Does Using Google Play and Apple App Store Mean My Business Never Has to Worry About Sales Tax Nexus?

Many app developers believe that by selling exclusively through Google Play or the Apple App Store, they’re automatically covered for all sales tax obligations. But is this true for every business and every location? Here’s what you need to know.

Sales Tax Collection by App Stores

• Apple and Google as Merchant of Record:
  For most transactions made through these platforms, Apple and Google act as the merchant of record. This means they typically calculate, collect, and remit sales tax or VAT based on the buyer’s location. For sales handled by the app stores, developers generally do not have to directly file or pay sales tax.
  
• Jurisdictional Variations:
  While the app stores manage sales tax compliance in most major markets, there are exceptions:
  
  • In certain states or countries, the developer may still be responsible for sales tax reporting or specific forms.
    
  • Some state laws may require developers to include marketplace (app store) sales when calculating whether they meet economic nexus thresholds.
    

What’s the Catch? When You Still Need to Pay Attention

• Thresholds & Nexus:
  Your total sales, both through app stores and other platforms, may push your business past state sales tax nexus thresholds. Once you cross these limits, you could have additional registration or filing requirements, even if the actual sales tax is being collected by the platform.
  
• Direct and Multi-Channel Sales:
  If you also sell your digital products or subscriptions directly (through Stripe, PayPal, Paddle, etc.) or outside the app stores, you are generally responsible for collecting and remitting sales tax yourself on those transactions.
  
• Global Differences:
  App stores may not handle all local tax requirements in every country. In certain jurisdictions, you may still need to register, submit periodic reports, or issue compliant invoices, even if tax is collected by the marketplace.
  

When App Stores Handle Sales Tax

* You still need to monitor total sales for nexus and comply with local regulations.

Key Takeaways

• Using Google Play and Apple App Store significantly reduces your direct sales tax compliance burden, but does not eliminate all potential responsibilities, especially related to nexus and multi-channel sales.
  
• Monitor your total sales (all channels) to determine if you’re approaching tax nexus thresholds in any state or country.
  
• Review all sales channels and consult a specialist to ensure complete compliance.
  

For comprehensive guidance on your business’s sales tax compliance, whether you sell only via app stores or through multiple payment platforms, Kruze Consulting’s startup experts are here to help.