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MS store fees for European developers RRS feed

  • Question

  • I am applying for a developer store account as a COMPANY. We are based in CYPRUS (Europe). I see that for European accounts, Microsoft is automatically deducting 19% tax on top of the 30% store fee, which corresponds to the sales tax (VAT). However VAT is only for sales in Europe. If somebody buys our app from USA, there is no VAT, so I cannot see how this extra 19% on ALL sales is justified. This doesn't make sense -- you could even say it defrauds European based store accounts (because it charges money where no costs are incurred to Microsoft)

    If that is indeed the case then it is a show-stopper for anybody based in Europe (parting with 50% of the earnings as fees)

    Does Microsoft at least issue VAT invoices to developer accounts so I can reclaim this 19% from the local tax authorities?


    Wednesday, November 2, 2016 6:30 AM

All replies

  • Hello,
    Base on your description, when somebody buys your app from USA or other non-European countries, you want to receive VAT invoices from Microsoft so you can reclaim this 19% from the local tax authorities.

    From App developer agreement, we could see that If taxes are required to be withheld on any amounts to be paid by Microsoft to you, Microsoft will deduct such taxes from the amount owed and pay them to the appropriate taxing authority and, as required, will secure and deliver to you an official receipt for any such taxes withheld. Microsoft will use reasonable efforts to minimize such taxes to the extent permissible under applicable law, and each party will reasonably cooperate with the other to obtain the lowest tax rates or elimination of such taxes pursuant to the applicable income tax treaties.

    If you have any question, I would like to suggest you to create support ticket through your developer account so that you will receive more professional help.


    Best regards,
    Cherry Bu.

    MSDN Community Support
    Please remember to click "Mark as Answer" the responses that resolved your issue, and to click "Unmark as Answer" if not. This can be beneficial to other community members reading this thread. If you have any compliments or complaints to MSDN Support, feel free to contact MSDNFSF@microsoft.com.

    Thursday, November 3, 2016 10:40 AM
    Moderator
  • thanks for your reply

    the way I read the developer agreement (and I hope I'm wrong) is that Microsoft charges tax based on the location of the COMPANY, and not the actual customer's location. Hence they would charge us 19% for the global sales (?)

    I tried contacting the store support by email and chat, and in both cases I got nowhere. MS representatives advised me to "consult tax specialists" like as if it is MY fault that there is a definite tax/fee bias against European developers!

    as a contrast, American developers get their FULL 70% based on the amount set as app price. The store adds local taxes on top automatically. Why couldn't they do the same for everybody? I am selling software for many years and never had such weird sales tax agreement

    Thursday, November 3, 2016 11:54 AM
  • Hello Nikos,

    Effective January of this year this changed due to changes in EU regulations. Starting January 2016 the VAT is now charged based on the purchaser's country in order to comply with the EU regulations. Microsoft is required to comply with these rules. This is covered in the developer agreement.

    You can set the price individually for each market in order to ensure you receive comparable revenue regardless of the market VAT/taxes, etc.

    -Eric


    Contact Dev Center Support

    Friday, November 4, 2016 7:14 PM
    Owner
  • I am aware of the rules. As you say "VAT is now charged based on the purchaser's country"

    if I sell ALL my apps in USA, then there is no VAT to consider, correct?

    so why does the developer agreement say that I will receive from Microsoft only 51% of my sales? Why is 19% withheld when no sales tax is incurred?

    what SHOULD happen is that the store keeps VAT only for sales in the EU, and for the rest of the world it just keeps the standard 30% fee

    Saturday, November 5, 2016 5:35 AM
  • Hello Nikos,

    The store fee is 30% and depending on where you live and other factors there may be taxes withheld.

    I cannot address your question specifically since I do not know the details of your account or how your tax form was completed and this is not something that can be addressed via the forums.

    You should consult a tax professional and also review the Getting Paid documentation for an explanation of the fees and payout structure.

    -Eric


    Contact Dev Center Support

    Tuesday, November 8, 2016 3:42 PM
    Owner
  • this is what pretty much every "support" question ends up as, "consult a tax professional", very sad

    we are talking about SALES tax (a store matter) here which you withhold ILLEGALY from ANY developer in Europe. Do you understand that? What am I going to tell my "tax professional"? That Microsoft is keeping 19% tax (from any sales in the USA) and doesn't give it to anybody?

    I don't understand how you cannot see such an obvious problem. I also wonder how this hasn't been raised by other developers based in Europe.

    Wednesday, November 9, 2016 8:17 AM
  • Hi Nikos,

    As Eric-D said that the VAT is now charged based on the purchaser's country in order to comply with the EU regulations.

    So if a Cyprus developer sells an app to a Cyprus customer, then Microsoft will deduct 19% VAT from the proceeds.  If the same developer sells an app to a Belgian customer, then Microsoft will deduct 21% VAT.  If a USA customer buys the app, Microsoft will not deduct any VAT, because Microsoft will add US sales tax onto the purchase price that the customer pays.

    Microsoft don’t provide VAT invoices, because under European law, Microsoft must collect and account for the VAT, not the developer.

    More detailed information you could refer to Tax details for paid apps

    I hope this explanation can answer your doubts.

    Thank you.

    Best regards,

    Cherry Bu


    MSDN Community Support
    Please remember to click "Mark as Answer" the responses that resolved your issue, and to click "Unmark as Answer" if not. This can be beneficial to other community members reading this thread. If you have any compliments or complaints to MSDN Support, feel free to contact MSDNFSF@microsoft.com.


    Wednesday, November 16, 2016 2:21 AM
    Moderator
  • I think Cherry's answer is very helpful to me. Now I fully understand the Microsoft tax.
    Wednesday, November 16, 2016 8:20 AM
  • Hi Nikos,

    If you know about the Microsoft Store fee for European developer, you might mark my last response as answer to benefit more community member to know about this question.

    Thanks for your understanding.

    Best Regards,

    Cherry Bu.


    MSDN Community Support
    Please remember to click "Mark as Answer" the responses that resolved your issue, and to click "Unmark as Answer" if not. This can be beneficial to other community members reading this thread. If you have any compliments or complaints to MSDN Support, feel free to contact MSDNFSF@microsoft.com.


    Friday, November 18, 2016 7:19 AM
    Moderator