Hi, for this question the knowledge of EU countries tax systems would be helpful, but your general knowledge is also welcomed.
Here is a "theoretical" situation. Lets say that i made game and uploaded it to steam. I got some money from sales and now I have 2 options: should i pay taxes for Denmark(where i student) or should i pay taxes for Lithuania(where i technically still a citizen)?
In general my question is: under what circumstances I should pay taxes for specific country. I mean if i got a cucumber from country "A", went to country "B" and sold it, I would give taxes for country "B" (because act of selling cucumber took place in country "B"). What about intellectual products? I mean there technically no place where i sold my product, so according to what rules my profit bounds to specific country's tax system?
P.S. I doubt that place where I was while putting game into Steam is important, but just in case I will say that I putted game while I was in Lithuania(right before i went to Denmark).
Which country should get taxes?
Before you put your game on steam, you register a company in one of those countries, and fill out a bunch of tax paperwork with valve. This company gets the money, so they pay tax (in the place where they are registered).
Of course, if you didn't register a company, then all your revenue counts as personal income, and you typically pay income tax in the country in which you are resident.
Your "permanent" or "legal" residence is Lithuania. You should pay taxes in Lithuania, not the country where you're going to school.
This is not legal advice (I am not a lawyer).
13 hours ago, SkyPenguin said:mm... USA rule is to pay taxes to both USA and whatever country you're in.
File in both, yes. But you can typically deduct the taxes paid to the foreign government.
16 hours ago, SkyPenguin said:mm... USA rule is to pay taxes to both USA and whatever country you're in.
Not necessarily, a lot of countries have agreement to prevent double-taxing and therefore you tax only in one. You will most likely need to fill in some form at least (W8-BEN for the USA).
On 7/21/2018 at 7:23 PM, Ripian said:should i pay taxes for Denmark(where i student) or should i pay taxes for Lithuania(where i technically still a citizen)?
Tax laws are quite complex in the EU (and it depends on what kind of service/product it is, and who are the parties - whether private companies, or physical person on at least one of the sides).
To sell anything in EU you have to be a registered business (limited liability-like company, stock-based company, "sole property" company etc. - this varies based on member state), unless you want to use seller agreements (which are often more complex than to start own company - so I never was interested in those).
VAT
If the registered company provides service or sells product into foreign country it automatically becomes VAT payer. This may require additional bureaucracy in your country.
You are bound to charge VAT for every customer. Now depending on the customer:
- ask for refund of VAT during VAT report monthly for those customers that are VAT payers in EU member state that is the one where your company is registered (each country has a form (some two ... sigh ... Czech Republic))
- for VAT payers that are in EU member states but not the same EU member state where your company is registered VAT is using reverse charge mechanism (in the end it's either not paid at all or refund for the buyer side)
- for non-VAT payers you will most likely need a VAT account in all member states where you sell (note. it is possible to use MOSS mechanism instead - at least for software services, etc. - you will need to register for it though).
More information available in (also on ec.europa - you can find viable information what is mentioned reverse charge and how it works)
Income Tax
This is regulated on EU member state level only, you will have different rules & values in Germany, Czech Republic, Austria, Lithuania, France, etc. It can also differ per your business type, I can only add that for Czech Republic this is at 19% as of 2018 for limited-liability-like companies (S.R.O. in Czech) and stock-based companies (A.S. in Czech).
Generally paid once per year - you take all income, subtract all expenditures (everything you buy required for running the business, payments to workers, etc.) - and from the rest you pay income tax. You may also need additional forms based on the country where your business is registered, like complete accounting with all transactions.
Final word - I'm not a lawyer, I've spend last few years running a company in Czech Republic (in EU), and had numerous headaches with bureaucracy (and still have), so feel free to ask anything more specific - I might be able to help, but I may be mistaken (with a bit of sarcasm - in worst, you can ask for same jail as me and beat me up there). Be sure though - this will make you totally hate your country administrative and EU bureaucracy as a whole.
