Do Apple take 40% in the EU?

If you look at the sales reports from iTunes Connect, it seems that Apple are taking nearly 40% of the sale price for downloads made in Europe. Of course they claim to take 30% and, indeed, that’s exactly what you see in the US store.

So what’s going on?

The good news is that Apple are not screwing you over. The numbers do add up. The difference is that prices in the US App Store do not include sales tax (VAT) but those in Europe do. This means that before Apple take their 30% cut, they first take off the tax that needs to be paid. If that’s not clear, let’s work through an example.

I know that my app sells for £1.49 here in the UK. I also know that I get ninety-one pence from Apple for each sale.

If we take that £0.91 and add back the 30% that Apple take we get £1.30. Then we add VAT, which in the UK is 20%, and we get… £1.56.

Oh.

It turns out that downloads are billed from Luxembourg where the sales tax rate is 15%. Because both countries are in the EU there’s a reciprocal tax agreement which means we don’t have to add UK tax as well.

If we do the same calculation as before but with a 15% tax rate we get… £1.49. Phew.

So there you go. You do get 70% of the money that Apple gets for each sale.