VERY IMPORTANT
When you start selling downloadable apps you are IMMEDIATELY responsible for collecting and remitting VAT/sales tax all over the world.
For example, If you are a UK registered business, normally you can have a maximum revenue of up to £84,000 before you need to register for and collect/remit VAT/sales taxes.
However, If your sell SOFTWARE to consumers in the EU, then you **MUST charge them EU VAT/IVA immediately.
Don’t be confused by the €10,000 annual sales threshold that applies to EU businesses.
Businesses outside the EU must collect EU VAT for ALL their sales to European consumers, with no minimum threshold.
Think for a moment of the consequences of this - it means that before you start selling, you have to register for VAT in every country in the EU (presently there are 27 and all have varying VAT rates and rules), and if you want to sell worldwide, you need also to register for sales tax in around nearly 200 other countries in the world, many of which have sales tax rules and regulations that are difficult to interpret and comply with.
If you feel that you have enough expertise to attempt to do all of this yourself, you will soon find this to be a very costly process and a huge administrative and legislative nightmare, especially if you are a small company or a sole trader.
You will need to be fully conversant with all the VAT/sales taxation laws, rules and regulations.
You are also fully responsible for calculating and collecting/remitting the correct rates of VAT/sales tax and you are further responsible for keeping accurate records of everything for at least 10 years (this, in itself, is a huge undertaking even for a large organisation).
You will certainly need to seek advice from taxation experts - and their services do not come cheap.
And that’s only the start, you would also need to employ a team to keep up with the admin, leaving you with further costs and headaches, when all you wanted to do was sell your product with the minimum of fuss and hassle…
Worse still, if you get things wrong or fail to fulfil all the legal obligations, you could be prosecuted (you can be sure that the penalties are severe) and this could end up putting an end to your business and all your hard work would have been for nothing.
Unfortunately, most authors of downloadable software products do not understand the legislation or realise how big this problem is until they start trying to sell their product.
Please don’t make this mistake…
Don’t bust your head with this and risk your business when there is a simple solution -
You can use a “merchant of record” re-seller company to collect and remit VAT/sales tax all over the world for you.
There are a few such companies, Fast Spring and Paddle being 2 examples.
Currently G.D.G. Software supplies a script for Fast Spring integration with their excellent Protect e-book service.
Fast Spring collects and remits VAT/sales tax for you, however, their fees are higher and their resources and admin systems are limited in comparison to those of Paddle.
G.D.G. Software currently offer no integration with Paddle and unless there is more demand, there are presently no plans to do so.
If you are planning to release an app soon, click on the link below and check out why you should strongly consider using Paddle as a solution to selling your software app worldwide.
HOW IT WORKS.
In a nutshell, you sell Paddle your software product on a B2B (business to business) basis, Paddle charge themselves the appropriate VAT/sales tax and then claim it back, leaving you with no VAT/sales tax collection responsibility.
Paddle services include payments and checkout, subscriptions, global tax and compliance, fraud prevention, reporting, customer billing support and much more.
Paddle then sells your product to the end customer for you, (they are VAT/sales tax registered all over the world) and they collect and remit the appropriate VAT/sales taxes to the appropriate authorities freeing you of all that heavy responsibility.
You are later sent “reverse invoices” for VAT/sales tax showing all transactions, keeping things easy for your business accounting purposes.
You pay Paddle a 5% + 50 cents fee per transaction which they deduct from each sale they make and the rest is paid to you, you can rest reassured that this is a very small cost in comparison to what it would cost you to try and collect and remit VAT and sales taxes all over the world yourself and everything else a merchant of record does for you.
The Paddle solution will certainly leave you free to concentrate on further developing and promoting your work, and doing what you do best.
Please give your support by urging the G.D.G. Software team to write a script to integrate the Protect e-book service with Paddle.
Wishing you all the best with your projects!
Thanks
