Late last year I started selling an app in the Educational/Game category, Apple and Google handle the sales tax. But with regards to the payments from Apple, I am in the individual W-8BEN category (no connection to the US what so ever, except of course some customers are from the US.) So Apple does not withold any tax in payments to me. Its not making a lot of money yet, Im holding off creating an LLC for this until its profitiable enough to make the extra complexity of an LLC worth the effort.
If I read the Apple information carefully, they say they are not "required" to withohold or report W-8BEN income. And they themselves categoriese the income as income from "digital book/app sales" (as opposed to royalty payments.) Is it correct to assume therefore, for digital app sales there is no other US tax requirement? Is it correct that people who have nothing to do with the US don't need to worry about 1040-NR or anything like that?
Im not sure if I contact random US accountants if they will be able to answer specific international tax related questions like that, so I thought I would just ask here first what other people do, since there are other people here who appear to be selling apps as well. Im excited to find a forum that actually has other people doing similar things to me. Where do people go to learn more about taxability of various activities related to digital app/book sales, or does everyone always have an accountant they can ask everytime they need to make a decision?
I discovered this related App Store thread, which has some discussion with regards to the Google App store. Although it doesn't answer the specific question I have, its helpful.
Expanded with more detail:
It seems to me that Apple doesn't withhold tax on App Sales for foreigners. It seems like there is a careful distinction that is being made in the contract between the Developer and Apple. It is my tentative understanding that the contract understands that a "Digital App/Book sale" is occuring when an app is Sold, as opposed to a "Royalty payment".
If I understand (I might not understand), Apple sets it up so that they are not "licensing your copyright to make a sale/profit." Instead it seems like the contract between Apple and a developer is a contract set up to allow to make a sale of a digital product under a retailer (merchant) type model.
I _think_ (again I am not an expert) this might be an important distinction, because the US tax code seems to require that dividends/royalties are taxed as the money goes out, but digital sales of products are not taxed.
No idea if this is correct, and no idea how to find out if this is correct.
If I read the Apple information carefully, they say they are not "required" to withohold or report W-8BEN income. And they themselves categoriese the income as income from "digital book/app sales" (as opposed to royalty payments.) Is it correct to assume therefore, for digital app sales there is no other US tax requirement? Is it correct that people who have nothing to do with the US don't need to worry about 1040-NR or anything like that?
Im not sure if I contact random US accountants if they will be able to answer specific international tax related questions like that, so I thought I would just ask here first what other people do, since there are other people here who appear to be selling apps as well. Im excited to find a forum that actually has other people doing similar things to me. Where do people go to learn more about taxability of various activities related to digital app/book sales, or does everyone always have an accountant they can ask everytime they need to make a decision?
I discovered this related App Store thread, which has some discussion with regards to the Google App store. Although it doesn't answer the specific question I have, its helpful.
Expanded with more detail:
It seems to me that Apple doesn't withhold tax on App Sales for foreigners. It seems like there is a careful distinction that is being made in the contract between the Developer and Apple. It is my tentative understanding that the contract understands that a "Digital App/Book sale" is occuring when an app is Sold, as opposed to a "Royalty payment".
If I understand (I might not understand), Apple sets it up so that they are not "licensing your copyright to make a sale/profit." Instead it seems like the contract between Apple and a developer is a contract set up to allow to make a sale of a digital product under a retailer (merchant) type model.
I _think_ (again I am not an expert) this might be an important distinction, because the US tax code seems to require that dividends/royalties are taxed as the money goes out, but digital sales of products are not taxed.
No idea if this is correct, and no idea how to find out if this is correct.
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