Earning with your Android App (France Tax System applied)

Money, money… That’s a big topic most of people are interested in! And there is a myth around solo developers (that I belong to) that publish their own apps on the Play store. I’m writing this article to demystify this bias by testifying out of my experience for the past few years. I won’t talk in this article about how to sell more (with growth tips) and therefore to earn more, but rather how much you could expect to earn out of a sell on the PlayStore when you are a French resident (with the whole legal aspect of the earning).

Selling on the PlayStore

I have an utility app on the PlayStore called SaveMMS that allows you to backup your whole MMS attachments very easily. Few years back, I made this app for myself, but it seems to have an interest among many people. To give you some vanity metrics, there have been more than 100k+ downloads, fully organically, and more than 2k+ reviews. Slow but steady traction is a perfect condition to experiment not only new features, but also financial growth. So I decided to put some of the features in a so-called « pro » section, available by purchasing an in-app product (that unlock the pro features).

Turnover & net revenue

I experimented various prices for this in-app product; but the for the sake of this article, let’s stick with my more relevant selling price, namely 1.99€ (for France & Europe) & $1.99 for everywhere else. Below 2 screenshots from the developer PlayStore dashboard that show a sell in France, and another in the US. Of course the currency differs but in the end, I deal only in Euro.

What we can see here is out of 1.99€ for a sell, Google will distribute you 58% of it, namely 1.16€ on your bank account as a Net revenue. Where went the 42% of the selling price ?

Transaction Fee & VAT

Out of a sell on the PlayStore, a transaction fee of 30% is applied. The precise documentation says :

For applications and in-app products that you sell on Google Play, the transaction fee is equivalent to 30% of the price.

You receive 70% of the payment. The remaining 30% goes to the distribution partner and operating fees.

However, before (or after?) appliying this transaction Fee, there is also the Value Added Tax (VAT) that a state can collect out of any sells. In France for instance, this tax represents 20% of the price. So when you buy anything, France is collecting 20% as a tax, even for virtual goods.

To ease the accountancy of the seller on the PlayStore, Google decided to collect this VAT and redistribute it depending on each country legislation, as stated here

Purchases are made from the developer of the app. In most locations, the developer is responsible for charging taxes (where applicable). For customers in the EU Member States, Google is responsible for charging, collecting, and remitting the VAT on sales as a result of changes in EU VAT legislation.

So for my 1.99€ sell, that includes in fact a 20% VAT for France as well as the 30% transaction fee. Let’s make the calculation

Scenario 1

1.99€ VAT included -> 1.66€ (VAT FREE 20%) -> 1.16€ (30% transaction fee deduced).

In this order (VAT applied before transaction fee), Google gave 0.33€ to France, and collect to himself 0.50€.

Scenario 2

However, there is also another scenario, and this as a significant change on how much Google earn. This scenario represents the case where the VAT is applied after the transaction fee. Let’s do the math

1.99€ VAT included -> 1.39€ (30% transaction fee deduced) -> 1.16€ (VAT free 20%).

In this scenario, Google earns 0.60€ for the sell (and not 0.50€ as in the previous scenario, so 20% more). On the contrary, the French state got 0.23€ of VAT instead of 0.33€ (which is a loss of 43%).

Whatever the scenario is, what is sure is that as a developer selling your product in France, you will still give 42% of your turnover to the combination of Google & French state.

Can I spend this money ?

So far, we have 1.16€ left out of 1.99€ selling price of our in-app product. You may think : that’s still good. Not exactly! You can’t simply collect this money on your personal bank account and spend it as will. To do so, you have to « transform » this earning into a « usable » revenue. One of the mean to achieve it is to pay yourself a salary. Of course, to pay yourself a salary, you have to give the state and various organizations its part. The state here is the IRS (Internal Revenue Service) or « fisc » as we call it in France.

I’m collecting my in-app revenue through a legal company that I own and that I used to carry out my freelancing activity. The legal framework I’m using is called a SASU, a form of a simplified limited company under French law. The very interesting advantage of this form of company is that you pay your taxes only when you pay yourself a salary. That might sound crazy, but in France, you have other kind of company forms where you pay taxes even though you don’t earn anything !

Salary

To pay yourself a salary, you have to distribute taxes as form of contributions in 2 steps : employer security contributions (charges patronales) & payroll expenses (charges salariales). Hold on to your hats, that become very interesting and surreal for a non French taxpayer.

What your employer withdraw you in the end of the month is your net salary. This net salary excludes the payroll expenses. Combining your net salary with your payroll expenses gives you your gross salary. Above your gross salary, the employer should pay the « employer security contributions » calculated against your gross salary. In my case, as a solo developer and company owner, I’m at the same time my employer as well as my employee, so I have to pay the full taxes along the chain.

So, to give you a clear idea, here is the cut :

Business Revenue (Play Store) -> Employer Security contributions -> Gross salary -> Net salary -> Enjoy

Employer Security Contributions

This contribution includes various financing such as French Social Security, retirement pension, professional training & more. Roughly, in my case, the employer security contributions are up to 42% of your gross salary.

Payroll Expenses

Again, this contributions includes various financing such as again, the French Social Security (financing & debt), retirement pensions, unemployment pensions & so. For executive jobs, such as developer, these payroll expenses are up to 27% of your gross salary.

What do I have left in my pocket ?

So let’s do the math. I need to transform my 1.16€ of play store net revenue into a net salary, applying the employer security contributions as well as the payroll expenses.

Gross Salary

I should pay 42% as an employer security contributions on top of my gross salary, so I have 58% left for my gross salary as follow :

gross salary = 1.16€ x 58% = 0.67€

Net Salary

My gross salary is 0.67€. But I still have to pay parroll expenses that are up to 27% of the gross salary, so I have 73% left as a net salary :

net salary = 0.67€ x 73% = 0.49€

My earning

So out of my 1.99€ selling price, I can expect to earn 0.49€ as a salary, that means 75% is gone as various taxes & fees.

My real earning

Let’s go a bit deeper. Like any other country, you have the income tax liability (impôts sur le revenu) that is calculated on your net earning. In France, there are tax brackets (14%, 30% …) depending on your overall earning. So part of your income would be taxed at 14% whereas other part at 30% & more.

Let’s consider that the 0.49€ you just earned as a net salary is taxed in the 30% bracket, that means that you will have 70% left to yourself, which is 0.34€.

Congratulation, you can now spend 0.34€ out of your 1.99€ sell. Wanna give more ? You can my friend 🙂 If you want to spend this 0.34€ on anything, the state applies 20% VAT, remember ? :p so when you spend your 0.34€, you actually pay 0.28€ for the business and 0.06€ to the state.

The state always wins out of your work, that’s how it works in case you forgot 🙂

Decent Salary ?

In France, the minimum net wage is 1153€ (as we called it the SMIC).

We just calculated that out of sell on the PlayStore, we have to distribute 75% as various taxes & fees in France. So ? Well, that means that to have the Minimum Net Wage, you have to sell for 4612€ of in-app purchase per month, which is in my case 2318 buyers per month, so 80 buyers per day 🙂 That is definitely not the case for me! I have few buyers per day, enough to buy me a coffee (not in Starbucks of course :p) and someday enough to pay a friend for a coffee too 🙂

Why making app then ?

I can’t pay myself a decent salary out of my spare time apps, but fortunately, I have a real job as a freelancer developer that allows me to decently fulfill my expenses in a city like Paris.

Also publishing app brings me way more than money, which is in fact not easily quantifiable : satisfaction & sense of accomplishment. Check these reviews :

Review #1 :

Review #2 : 

Review #3 : 

Can you expect a better reward than that out of your work ?! I don’t think so. What allowed me the PlayStore is to reach thousands of people, interact with them and help them, without any border nor limitation. And this is a huge satisfaction my friend 🙂

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