AppStore Tax information for UK developer [closed]

Question

I've been reading about the Apple withholding a 30% tax on the revenue until you fill out a W8BEN tax form. This isn't very well documented and as I've only just read about this, I'm starting to think I'm going to lose out on my previous sales.

If you're from the UK (like me) and are a sole trader, how do you go about avoiding this tax from being withheld?

Thanks

Answer 1

Last year I sold just over 102,000 copies of my app. My direct deposits totaled right around $69,500. It was sold in several countries so the percentages are different with exchange rates and such. All in all, Apple took 30%, not more, not less. It is my understanding that as a developer, we are independent, not an employee of Apple or on their payroll. We simply get paid for royalties and are required to report it as income earned and pay taxes on it. Apple doesn't report your earnings to the IRS(same with eBay) but be warned, any deposit $10,000 or more will get reported by your bank.

Just so you know, if you fail to report or file your taxes and you owe money, they will charge you a penalty for not filing as well as interest on top of what you already owe. My cousin paid $2200 penalty for not filing and also interest on the full amount. It's like a forced loan from the IRS.

Some info I found. ..Royalty income can come in 2 forms for tax reporting purposes. The royalties received that result from your creative work is considered self-employment income. There are also royalties received through an investment in a mineral operation, such as a gas and oil limited partnership.

Royalties derived from creative works are reported on Schedule C of the Form 1040. Any royalties derived from investment activities in mineral interests are to be reported on Schedule E of Form 1040. These forms may be obtained simply from the IRS via their website at IRS.gov (with an instruction booklet). They can also be accessed via a software program or through the employment of a professional tax preparer or adviser.

Answer 2

I'm not sure I fully understand how Apple manage the tax, but as far as I'm led to believe, all you need to do is fill out the Tax Information and agree to the contracts at iTunes Connect and that should be it.

I believe that Apple will take the required tax from the revenue before taking their 30% cut. In all it works out roughly around 50%.

Edit:

If you login to iTunes Connect and navigate to the Contracts, Tax & Banking Information section you will see a list of available contracts that you can enter into with Apple. You should see a contract for Paid Applications. If you check the box next to the contract, and click submit, you will be able to read the contract (you won't be accepting the contract by clicking submit, so this is safely a no-commit situation).

The contract states how much Apple takes for each different region, and what they do with Tax for each different region.

In the UK, I interpreted the contract to state that Apple will take and remit taxes for the UK (among other regions), as well as taking their "commission" as they call it (the commission being the 30%).

Hope this helps.