Here is a quick tip for non-US iPhone developers who want to sell their apps through the Apple App Store:
(UPDATE: To make it absolutely clear I am not intimately familiar with the US tax laws. This tip is only on how to get an EIN required for the relevant forms and only applies to developers who operate under a company. The following explanation is my take on why and how this works. I might have gotten it all wrong. However, I wish I knew that I could get an EIN years ago, so I thought this tip could be useful.)
To make sure that everybody can pay the taxes from business conducted, the US has a concept called Withholding Tax. Most non-US developers will not have to pay taxes in the US because of international treaties that prevent double taxation. The principle is that if you pay income tax in your own country you should not have to pay income tax on the same income in another country.
To cut the story short, Apple will hold up to 30% of what they owe you for tax purposes unless you supply them with a W-8BEN form which states that you do not need to pay taxes in the US because you pay them elsewhere. That form requires a valid SSN (the US Social Security Number) which you will not have if you are not a US citizen.
Fortunately, alternatively you can enter an EIN (Employer Identification Number) which is used to identify companies as legal entities. If you are a non-US developer, you can request such an EIN from the IRS (the US Internal Revenue Service which is the tax authority). Here is how:
Thanks to Martin Pittenauer of TheCodingMonkeys for supplying the tip.
As usual, check with your tax lawyer to make sure how this applies to you.
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But what happens if you sell an iPhone app in a different country from USA, for example, Brazil ??
Apple will hold taxes for Brazil ? or I have to pay them directly to the Brazilian tax authority, if there's no taxation international treaties ? I have to check by myself ?
Does the procedure you describe apply only for application sold in USA ?
Let's assume I live in EU, and I sell apps in EU, why I must have to fill an USA IRS ?
Also, will Apple send invoices to the customers and the developers gets only royalties ?
I think that there are really many issues to solve.
I can only speak for myself, so check with your tax lawyer and Apple to be sure.
However, this is probably much easier than you assume. This is how we do it for a while with Kagi for our Mac apps: Kagi acts as a reseller for our stuff. They purchase from us from their base in California. They resell to anywhere in the world in accordance with the tax rules that apply there. That does not matter for us since our only customer is Kagi with an address in California.
I think it works the same way with the iPhone app store. Since it is the only distribution channel, Apple in California is your only customer. I believe that they will not even supply you with their customer's (the user of your application) contact information.
Best,
Oliver.
My advice is to re-think offering tax advice as a non-professional.
if you get it wrong, you could be liable for substantial sums of money.
If the IRS auditor finds that an over-statement of expenses/deduction, or under-statement of income was intentional then they *will* assess penalties such as the Accuracy Related Penalty [Section 6662] or the Substantial Understatement Penalty [Section 6662(b)].
The number one exemption from various tax penalties is that you "relied on the advice of a tax professional.
"Heard it on the Internet" isn't going to win the day if you got it wrong.
You may also wish to read the instructions for Form W-8, especially the part about SSNs (and ITINs), since, given my read, you got it all wrong, especially with respect to EINs.
http://www.irs.gov/pub/irs-pdf/iw8ben.pdf
I am not a tax attorney or other tax professional... this is not professional advice. You can't rely on this advice... See a real professional if you have questions.
This is a "not issue" for Italian developers because we use to pay about 50% of taxes here on our incomes. So I'll be happy to pay just 30% to IRS and nothing else here in Italy! :-)
Probably it's similar in other EU countries...
Well it seems that if there is a double taxation avoidance treaty between your country and US then you should use the W-7 to get an ITIN and then use that on the W-8BEN. However that's my take on it and to be honest the W-7 already managed to get me totally confused on the first third already...
Is Apple paying it as royalities or salary or ... (being a private person, not a company)...
As far as I understood reading the paper at dev's portal and the documentation at itunes connect, if your country has a tax treaty with US you can send that form, and depending on the country you can be free of all the 30% cut, otherwise you can seat and cry. I'm from Brazil.
A better tip would be to call up your local IRS office. I called up mine in Frankfurt. They told me to fill out W-8BEN and just use my European VAT ID. That said - I am NO TAX PROFESSIONAL and I would suggest you talk to the IRS yourself.
@Torsten
I live in Munich. Do you have any idea how to obtain a European VAT ID?
Cheers
The IRS website provides information about that:
http://www.irs.gov/instructions/iw8ben/index.html