united-states, mobile-apps, taxeswe recently started selling apps through the Google Play Store. As we are pretty confused be the complex taxation system, I’m seeking for some help here.
We are a small business based in Germany, and we want to sell our apps to customers in the US, via the Google Play Store.
I stumbled across this “nexus” thingy: so we don’t have that. No people from us live in the US or have ever been there.
Which taxes do we need pay? And how to register for a tax-number? Is there a certain limit under which you don’t have to pay taxes?
The answer is murky best I can recollect. On paper it’s no action needed. In practice there are a bunch of caveats.
In particular, your clients might require you to fill in a form when you’re selling high ticket items to justify a foreign-based expense.
Similarly, your US-based service provider (i.e. Google) will declare your income to the IRS when you’re earning more than the revenue limit, unless you took prior steps by filling a form that warrants you’re foreign-based.
Also note that this stuff changes year on year, and it’s non-trivial to keep up with what you need to do exactly while worrying about a gazillion other things in a startup.
Your best bet is to work with a accountant; ideally one who interacts with companies that deal with the US. They’ll know the gory details and keep you up to date for a very reasonable fee. (Plus they can do your accounting and VAT and all that BS for you on top. You want this.)
(Aside – This much you don’t want: to create a US-based company until you’ve actual, genuine employees there, or investors who insist on you having one - typically for IP-related nonsense. If you ever do, also get a US-based accountant in the same state to make sure you comply on and stay on top of all of the US tax-related nonsense. And a US-based lawyer.)
I have experience selling software all around the world as a US based company and I'm pretty sure that the same principles apply in reverse.
As a U.S. company in Massachusetts selling software around the world, I paid:
and that is it! I did not pay taxes to any other countries or even any other US states.
For your situation, you should not owe any income taxes to the U.S. or any state. Even though Google is helping you sell, it looks like you do not have to pay any sales tax either (see here).
It is possible that there is some other tax, such as an import tax, for foreign companies selling in the U.S., but I've never heard of that.
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