How tax policies affect payout for Azure Marketplace
Appropriate roles: User management admin | Admin agent
The Microsoft commercial marketplace has global reach. Transactions occur across borders and depending on where the independent software vendor (ISV) and the customer are located, tax implications can vary. Microsoft AppSource and Azure Marketplace use the Partner Center Tax Profile Information to determine the ISV's country/region. To determine the customer's country/region, either use the customer's billing information or, if the customer is in the EU, we use two different pieces of information.
To better understand the following scenarios, refer to the Tax details table, which shows whether Microsoft collects and pays taxes on behalf of the publisher or if that responsibility belongs to the publisher.
Note
All examples sale values and tax percentages in this topic are for illustrative purposes only, not exact figures.
Publisher transacts in Microsoft-managed tax country/region
Scenario A – Transactions that take place between a publisher and a customer in a Microsoft-managed tax country/region. These transactions will have applicable tax added at the time of sale and Microsoft sends that tax to the applicable country/region. No taxes are withheld from payout and payout calculations are tax exclusive.
See Scenario D for transactions between a non-US publisher and a US customer.
Publisher transacts in Microsoft-managed tax country/region where marketplace fee is taxable service
Scenario B – Transactions that take place between a US-based publisher (as defined by their Partner Center Tax Profile Information) to a customer in a Microsoft-managed tax country/region where the country/region imposes a tax on the Marketplace Fee (a taxable service). In this scenario, the tax on the store service fee is subtracted from the publisher's payout.
Publisher transacts in publisher-managed tax country/region
Scenario C – Transactions that take place between a publisher and a customer in a publisher-managed tax country/region that does not impose a withholding tax on customers. Customers pay no tax at the point of sale and it is the publisher's obligation to pay all applicable taxes.
For more information on country/region-specific pricing (for example, to offset upcoming taxation) see Plans and pricing for commercial marketplace offers.
Foreign publisher transacts with US customer
Scenario D – All foreign publishers (as defined by their Partner Center Tax Profile Information) in countries/regions without a US treaty (see Scenario E) making a sale to a US-based customer (as defined by their customer account address). US government requires that Microsoft withhold tax on behalf of the publisher. Tax withheld from payout to publisher is calculated based on offer price.
Foreign publisher with a treaty transacts with US customer
Scenario E – All foreign publishers (as defined by their Partner Center Tax Profile Information) in countries/regions with a US treaty making a sale to a US-based customer (as defined by their customer account address). US government does not require Microsoft to withhold tax on behalf of the publisher.
Foreign publisher sells to an EU VAT-registered customer in a Microsoft-managed country/region (outside Ireland)
Scenario F – All transactions between foreign publishers and EU value-added tax (VAT)-registered customers (outside Ireland) in a Microsoft-Managed Country/Region. The customer does not pay tax on the sale.
Foreign publisher sells to an EU VAT-registered customer in a Microsoft-managed country/region (in Ireland)
Scenario G – All transactions between foreign publishers and EU VAT-registered customers (inside Ireland) in a Microsoft-Managed country/region. The customer pays Irish VAT and Microsoft pays this tax to the Irish government.
