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Google today updated its developer support pages to indicate that from 1st January, 2015 it will be handling, charging and remitting VAT on behalf of developers for content sold through Google Play in the EU region. The company had to make this announcement after a change in the EU’s VAT laws.
From 1st January, Google will automatically deduct the VAT (Value Added Tax) from the money paid by a user to purchase content on Google Play, and deposit it to the correct authorities. As explained by Google, post this change developers will receive around 58% of their original app price from the company compared to the current 75%.
The VAT rate in the EU varies from region to region, with the rate reaching as high as 27% in Denmark and other places.
It does not matter whether you live in the EU region or not, as these changes will be applicable for all developers who have paid apps listed on Google Play.
In most regions of the world, including the U.K., Singapore, Australia, Belgium and Brazil, Google will display the full price of the app inclusive of the VAT amount. In other regions though, it will add the VAT amount to the final price during the checkout process.
While this move should not affect big app development companies, it is bound to affect indie developers negatively. It is more than likely that small developers will increase the prices of their apps to compensate for the hit in their earnings.
