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Taxes on selling a domain

8:37 am on Jun 12, 2016 (gmt 0)

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hello all,

I was wondering how domain transactions are handled from foreign countries. Meaning the buyer (based in the US) is planning to purchase a domain from me (living abroad outside the US).

He would claim the domain as cost/expense to his businesses to deduct taxes. However, how would he prove that when I live outside the country. And would I also have to pay taxes when he's paying through a friend living in my country? Or would he list his friends name since he is paying him directly to transfer in our currency?

Would I have to pay taxes twice? A bit confused on this one.

thanks in advance,
9:36 am on June 12, 2016 (gmt 0)

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disclaimer: I am not a tax advisor so i can only tell you how i work with foreign countries! But it depends on the country you live in or pay taxes.

I am based in the EU and with a sales transaction (digital services) outside the EU i am not paying any sales tax or VAT. Only income tax over my profit.

Getting paid by someone in your own country and not counting VAT could be seen as tax fraud so i would double check the identity of the buyer. And the invoice should be on name of the US buyer and not the friend!
10:02 am on June 12, 2016 (gmt 0)

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Ok thank you.
I'm doing some search online but may also consult with the buyer and a tax lawyer.
Just found this link too:
The first issue to explain to your tax professional is that domain names are service contracts - some mistakenly think them to be tangible personal property. (Try to explain that as she repeatedly flips through her tax guide only to find no specific IRS rules or rulings!) As service contracts, most tax advisors handle domain name sales by applying tax rules related to trademarks!

11:02 am on June 12, 2016 (gmt 0)

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For the seller there's usually an income/gains tax of some kind. For the buyer there may be a transactional tax/fee applied. On something like this be sure to consult an attorney/tax person (preparer/accountant, not the government!) for best results.
5:51 pm on June 12, 2016 (gmt 0)

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You should issue him an invoice that shows your details (either your details as an individual, or as a business if you operate that way), to allow him to prove the expense. Let him sort his own tax affairs out, that's not up to you.

You should pay tax according to the tax laws in your country. If self-employed in the UK for instance, this means paying tax on profits that are above the basic non-taxable allowance.