I see this was posted recently: http://creators.xna.com/en-us/tax_law_and_community_games

But how do I register my SSN & EIN with my XNA creators club account? 

What's the minimum payout?

 

I also have questions :p I have my company in France, so if I understand well the creators post, I need an EIN. But when I follow the link, it states an EIN is delivered only to US-based company. Anyone can bring some light to european companies process (since I guess all of them have agreements with USA, at least France does) ?

You can't do anything until XBLCG goes live. As far as the legal aspects, consult a lawyer.

The news post is meant to inform creators of the things they'll need to collect to be able to get going with XBLCG. When we do the update to the site at the end of the month, you'll then be able to fill in the appropriate information for tax purposes. Just 12 days left... ;)

Jim Perry:

You can't do anything until XBLCG goes live. As far as the legal aspects, consult a lawyer.

Personally I don't think its reasonable to expect everyone to consult a lawyer. To consult a lawyer/solicitor might cost more than I could make back from ym game (I have absolutely no idea how much money I could make).

The Taxes post doesn't really give any help, and neither do the links to the US IRS.

From what I can tell, this implies that I will be paying tax to the US IRS and not the UK HMRC (I live int he UK obviously)? Is this the case? What are the tax rates in the US?

Thanks
Ben

BenS1:

Jim Perry:

You can't do anything until XBLCG goes live. As far as the legal aspects, consult a lawyer.

Personally I don't think its reasonable to expect everyone to consult a lawyer. To consult a lawyer/solicitor might cost more than I could make back from ym game (I have absolutely no idea how much money I could make).

If you cannot afford a lawyer, then don't. The point Jim (and all of us MVPs) try to make by saying that is that we do not tolerate legal advice being given on these forums. Regardless of how many disclaimers are put on both the questions or answers, we don't like seeing people giving or taking legal advice on this forum.

So if you do not wish to speak to a lawyer, that is totally up to you. However we ask that you (and everyone else) refrain from asking legal questions on these forums.

I understand what you're saying Nick (And Jim) and I understand why you can't have legal questions and answers on the forums, however the problem I now have is that Microsoft have created a post ont he Creators site saying that we have to do something that is unfamiliar to those of us not in the US.

I've personally earned money from US companies before and I've paid my taxes through the UK HMRC as per normal... that's what I thought was going to happen here, however in this case it appears that Microsoft is saying I have to pay tax through the US tax system instead of the UK tax system. That obviously leaves lots of questions...

One option would be for several thousand non-US XNA developers to all go out and pay hundreds of pounds/dollars/euros on lawyers, of which some (Many? Most?) of those people may never recoup that cost through sales. Another option would be for Microsofts lawyers to post more helpful information (On the main Creators site, not the forums obviously).

Am I being unreasonable?

Ben

I am based over in the UK also and have been in contact with the US Embassy to review my options. Note that I am not a lawyer and this information was not provided by one - it is simply my experience of the last few days.

I was informed that applying for an ITIN is the best course of action. This would require the filling in of a W7 form (available at the US Embassy in London) and have to show identification papers as well as a certified letter showing my reason for requiring an ITIN. The receptionist was unable to answer a simple printout of the Taxes requirement would be sufficient, so I will be finding out first hand tomorrow.

With all our dealings and payments with US companies we've always supplied a W-8BEN form, is this still possible?

So we have to goto the US embassey?!!! Ouch!

If I did go an see a tax accountant, and he wanted to discuss some of the details with Microsoft, where would I find the contact details?

Thanks
Ben

BenS1:

So we have to goto the US embassey?!!! Ouch!

If I did go an see a tax accountant, and he wanted to discuss some of the details with Microsoft, where would I find the contact details?

Thanks
Ben

It is possible to apply for an ITIN via post (to TX, USA), but that will take up to 8 weeks. In person at the embassy is only 10 working days apparently.

BenS1:

Am I being unreasonable?

IMO, a bit. MS lawyers work for MS, not developers. If you're going to do business, it's up to you to ensure that you're doing it correctly, not MS.

Let's be honest. Microsoft is rolling out community games because they see it as a business. They get (hopefully) a lot of content for 'free'. If they don't want to scare smaller developers away, they should certainly invest a little more than a 2 paragraph blob on taxes. They may very well do so closer to launch date, but I'm not holding my breath.

Jim Perry:

BenS1:

Am I being unreasonable?

IMO, a bit. MS lawyers work for MS, not developers. If you're going to do business, it's up to you to ensure that you're doing it correctly, not MS.

But this isn't a business for me, its a hobby. I thought that the vast majority of people saw XNA games development as a hobby, not as a business. In fact, the announcement that we'd be able to make money from our games was only actually made in the past couple of months.... long after I actually started developing my game.

Sure if it was a business then I'd agree.

Anyway, having just had a quick chat with an accountant, I was told that the normal way these things work with countries with a tax treaty is that you fill in a tax return in your own country and declare the income as "Other taxable income"... you then pay the tax in your country (UK), not the other country (US). However, this would require that Microsoft make the payments tax free so that the tax can be calculated and paid as part of a UK tax return.....

So, getting to the point... even having spoken to an accountant, I (Or my accountant) need to speak to Microsoft. Is there an official point of contact?

Thanks
Ben

It's great to see all this excitement and folks getting ready for the launch. We will have more information and will guide you through the process of getting setup for the tax purposes once we launch. We know it's difficult to know what to do right now, but we are trying to make it as easy as possible for anyone to get their games sold. There will be legal agreements (localized to a country as needed) that you may like to get reviewed, and yes, you may need to see your tax accountant, but remember, you're now selling something around the world.

To help clarify Ben's post above, we are working with a company who already is very experienced with the tax and money distribution that the CGs system will need to do. They'll be helping us and helping you understand what to pay, who to pay to, who is taxed what etc.

 

I'm sure Microsoft would love for all the hobby folk to just write their games and send them a check. Sadly the US tax code is horribly complicated and there's no way that Microsoft can cover every case.

http://creators.xna.com/en-US/tax_law_and_community_games

"A Tax Identifier Number is not strictly required to get paid, although without it you will be subject to an automatic 30% U.S. tax withholding. If your country has a tax treaty with the U.S then you will be able to take advantage of that providing you have a relevant Tax Identifier Number."

Since no TIN means 30% withholding then the implication (to me at least) is that with one you will not get a withholding and then pay tac in your own country which seems to align with what you are seeing/hearing from the experts.

Can you find out exactly what your accountant thinks is missing from that page so that we can get Microsoft to make it more obvious?

 

Jenkmeister:

It's great to see all this excitement and folks getting ready for the launch. We will have more information and will guide you through the process of getting setup for the tax purposes once we launch. We know it's difficult to know what to do right now, but we are trying to make it as easy as possible for anyone to get their games sold. There will be legal agreements (localized to a country as needed) that you may like to get reviewed, and yes, you may need to see your tax accountant, but remember, you're now selling something around the world.

To help clarify Ben's post above, we are working with a company who already is very experienced with the tax and money distribution that the CGs system will need to do. They'll be helping us and helping you understand what to pay, who to pay to, who is taxed what etc.

 

Thats great news, thanks.

I guess my only concern at this point is that I'm targetting getting my game ready in time for CG launch day... and I'd hate to put in the long nights only to find at the end of it that I have to go through a 14+ day process of applying for tax IDs which prevents me from releasing the game on time.

Would it be possible for you to clarify just one thing? Will it still be possible to release the game even if the tax stuff isn't sorted out seeing as payment isn't made until the end of the quarter anyway?

Thanks for your help
Ben

Yes, I can confirm that you'll be able to create, submit and release your game without completing the tax related pieces. You'll need to have that done by the time you want to get paid.

I actually asked MS people about this, and "releasing the game" and "getting paid" are two separate things. Thus, you can release whenever you want, and then work out the details of payments separately, and fill them in when you have them. Your sales will accrue, and not pay out, until you:

1) provide the necessary details to the payment provider

2) have enough sales to be over the payment bar (which we don't know how much it is -- I would compare it to Google Text Ads where it's $100, but that's just a guess)

Btw, before getting legal advice, you might want to consult available public information:

Obtaining an ITIN from abroad

Understanding your IRS ITIN

Taxpayer Identification Numbers (TIN)

Having operated businesses and having had to file taxes both in the US and a European country in the past, I will say that the US tax system is no more than 30% more complex than the comparable European system, Taxes on business activities (be they hobby or not) and especially on international dealings are going to be complex no matter where you live. If most of the developers here have never had a business in their home country, then the bureaucracy shock they may be seeing is probably more related to the field they're getting into, than anything specifically US-related. You'll have to suck it up and read up everything on the applicable US regulations and the regulations in your own country that apply to inter-country business dealings and income, which will probably take many days of your time, and may take some money if you find you need to go ask a licensed professional. Note: read the entire things because general statements in the front of some brochure may be redacted for specific cases in the back. (Still not legal advice)

Thanks Sean and Jon, its good to know that I can get on with developing my game now and then worry about the tax/payment system after its done.

Thanks
Ben

Jenkmeister:

Yes, I can confirm that you'll be able to create, submit and release your game without completing the tax related pieces. You'll need to have that done by the time you want to get paid.

So you could in theory NOT fill out the paperwork for the taxes part and NOT get paid? This could be useful for those that can't make money on games made in the spare time while still working for a game developer. What happens to all that money that goes unclaimed? And will the developer be able to continue posting games without claiming their earnings?

Personally, I think all the tax ID and W9 requirements are bunch of baloney. Lots of bureaucratic red tape that will ruin the whole point of Community Games. Just give them the option to make free games and not require all this crap. This is turning out to be nothing like the "YouTube of Games".

Tommy McClain

 

AzBat360:

Personally, I think all the tax ID and W9 requirements are bunch of baloney. Lots of bureaucratic red tape that will ruin the whole point of Community Games. Just give them the option to make free games and not require all this crap. This is turning out to be nothing like the "YouTube of Games".

TaxIDs and W9s are a fact of life when money is involved - you've got to pay those politicians somehow eh?

You can do free games today if you stick to Windows - you wont get Xbox live, or consistent cheap hardware for your audience but that might be OK for you.

If you want those thing you have to set up a networking infrastructure and payfor all the servers and the website to download the games and the developers to make all that software... Then you might change your mind about letting everyone use your site for free.

One day people will realise that Microsoft (and Google and Apple and any other company you might think is different) are for profit companies. They don't do ANYTHING without thinking about the bottom line.

 

Yet YouTube figured out how to allow people to give away their videos for free and they're making money hand over fist. I perfectly understand Microsoft is a for profit company. There are ways to make money and still allow people to give their content away.

Tommy McClain

Becuase we all want our games to show us a 30s ad before each level....

I'm not sure where you get the figures on YouTube making profit. They were a private company so nothing was published however smart speculators (e.g.http://www.bivingsreport.com/2006/youtube-show-me-the-money/) seem to think they made less than 0. Sure lots of people got rich when google bought them out but that's not profit. Now where is the profit? Well google don't publish figures for just YouTube but they did say in May that they hope to release products that will make money by the end of the year (http://www.nydailynews.com/money/2008/05/09/2008-05-09_google_seeks_youtube_profit.html). But look at the simple math anyway: There's almost no ads on a YouTube page, they give embedded content away for free and they have HUGE bandwidth costs (compare to a google search page with >10 ads per page on a low bandwidth single page). I'm sure Google has a plan of how to turn it into revenue but right now there's nothing. Its exists purely because google is covering the bandwidth bill jut like the VC money covered it before.

Could Microsoft do that? Yes they have plenty of cash but most teams at Microsoft are not given that option. They need to eventually justify their existence through some kind of profit. In the Xbox world that's done by taking a small amount of profit off the top of each game. Right now it would seem that this business model doesn't extend to free games. Maybe if enough 800 and 400 point games sell then Microsoft can use some of that profit to subsidize a free channel later.

The other point to consider is that this model is a good thing for gamers -- because money attracts and pays for talented developers and artists. 

In my fantasy world where I make $300-$500 for every hour my company puts into XNA community games, myself and a whole lot of other companies would create XNA community games in a very serious way.  This would bring a great set of games to the community. 

If on the other hand there was no financial potential with XNA, then the quality of XNA games would be lower.  Only those creating XNA games for the love of it would do it.  Which would be fine and there would still be good games, but it wouldn’t nearly as attract as many games or as many developers / artists / etc if they can’t work full time and earn a living wage by writing XNA games.

Obviously, it’s yet to be seen how much money there really is in creating successful XNA games.  So many of us are creating XNA games for the fun of it and waiting to see what will happen.  But based on that success, other companies will choose (or not) to invest in this market.