermediary like Facebook, the Apple Store or other third parties, according to a report from Sveriges Radio (SR).

The VAT burden could end up being as much as 25 percent, making it very hard for Swedish companies to be competitive, according to developers, especially as these rules do not apply to those in other EU countries.

As a result of the charges there is a danger that uncompetitive Swedish operators will be forced either to move abroad or close down altogether, according to Tommy Palm, CEO of Fabrication Games, while Per Strömbäck who is spokesperson for the computer games association believes it is time for the government to step in and help.

”EU rules say that anyone who sells the goods are liable to pay tax, but who is the seller? Is it the Swedish company, or is the App store? Tax Authorities in Europe say it's App store while the Swedish Tax Agency say it is the app company,” he told SR.

”We want Anders Borg (minister for finance) to put his foot down and decide that this should be an exception and that no Swedish VAT will be charged until the matter is investigated at EU level. Why should Swedish companies get hit?”,he added.

As things stand, Swedish games developers who sell via the App Store will have to pay EU VAT on the revenue from each app, then a commission to Apple of 30 percent and then an extra VAT payment to the Swedish government, making them much less competitive than others in the EU, not forced to pay VAT locally.

With the global industry said to be worth some 190 billion kronor ($28 billion) the EU is planning new directives on how electronic services are taxed in 2015.

The Local/gm (news@thelocal.se)

Your comments about this article

12:32 October 1, 2011 by Abe L
Typical narrowminded Swedish attitude that everything needs to be taxed through the roof so everyone can stay miserable.

The tax should only be payed in the country of purchase. This is really not an industry Sweden wants to miss out on. It's not like physical products get charged VAT twice when sold through a distributor.
12:37 October 1, 2011 by Keith #5083
This is weird.

First, the commission payment has nothing to do with it, unless you interpret the commission payment as an action made to a 'retail outlet', in which case it is the retail outlet that pays the final VAT. The App Co pays VAT on it's net receipt from the sale of the product to the App Store. In any interpretation of VAT rules it is clearly incorrect for the App Co to pay VAT on the 30% commission it pays the App Store, the App Store pays (or should pay) the VAT on it's re-sale of the product.

The seller is the App Store - and the proof of this is that they receive a commission for their marketing of the product. What else would you pay them for????

In UK VAT legislation in the 70's there was a special clause allowing for such a scenario as the VAT calculation on the discounted price (including after commission/sales payments) that is to say the actual net receipt price.
13:52 October 1, 2011 by Opinionfool
VAT is a pyramid scheme with those lower down adding more to the tax bill. Then at the bottom it is the consumer who *pays*; those higher up collecting from down below and offseting what was changed on their consumption, so they only remit the difference to the government. So to say that app developers *pay* twice is a misnomer. They may have to remit taxes to two different places but that isn't the same as paying twice.
14:19 October 1, 2011 by Nemesis
This article is false.

VAT is paid at point of sale, once and once only.

That is the law right across Europe.
14:22 October 1, 2011 by Keith #5083
#Nemesis

Totally agree with your second and third lines.

I think, however, the issue concerns "what is the point of sale" when organised by an

online store who maybe do not collect payment directly.
14:23 October 1, 2011 by robertjmizen
Opinionfool is correct,

VAT, No matter where the sales are made, are legally collected from the customer by Apple. Who then pay the VAT because thats part of the income of their sales. Apple make very little money if any at all (I believe on the 30% they take its something like 1-2% they actually make.)

If the Tax Office say you should pay VAT on your 70%, all you need to do is Give them the Tax Number for Apple for Different Territory. Example:

My company is NRD Studios, Based in Sweden. We sell FAMIGE at the Tier 1 Rate on the App Store at 7 SEK.

All sales through apple in the EU Are made by Apple S.a.r.l who charge VAT in the different countries. All are different amounts. After the payment of 70% to us, you only pay income tax or corporate tax depending on your legal setup.

All sales for example in the USA etc, are charged VAT or GST depending on state etc. Which apple collect again, and forward the remaining 70% to you.

Its important to note that while you sell on the App Store. and charge 7 SEK For example, you are only setting that as the price customers should see, really you are giving it to apple for less then 7 SEK, to make sales on your behalf.

If the Tax Office give you a hard time, you need to state that Customers are legally obliged to pay the VAT at point of Sale. Which Apple is the Seller. The fact it says your name on the receipt is irrelevant as all the payments, processes and point of purchase is through Apple. Apples agreement states they collect VAT at point of sale. Hope this helps people.
17:30 October 1, 2011 by Keith #5083
#6

Beautifully clear.
01:35 October 2, 2011 by robertjmizen
The funny thing about this issue also. the tax office will probably say to you that they do not know how to deal with the situation.

So your argument is that neither do you. if the tax office don't know the rules its impossible for you to as well.

Either way, they are not gona make me slap 50% (2 x 25%) VAT sales on people in Sweden or any country for that matter.
10:13 October 2, 2011 by BrittInSweden
@robertjmizen

Apple keeps all 30% of the sale as tax is applied on the value of the item at which point Apple takes its 30% share.

Apple then pay taxes as any normal company would based on their income over the year including hardware, iTunes, AppStore etc.
10:35 October 2, 2011 by Keith #5083
#BrittinSweden

errrm, can you run that first sentence by me again please. It reads likes it's from The Hitchhikers Guide to Galactic VAT.
13:11 October 2, 2011 by robertjmizen
#BrittinSweden

Apple do collect 30% of the net sales. But it also states that "Where ever there is a need to apply any sales, vat, value, state/country sales tax on the sale of the application, apple will apply that amount and withhold it and pay it to the relevant authorities"
09:50 October 3, 2011 by Da Goat
simple make a subsidiary in another country and sell them apps from there!

Bahamas or Norfolk island would be a good place!

make your apps in sweden then ftp them to your subsidiary office who then has them marketed from the remote office and then funnels the money back !
15:08 October 3, 2011 by robertjmizen
Da Goat,

Applause to your initiative :)

But the issue is not with Income Tax. It is VAT, which is irregardless of location sadly.

Certainly setting up in the Bahamas or a place like that would mean you pay less income tax or corporate tax. But VAT is tax issued and collected at the point of sale.

All my sales in Sweden through Apple incur the 25% VAT Charge. The ones in the UK 17.5 Etc. Really the whole situation is Tax Office thinking you should pay twice which is nothing short of ridiculous and a con. No matter what they say, they won't be getting any VAT from my company on any sales through any agent, reseller or commissioner. I have written this issue to few authorities about this.

The end of the story is. that they can't ask for second rounds of VAT from you. You have paid it "effectively" through Apple. If they don't like it, then they have to take the issue up with Apple. And we all know who would win that battle.

Through my experience with the tax office here and in the uk. They hardly know even the most basic rules, let alone about the whole developer rules with Apple.

If anyone has any questions or needs help just drop me a email at robertmizen@me.com
00:39 October 4, 2011 by Opinionfool
@robertjmizen

Actually the current general rate of VAT in the UK is 20%. Unless you're selling children's car seats or sanitary wear in which case it is 5% or food, books/magazines, children's clothes in which case it is 0%. There are other things that the UK has deemed exempt from VAT but as software isn't one such it doesn't matter. There's a full list over at the relevant web site for HM Revenue and Customs.
15:49 October 5, 2011 by robertjmizen
@Opinionfool

This is not about what is exempt or not. this is about paying it twice.
Today's headlines
National
Swedish airfares to get cheaper in 2015

Swedish airfares to get cheaper in 2015

Sweden is set to buck the European trend of rising air prices with fares expected to drop next year according to a new report. READ  

National
Swede's homemade submarine nets fortune
Eric Westerberg's homemade submarine Isabelle. Photo: PS.nu

Swede's homemade submarine nets fortune

A Swedish submarine enthusiast who spent over 3,500 hours making his own vessel has sold his prized possession for 705,000 kronor ($98,500) in an online auction. READ  

National
Cops reported for making 'Roma' comment

Cops reported for making 'Roma' comment

Police in northern Sweden have been reported to the Equality Ombudsman for describing a wanted suspect as having a "Roma appearance." READ  

Donald Duck and Zlatan get Swedish votes
A political career for Zlatan? Some fans seem to want to see that. Photo: Peter Dejong/TT

Donald Duck and Zlatan get Swedish votes

The Bilderberg Group, the Satanic Initiative and Adolf Hitler all received votes in Sweden’s general election, according to a list released by the country’s electoral authority. READ  

Sport
Stockholm fails bid to host Euro 2020 games
The Swedish team in action. Photo: TT

Stockholm fails bid to host Euro 2020 games

Sweden's capital has missed out on a chance to host any Euro 2020 games, with Copenhagen the only Scandinavian city among the thirteen winning locations. READ  

Vicar: God rejects fans of women priests
Antje Jackelén, Archbishop of Uppsala, is the first woman to head the Swedish church. Photo: Stig-Åke Jönsson/TT

Vicar: God rejects fans of women priests

A Swedish priest has been fired after telling his congregation that people who support female priests would be rejected by God - despite the fact that his own church is led by a woman. READ  

Analysis
Women set to dominate top post-election jobs
Margot Wallström (right) could become Stefan Löfven's new Minister of Foreign Affairs. Photo: TT

Women set to dominate top post-election jobs

Sweden could soon get a female Foreign Minister, Fredrik Reinfeldt's ousted Moderate Party is preparing for its first woman leader and the grandmother of actor Hugh Grant's son is being tipped as Parliament's next Speaker. READ  

National
Sweden protests over Russian plane incursions
A Gripen plane was scrambled to see off the Russian planes. Photo: Johan Nilsson/TT

Sweden protests over Russian plane incursions

UPDATED: Sweden has summoned the Russian Ambassador for a dressing down after two Russian planes violated Swedish airspace last week. READ  

Elections 2014
'Good prospects' for Alliance co-operation

'Good prospects' for Alliance co-operation

UPDATED: Social Democrat leader Stefan Löfven says he is positive that his party can co-operate with the former governing Alliance on some issues. READ  

Lifestyle
Introducing...Astrid Lindgren
Pippi Longstocking comes to live at the Astrid Lindgren theme park. Photo: TT

Introducing...Astrid Lindgren

The creator of Pippi Longstocking, Astrid Lindgren, is the most translated author from Sweden, and has filled children's imaginations since the 1940s. The Local finds out why her work has become a timeless classic. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
The 'black gold' of Sweden's west coast.
National
West Sweden prepares for the 2014 lobster premiere
Society
What's on in Sweden
Politics
How Sweden Democrats went mainstream
Politics
Scandinavia and Scotland: closer links?
Gallery
Property of the week - Eskilstuna
Blog updates

20 September

How a Frog Can Save the Environment (Stockholm in my American Heart) »

"What we do we imagine when we think of children enjoying nature? Perhaps it’s fishing, marveling at lightning bugs on a muggy July day or blowing on the wispy petals of a dandelion to make a special wish. But perhaps most iconic of the playful innocence in childhood is hopping after and trying to catch..." READ »

 

19 September

Editor’s blog (The Local Sweden) »

"Happy Friday readers! It sure has been a exciting week in Sweden, where we’re set to get a new Prime Minister after Fredrik Reinfeldt stepped down following Sunday’s elections. The Local blogged live from the key political gatherings across Stockholm. Why not re-visit the action by taking a look at our photos, tweets, videos and analysis? Since the..." READ »

 
 
 
Sponsored Article
How to start a business in Stockholm
Society
How I became a surf blogger when I moved to Sweden
Gallery
People-watching: September 13th
Society
Why is Stockholm's Södermalm so cool?
Gallery
People-watching: September 11th
Gallery
People-watching: September 13th
Politics
Five possible election outcomes
Politics
Sweden elections: How do they work?
Politics
Sweden elections: Who's who?
Gallery
Property of the week - Hornstull, Stockholm
Analysis
Five differences between the UK and Sweden
Welshman Jonny Luck is now a chef in Sweden
Society
How I opened my own restaurant in Sweden's Malmö
Sponsored Article
Stockholm tech fest: relive the magic
Gallery
People-watching September 8th
Photo: TT
Politics
Feminists fight for first seats
Politics
Immigration cut push from Sweden Democrats
Sheryl Sandberg says women have "low expectations"
Tech
Facebook exec talks women's limits in Swedish business
Politics
Left Party calls for justice and equality
Politics
Green Party wants 'better world' for kids
Lifestyle
The five best Swedish songs of the month
Sponsored Article
Introducing… Insurance in Stockholm
Sponsored Article
Graduates: Insure your income in Sweden with AEA
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

864
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN