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International contract and company law

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2 comments, last by StonepunshStudio 5 years, 10 months ago

Hello guys,

I think this might be very complicated so a really lawyer is the only real solution in my case i think. But i thought that it might be helpful to first talk with you about that stuff. I think i never mentioned that i am only 15 years old. This makes some problems with the german law because i only can start a company with some detours. Now the problem is i am not allowed at all to be the managing Director of a  UG/Gmbh  and in other company forms in germany my private assets wouldn´t be safe. A solution for this would be to make one of my parents managing director and i would be a Business partner of the company. But this would definitely require some tax advice for my parents and advice for the dividends. Now my first question: Could an other teammember start a company outside of germany and i could still be a Business partner and everyone in the team could get a certain share? And my second question is: We got an offer by an art studio from Indonesia which would do the whole art for the game for a certain share. Is a contract usually internationally valid? And if you write the legal base for the contract is German law, can they still accuse us of the contract with Indonesia law? And my last question is a tax question: Some calculation. Let´s say we sell our game only on Steam for maybe 10 bucks. We sell about 50.000 copies of it. So steam would have 500.000$. They first pay some taxes depending on the country of our company somewhere between 0-30%. Let´s say 10%. That makes 450.000$. Then Steam takes their 30% share --> 315.000$. The company in germany would pay around 40.000$ taxes for their income. If i now want to get my rev share of maybe 10% you could think i will get 27,5k but in germany you pay somewhere between 30-50% taxes for the dividens. So i have maybe about 20k left. Or if i would have 100% of the income 150k left. Is this in other countries normal too? I mean that are only 30% of your whole sells. Thank you guys so much.

Cheers,

Finn

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26 minutes ago, StonepunshStudio said:

And if you write the legal base for the contract is German law, can they still accuse us of the contract with Indonesia law?

Contracts often state in which jurisdiction any disagreements will be settled. But yes, anyone can argue anything in any court at any time - the law is always grey. Consult a lawyer to find out the probability of particular shades of grey ending up as black or white. 

26 minutes ago, StonepunshStudio said:

And my last question is a tax question: Some calculation. Let´s say we sell our game only on Steam for maybe 10 bucks. We sell about 50.000 copies of it. So steam would have 500.000$. They first pay some taxes depending on the country of our company somewhere between 0-30%. Let´s say 10%. That makes 450.000$. Then Steam takes their 30% share --> 315.000$. The company in germany would pay around 40.000$ taxes for their income. If i now want to get my rev share of maybe 10% you could think i will get 27,5k but in germany you pay somewhere between 30-50% taxes for the dividens. So i have maybe about 20k left. Or if i would have 100% of the income 150k left. Is this in other countries normal too?

Company taxes are generally on profits, while individual taxes are generally on income. Steam's 30% cut is pre-tax. 

So, your game makes $500k, Steam take $150k (30%) how they pay tax on their cut is their problem. You've lodged a W8-BEN / declaration of payments to foreign business form with them (I'm reciting the name from memory, so maybe not that exact name) which allows Steam to send your 70% cut off-shore without the US IRS taxing it whatsoever. That money arrives in your German company's possession, but you don't pay company tax on it yet because it's not yet "profits". You then pay it out as wages/salaries/dividends to your staff and withhold income tax (etc) at that time (say 25% of those payments goes to the government). A year later, if any money left in the company accounts becomes profits then the government takes, say, 20% of that leftover money (minus claimable expenses). 

All in all, if the company pays out all earnings as salaries, your income tax rate was 25% and Steam take 30%, then you keep a bit over half of your retail earnings. 

Sorry for the way to late answer. Thank you a lot for helping out. Really appreciated. I didn´t know that there is a way for steam to go around these taxes.

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