Methodology

Mobile App Tax & VAT Compliance for Indie Developers (2026)

What indie mobile developers actually need to know about tax compliance — App Store/Google Play tax handling, VAT/sales tax across jurisdictions, and the documentation you should keep.

ASOhack TeamMay 19, 20267 min read

Tax and compliance feel boring until you owe back-taxes. For indie mobile devs, the rules differ across:

App Store vs Google Play (different VAT/sales-tax handling).
US vs EU vs other jurisdictions.
Sole proprietor vs LLC vs C-corp.
Different income tiers (Small Business programs).

This isn't tax advice — talk to an accountant — but it's a working overview so you know what questions to ask.

What App Store / Google Play handle for you

The good news: both stores handle a lot of tax compliance on your behalf, including VAT/sales-tax collection from the user.

App Store

Collects VAT/sales tax from end users in EU and most US states.
Remits VAT to EU and applicable taxing jurisdictions.
Sends you net of tax payments.
Provides annual tax summary (Form 1099-K for US, equivalent elsewhere).

Google Play

Same general model.
Tax collection across most jurisdictions.
Remits VAT/sales tax for you.

What you receive in your account is net revenue after:

Apple/Google's 30% (or 15% under Small Business / first $1M).
VAT/sales tax remitted to authorities.
Currency conversion.

You owe income tax on the net revenue you receive.

US tax basics (for US-based indie devs)

Federal income tax

App Store/Google Play income is self-employment income unless you operate through a corporation.

Schedule C if sole prop / single-member LLC.
1099-K from Apple/Google if you exceed thresholds (varies by year/state).
Self-employment tax (~15.3%) on top of income tax.

State income tax

Varies by state. Some states don't have income tax (TX, FL, WA, NV, etc.). Most do.

Deductible expenses

For indie devs:

App Store / Google Play fees (the 30%/15% they take).
Software subscriptions (Cursor, Firebase, RevenueCat, etc.).
Marketing / advertising costs.
Equipment (Mac, phone for testing).
Home office (if applicable).
Conference / training fees.
Contractor payments (must issue 1099 if >$600/year).

When to incorporate

For US indie devs:

Sole prop / single-member LLC: simplest. Good up to ~$100-150k/year revenue.
S-Corp election: saves on self-employment tax above ~$80-100k profit. Adds complexity (payroll, tax filings).
C-Corp: rarely worth it for indie scale.

Talk to a CPA before incorporating.

EU / UK tax basics

VAT

Apple/Google remit VAT to EU/UK authorities on your behalf. You receive net of VAT.

If you're EU/UK based:

Income tax on net revenue from stores.
May need to register for VAT if your total revenue (including non-store) exceeds VAT threshold.

Country-specific

UK: similar; HMRC has specific guidance.
Germany: Apple's tax handling considered legitimate; you owe income tax on net.
France: similar.
Italy / Spain: similar.

Becoming a VAT-registered entity

If you sell direct (not through App Store/Google Play), you may need to register for VAT yourself.

Other jurisdictions

Canada

GST/HST collected by stores in some cases.
Income tax on net revenue.

Australia

GST handled similarly.
ABN required if income exceeds threshold.

Japan

Consumption tax handled by stores.
Income tax on net.

India / Brazil / Mexico / other emerging markets

Stores handle most tax compliance.
Country-specific requirements exist; consult local tax advisor.

Common indie mistakes

1. Not setting aside money for taxes

Indie devs often spend revenue as it comes in, then face a tax bill they can't pay.

Fix: set aside 25-35% of net store revenue for income tax + self-employment tax (US) or income tax (other countries). Adjust based on your jurisdiction.

2. Mixing personal + business expenses

If you're operating as sole prop / LLC, maintain separate accounts:

Business bank account.
Business credit card.
Personal accounts kept fully separate.

3. Not tracking expenses

Every business expense is potentially deductible. Track:

Receipts (digital or physical).
Date + business purpose.
Categorize at year-end or quarterly.

Tools: QuickBooks, Wave (free), Xero, etc.

4. Skipping quarterly estimated taxes (US)

If you expect to owe >$1k in income tax, the IRS expects quarterly estimated payments (April, June, September, January).

Skip and you'll owe penalties.

5. Ignoring 1099 requirements (US)

If you pay any US-based contractor >$600/year, you must issue them a 1099-NEC by January 31.

Doesn't apply to corporations or non-US contractors typically.

6. Trying to do it all yourself

For most indie devs:

DIY is fine in year 1 (low revenue, simple).
Hire a CPA by year 2 or once revenue exceeds $50-100k.
Pay $500-$2,000/year for CPA work — usually saves more in taxes than it costs.

Records to keep

For 3-7 years (varies by jurisdiction):

App Store / Google Play monthly statements.
All revenue records.
All expense receipts.
1099-K and similar forms.
Quarterly estimated tax payments.
Annual tax returns.

Backup in cloud storage. Tax authorities can audit going back years.

Subscription apps specifically

Subscription apps have unique tax considerations:

Recognized revenue

App Store/Google Play handle this — you recognize revenue when the user is charged, not when their subscription is consumed.

Refunds and chargebacks

Apple/Google handle refunds and chargebacks; your net revenue is already adjusted.

EU VAT MOSS

If you sell direct to EU (not through stores), you may need to register for VAT MOSS / OSS.

For App Store/Google Play sales, the stores handle this.

Business structures

Sole proprietor

Easiest setup.
No tax filings beyond Schedule C.
Personal liability.

LLC

Limited liability protection.
Tax-flexible (default sole-prop tax treatment).
Some states have annual fees ($800/year in CA).

S-Corp

Same liability protection as LLC.
Can save self-employment tax above ~$80k profit (US).
Adds payroll + tax filing complexity.

Talk to an attorney + CPA before incorporating.

Common deductions for indie mobile devs

App Store/Google Play fees (the cut they take).
Subscription tools (Figma, Cursor, GitHub, Firebase, etc.).
Marketing/ads.
Equipment (Mac, phones, iPads — proportional if also personal use).
Home office (if dedicated space).
Internet / phone (proportional).
Conference fees + travel.
Tax preparation fees.
Books / training.
Health insurance premiums (if self-employed).
Retirement contributions (SEP-IRA, Solo 401k — significant tax benefits).

When to talk to a CPA

Definitely:

First year as an indie business.
Revenue exceeds $50k.
Considering incorporation.
Hiring contractors.
International tax (selling to other countries).
Major life event (marriage, home purchase, etc.).

Annual cost: $500-$2,000 for indie scale. Worth it.

Common mistakes

Not saving for taxes. Year-end surprise.
Mixing personal + business. Audit nightmare.
No expense tracking. Lost deductions.
Skipping quarterly estimated. Penalties.
DIY for too long. Eventually costs more than CPA.
Late incorporation. Some savings unrealized.
No retirement contributions. Major tax-advantaged savings missed.

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