Why is selling in the Apple Appstore less profitable in Europe than in the US?

As you can see here, Apple appstore application sales in Europe are not as profitable for developers.

To talk precisely, if you sell an app:

in USA for 3.99 USD, you earn 2.80 USD
in Europe for 3.99 EUR, you earn 2.43 EUR

The 70% for developer, 30% for Apple rule somehow does not work, most probably because of some tax rules.

Is there any work around to evade this taxation overhead? Such as moving the company headquarter which is enrolled for developer program to an off-shore tax heaven (such as Bahamas)?

Tax Apple

asked Sep 27 '12 at 20:05

Noway
192 points

I believe this is due to VAT, though I'm not sure. – Centurion Games 12 years ago

1 Answer

I don't know for sure, but I think Apple is using their EU subsidary based in Ireland to handle all AppStore proceeds from European countries, so the Irish VAT is applicable to all proceeds (as well as to the margin Apple collects). VAT in Ireland is a whopping 23%, so that explains the lower proceeds compared to US proceeds.

I'd love to see some official information on that because I did quite some research about this when I started selling apps on the AppStore, but as with everything Apple available information is very sparse.

answered Jan 26 '13 at 21:43

Johannes Rudolph
348 points

It IS VAT. You do not sell in Europe for 3.99 - you sell for 3.99 including the sales tax which in the US is not part of the price - it is added to the final step of payment. EU regulations require all prices to be quoted including all sales tax. Same in a shop in the USA - you pay more at the cash register than the price you see on the shelf. And - US sales tax is 0 for online sales, I think, while in Europe it is not. Tax evasion, in europe, is also seen as a crime - so no, there is no way around it. – Net Tecture 11 years ago