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I've written a Windows Phone 7 application to display the Ordnance Survey maps that are loved so much in the UK (I am amazed that no-one else has done this yet). However I was about to shell out the £65 to pay for the app hub and get my app to the marketplace when I started investigating how you actually get paid for the apps that people buy. Apparently if you are not a US developer then you have to start sending over forms e.g. W8BEN form? and even after this the IRS takes another 30% (after MS have taken their 30% share). It also mentions VAT so maybe there is more money taken off after this as well???

Has anyone from outside the US actually got all the paperwork sorted so they got paid? Did you get tax taken off as well? What percentage of the sales do you actually end up with? Is it all worth it?

I don't expect to make much from the app but I would like to think I could recoup my £65 and have enough to buy a couple of beers as well.

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  • you no doubt will have to pay VAT (as all UK businesses do). I doubt the US tax agencies are going to take some though, seems weird. Best thing to do is ask a tax specialist, or maybe contact someone in the know at Microsoft directly (they've no doubt dealt with it before).
    – jwenting
    Oct 6, 2011 at 11:36
  • I believe that you only have to pay VAT if you have a business that earns over £73000. Given that only UK people are likely to be interested in OS Maps and the small size of WP7 owners I might get 100 downloads @ £1.49 each (if I am lucky), which after all the deductions would just about cover the reg fee
    – Calanus
    Oct 6, 2011 at 11:44
  • The US tax agencies do want their cut from the WP marketplace. See here: msdn.microsoft.com/en-us/library/hh202925(v=vs.92).aspx
    – Calanus
    Oct 6, 2011 at 11:46
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    I don't understand why WP7 payouts are so complicated compared to Apple and Android. Does MS want people to develop stuff for their platform or what?
    – Calanus
    Oct 6, 2011 at 11:48
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    Microsoft chose to pay out into bank accounts and handle all US taxes for you, Google and Apple credit your creditcard and expect you to handle all taxes yourself (google and apple may also host apps in regionally diverse stores, I don't know, in which case US taxes may not apply to your sales). Google e.g. explicitly says you as the reseller are responsible for figuring out which if any taxes you should pay.
    – jwenting
    Oct 6, 2011 at 12:06

2 Answers 2

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Well after thinking this over I've gone and registered on app hub and handed over my money anyway. The app (OS Maps) is priced at 99p so after all the deductions I will pocket approx 30 pence for each download. I'll need at least approx 220 downloads before I earn any beer money. It's not a bad app and fills a niche but who knows how many downloads I'm likely to get.

Just a couple of comments on the whole Income Tax/VAT thing:

In the UK we don't pay VAT unless our wonderful business turns over more than 73k. If any app makes that much money I'll happily pay the VAT!

In the UK the income tax rate is generally 20%, so less than the 30% that the IRS want. Also, you would only pay income tax after any expenses, and the £65 for the app hub registration would definately be a legitimate expense so we are being short-changed by the way that MS are handling App store payments.

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You might want to check out this article. As it turns out, Microsoft has greatly simplified the formal steps WP7 developers need to take to get Marketplace revenues paid out.

This is a quote from MS:

One issue we’ve heard loud and clear from you is the time and energy required to provide tax information such as ITIN. I’m happy to share today that we’ve simplified payout and taxes by eliminating the need to provide an ITIN on your W-8 to take advantage of a reduced withholding rate. That’s MORE money, with less paperwork.

In addition, as far as I know, you don't have to pay taxes to the IRS in addition to UK taxes.

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